Tag Archives: Thailand

Opportunities and Challenges ahead for Vietnam: Lessons Learned from Thailand

Earlier this month I gave a presentation at the 13th Asia Insurance Review conference in Ho Chi Minh City, Vietnam. It was a very worthwhile event that gave good insights into this young insurance market, and it was great to be in Ho Chi Minh City—a place that immediately captured me with its charm.


Bangkok, Thailand during the 2011 floods. Photo by Petty Officer 1st Class Jennifer Villalovos.

Vietnam shares striking similarities to Thailand, both from a peril and an exposure perspective. And, for Vietnam to become more resilient, it could make sense to learn from Thailand’s recent natural catastrophe (NatCat) experiences, and understand why some of the events were particularly painful in absence of good exposure data.

NatCat and Exposure similarities between Thailand and Vietnam 

Flood profile Vietnam shows a similar flood profile as Thailand, with significant flooding every year. Vietnam’s Mekong Delta, responsible for half of the country’s rice production, is especially susceptible to flooding.
Coast line Both coastlines are similar in length[1] and are similarly exposed to storm surge and tsunami.[2]
Tsunami & Tourism Thailand and its tourism industry were severely affected by the 2004 Indian Ocean Tsunami. Vietnam’s coastline and it’s tourism hotspots (e.g. Da Nang) show similar exposure to tsunami, potentially originating from the Manila Arc.2
GDP growth Thailand’s rapid GDP growth and accompanying exposure growth in the decade prior to the 2011 floods caught many by surprise. Vietnam has been growing even faster in the last ten years[3]; and exposure data quality (completeness and accuracy) have not necessarily kept up with this development.
Industrialization and global supply chain relevance Many underestimated the significance Thailand played in the global supply chain; for example, in 2011 about a quarter of all hard disk drives were produced in Thailand. Currently, Vietnam is undergoing the same rapid industrialization. For example, Samsung opened yet another multi-billion dollar industrial facility in Vietnam, propelling the country to the forefront of mobile phone production and increasing its significance to the global supply chain.

Implications for the Insurance Industry

In light of these similarities and the strong impact that global warming will have on Vietnam[4], regulators and (re)insurers are now facing several challenges and opportunities:

Modeling of perils and technical writing of business needs to be at the forefront of every executive’s mind for any mid-to long-term business plan. While this is not something that can be implemented overnight, the first steps have been taken, and it’s just a matter of time to get there.

But to get there as quickly and efficiently as possible, another crucial step stone must be taken: to improve exposure data quality in Vietnam. Better exposure insights in Thailand would almost certainly have led to a better understanding of exposure accumulations and could have made a significant difference post floods, resulting in less financial and reputational damage to many (re)insurers.

As insurance veterans know, it’s not a question of if a large scale NatCat event will happen in Vietnam, but a question of when. And while it’s not possible to fully eliminate the element of surprise in NatCat events, the severity of these surprise can be reduced by having better exposure data and exposure management in place.

This is where the real opportunity and challenge lies for Vietnam: getting better exposure insights to be able to mitigate risks. Ultimately, any (re)insurer wants to be in a confident position when someone poses this question: “Do you understand your exposures in Vietnam?”

RMS recognizes the importance of improving the quality and management of exposure data: Over the past twelve months, RMS has released exposure data sets for Vietnam and many other territories in the Asia-Pacific. To find out more about the RMS® Asia Exposure data sets, please e-mail asia-exposure@rms.com.  

[1] Source: https://en.wikipedia.org/wiki/List_of_countries_by_length_of_coastline
[2] Please refer to the RMS® Global Tsunami Scenario Catalog and the RMS® report on Coastlines at Risk of Giant Earthquakes & Their Mega-Tsunami, 2015
[3] The World Bank: http://data.worldbank.org/country/vietnam, last accessed: 1 July 2015
[4] Vietnam ranks among the five countries to be most affected by global warming, World Bank Country Profile 2011: http://sdwebx.worldbank.org/climateportalb/doc/GFDRRCountryProfiles/wb_gfdrr_climate_change_country_profile_for_VNM.pdf

A Decade Later – Reconsidering The Indian Ocean Earthquake and Tsunami

This December marks the 10-year anniversary of the Indian Ocean earthquake and tsunami, a disaster that killed more than 230,000 people in 14 countries. The disaster hit Thailand and Indonesia especially hard and is considered one of the ten worst earthquakes in recorded history based on damages.

Click here for full size image

In advance of the anniversary on December 26, 2014, Dr. Robert Muir-Wood, RMS chief research officer, and Dr. Patricia Grossi, RMS senior director of global earthquake modeling, hosted their second Reddit Science AMA (Ask Me Anything). Back in October, Muir-Wood and Grossi hosted another AMA on the 25th anniversary of the Loma Prieta earthquake in the San Francisco Bay Area.

The latest Reddit thread generated almost 300 comments. Muir-Wood and Grossi discussed topics including: early warning systems for disasters like tsunamis, what variables are considered in catastrophe models, and if better building design can protect against natural disasters – particularly tsunamis. Highlights of the chat follow:

What kind of structural elements or configurations are best to combat or defend against these disasters?

Muir-Wood: There have been research studies on buildings best able to survive tsunamis. The key is to make them strong (from well engineered reinforced concrete) but with ground floor walls running parallel with the shoreline that are weak, so that the walls can be overwhelmed without threatening the whole building.

The 2004 Indian Ocean tsunami took a lot people by surprise due to the lack of a tsunami warning system even though there was a gap between the earthquake and the tsunami. If there was a tsunami warning system in place at the time would that have decreased the death toll by a lot, or not make too much of a difference considering how strong the tsunami was.

Grossi: Early warning systems are excellent tools for reducing the loss of life during an earthquake-induced tsunami event. But education is one of the easiest ways to reduce tsunami life loss. Such education needs to include knowledge of the cause of a tsunami and its association with the largest earthquakes to help individuals understand how their own observations can help them take appropriate action (e.g., seeing the water recede from the coastline). In essence, official warning systems can provide only part of the solution, as information can never be effectively disseminated to everyone along a coastline. With only 10 to 30 minutes warning in the nearfield of major tsunamis, it is imperative that people are taught to take their own action rather than wait for official instruction.

Show me the coolest tsunami video.

Muir-Wood: There are amazing videos of the Japan 2011 tsunami. I wouldn’t pick just one of them – but recommend you watch quite a few – because they are interestingly different. The most amazing feature of the tsunami is the way the water can continue to rise and rise, for five or ten minutes, apparently without end. And then how the people watching the tsunami, climb to higher locations and then realize that if it keeps rising there will be nowhere for them to go.

Was there anything we missed you wanted to discuss? Please let us know in the comments. 

Managing Risk 10 Years After the 2004 Indian Ocean Earthquake and Tsunami

On Sunday, December 26, 2004 at approximately 8 a.m. local time, a massive earthquake occurred along the Indian–Burma plate boundary off the coast of Sumatra, Indonesia. Rupturing over 1,200 km of the Sunda Trench, the magnitude of the earthquake has been estimated between M9.0 and M9.3—with the U.S. Geological Survey’s Centennial Earthquake Catalog estimating M9.1. Occurring at a fairly shallow depth—less than 30 km—the earthquake generated a basin-wide tsunami that inundated coastlines across the Indian Ocean and caused run-up waves farther afield, impacting the eastern coastline of Africa. By the end of the day, it was apparent that the event was going to emerge as one of the worst natural disasters in modern times.

Click here for full size image

Economic Toll and Recovery

Overall economic losses from the 2004 disaster were approximately $10 billion, with the majority of loss attributed to the damage in the Indonesia, Thailand, Sri Lanka, and India. The large majority of property damage was caused by the tsunami waves. Along coastlines of most of the affected countries, buildings were situated closer to sea level than is typical of higher latitudes, exacerbating the impacts.

In the aftermath of the event, the international relief efforts across the Indian Ocean were seen as fairly effective. But the longer-term recovery work in certain regions has struggled—due to the overwhelming numbers of people displaced from their homes. There are, of course, examples of well-executed reconstruction efforts. Build Change—a partner organization of RMS—has worked with tsunami survivors in Banda Aceh, Sumatra to rebuild safe, sustainable homes. Ten years after the event, evidence of the destruction wrought by the tsunami remains in the high-impacted areas.

Humanitarian Impact 

While tsunami in the Indian Ocean have certainly occurred many times before, from the perspective of modern history, the human casualties from the 2004 Indian Ocean Earthquake and Tsunami have no historical equal. More than 225,000 people lost their lives in the disaster, with most of the loss of life occurring in the near field in Sumatra, Indonesia. In Indonesia, the tsunami destroyed virtually every village, town, road, and bridge along a 170-km stretch of coast less than 10 m above sea level. Sri Lanka’s Eastern and Southern provinces were severely impacted, with fatality rate among the population within 1 km of coast between 15% and 20%. In India, entire villages in Tamil Nadu were destroyed.

In Thailand, the tsunami affected local inhabitants and foreign tourists in the densely inhabited Phuket Island. The fatalities among the tourists were a significant proportion of the overall loss of life, as many were on the beach or in hotels near the sea at the time the tsunami waves struck. In addition, the initial tsunami wave in Phuket, which was east of the rupture, began with a receding wave. Many of the tourists (not indigenous to tsunami-prone coastal regions) were unfortunately not familiar with the nature of tsunami waves. In many (but not all) tsunami, the first movement of the sea is a withdrawal. Any occasion when the sea level recedes rapidly and inexplicably should be taken as a signal for immediate flight to higher ground.

Managing Tsunami Risk in the Aftermath

The 2004 Indian Ocean Tsunami highlighted inherent vulnerabilities in the world’s coastlines and the people who live there. Coastal populations are on the increase in many parts of the world, mostly due to the exploitation of sea resources or tourism-related activities. Adequate tsunami mitigation measures— such as tsunami warning systems, education, and land use planning—can be put in place to save lives, property, and the livelihoods of those living on the coast.

Although the impact of the 2004 disaster on the global insurance industry was minimal, it alerted the world to the dangers of tsunami hazards. Worldwide response to the 2004 disaster resulted in the establishment of the Indian Ocean Tsunami Warning and Mitigation System in 2006.

Ten years hence, the world has seen two more earthquake-induced tsunami events—in the 2010 M8.8 Maule, Chile Earthquake and in the 2011 M9.0 Tohoku, Japan Earthquake—causing many clients to inquire where else in the world can events like these happen?

Chennai, India

9:30 a.m. local time

On the Indian peninsula, the hardest-hit areas were on India’s southeastern coast, in the state of Tamil Nadu, where close to 8,000 perished. Chennai, the capital of Tamil Nadu, has rebounded to become one of the Rockefeller Foundations’ “100 Resilient Cities” for its commitment to minimizing the impact of flooding in low-lying coastal areas and adopting a tsunami early warning system.

Just north of the earthquake’s epicenter, India’s Andaman and Nicobar islands were struck by waves reaching 4 to 15 m (13 to 50 ft) within 10 minutes of the earthquake. The death toll reached 7,000, with many more missing and presumed dead.

Distance from Epicenter

2,020 km

(1,260 mi)

Wave Height

5 m

(16 ft)

Time from initial rupture

3 hours

Banda Aceh, Indonesia

8:30 a.m. local time

The first wave reached Sumatra, Indonesia’s largest island, approximately 30 minutes after the initial rupture. Banda Aceh, the area hardest hit by the tsunami and closest major city to the earthquake’s epicenter, sustained more than 31,000 casualties in the city alone. Entire towns in the surrounding areas, some with populations of more than 10,000, vanished. More than 600,000 people in Aceh’s fishery and agricultural sectors lost their livelihoods.

Four times more women than men were killed—not just in Indonesia, but India and Sri Lanka as well—as many men were fishing, while women were on the beach, waiting for the fishermen to return, or at home, minding their children.

Distance from Epicenter

260 km

(160 mi)

Wave Height

30 m

(100 ft)

Time from initial rupture

30 min

Patong Beach, Thailand

9:30 a.m. local time

Tourism is one of Thailand’s key economic sectors, comprising about 12% of its overall GDP, with the greatest economic development along Thailand’s western coast. Khao Lak, Ko Phi Phi, and Phuket, with their pristine beaches, placid waters, and coral reefs, are among some of the most visited places on Earth. They were also the areas hit hardest by the tsunami.

The earthquake struck during the height of Thailand’s tourist season, causing close to 5,400 confirmed deaths, with many thousands more missing and presumed dead.

Distance from Epicenter

580 km

(360 mi)

Wave Height

6 m

(20 ft)

Time from initial rupture

1.5 hours

Galle Port, Sri Lanka

10:00 a.m. local time

Before the tsunami hit, elephants were observed running away from Patanangala beach in Yala National Park, directly in the tsunami’s path. Flamingos, goats, and buffaloes also moved to higher ground. All but two water buffaloes were unharmed.

When the waves came, Sri Lanka’s eastern and southern provinces were the hardest hit. In the coastal town of Telwatta, the tsunami struck an overcrowded train packed with passengers for the Buddhist full moon and Christmas holiday weekend. More than 1,700 lives were lost in what became the worst humanitarian disaster in railroad history.

Distance from Epicenter

1,750 km

(1,100 mi)

Wave Height

6 m

(20 ft)

Time from initial rupture

3 hours

Wave Height

6 m

(20 ft)

Northern Sumatra, West Coast

7:58 a.m. local time

The M9.1 earthquake struck 160 km (100 mi) off the northwest coast of Sumatra, Indonesia, generating the deadliest tsunami in history. With a rupture length of more than 1,200 km (750 mi), the earthquake released energy equivalent to 475 megatons of TNT, and shot a massive water column into the air.

The water settled back into the open ocean as a barely perceptible swell of only 50 cm (1.6 feet)—but moved at speeds of more than 600 km/hr (370 mph). It slowed toward the coast, inundating Sumatra with waves of up to 30 m (100 feet), leaving more than 225,000 people missing or presumed dead, and displacing 1.5 million more.

Countries impacted

14

Total insured losses

$1 billion

Total economic losses

$10 billion