Tag Archives: Tokio Marine

The Journey to Sendai and Beyond

Sendai is a city of a million people 2 hours north of Tokyo on the Shinkansen bullet train. From March 14-17, 2015 it will attract seven thousand people to the 3rd UN World Conference on Disaster Risk Reduction (WCDRR). Twelve heads of state (including one king and one emperor), seven prime ministers and 135 ministers and vice ministers, will be present to launch a fifteen year program of coordinated action around disaster risk reduction.

The conference is being hosted in Sendai because of the city’s recent experience of a mega-catastrophe. Just four years after the great Tohoku earthquake and tsunami in March 2011 and the coastal villages adjacent to Sendai still bear the scour marks where the great tsunami surged inland through the pine forests, removing many buildings off their foundations.

The original International Decade for Disaster Risk Reduction ran from 1990-1999. The second decade from 2005-2015, renewed at Kobe ten years after its devastating 1995 earthquake, was called the Hyogo Framework for Action. The continuation of this international program is currently designed to last for fifteen years. The fact that the frameworks have been renewed reflects reality—while there have been successes for particular regions and perils, the broader goals of worldwide disaster risk reduction have not been met. For example, the 2011 Tohoku earthquake was not anticipated, and as a result had grievous consequences in terms of loss of life and damage to the Fukushima nuclear power plants.

RMS will have four people at the Sendai WCDRR conference. We have obtained a coveted presentation on the main IGNITE stage—the equivalent to a “TED talk.” I will also be speaking on two panel sessions, one organized by The Geneva Association and Tokio Marine, “Insurance as contributors to problem solving and impact reduction,”and a second on the launch of the global set of catastrophe models developed by the UNISDR agency, for which RMS has provided high-level input. We have offered to host these worldwide UNISDR catastrophe models on RMS(one), which will open up access to the models for public officials in developing countries.

We have also worked on a couple of papers (for example, ‘Setting, Measuring and Monitoring: Targets for Disaster Risk Reduction: Recommendations for post-2015 international policy frameworks’) articulating how to measure progress in disaster risk reduction. At present, international frameworks have shied away from setting numerical commitments. We have argued that only probabilistic methods, which simulate thousands of possible events, can show baseline levels of risk, what actions will achieve progress, and whether targets have been achieved. We take Michael Bloomberg’s quote from the foreword to the Risky Business report: “if you can’t measure it, you can’t manage it.”

The work by the UNISDR on catastrophe modeling highlights the accelerated recognition of the role of modeling in managing and reducing disaster risk. There is now a real focus on public-private partnerships in achieving disaster reduction. With RMS’ rich and deep experience in catastrophe modeling, there is much we can offer to these expanded applications. For users of models in governments, public organisations and NGOs, models are required to:

  • explore how to manage a wide range of potential disasters
  • perform cost benefit analyses of alternative actions to reduce risk of loss of life or economic impacts
  • explore potential implications of climate change
  • explore holistically the potential for significant financial shocks to national economies

If you are attending the conference, come and visit us at our booth on the 6th floor of the Sendai International Center where we will be distributing information about our proposals for disaster risk modeling, and articulating our role as leaders in catastrophe risk modeling. It will be a highly publicized event with 500 journalists and around 300 private sector members, including several of our key clients. We will also be meeting with other organizations with which we are affiliated, including the UN Principles for Sustainable Insurance and the Rockefeller Foundation’s 100 Resilient Cities initiative.

We look forward to sharing more insight after the event.

Building Better Models Through Collaboration

To calibrate and validate their models, catastrophe modeling firms ideally have access to large amounts of high-quality, high-resolution claims and exposure data. But the insurance industry has so much to offer than just data.

In addition to exposure data, insurance companies have detailed knowledge of the claims practice itself, the exact policy wording in the underlying exposure, and local expertise. In addition, many insurance companies today have highly experienced teams of scientists that evaluate vendor cat models, or build their own models in-house.

At RMS, our approach to building models has evolved in recent years to capture the insurance industry’s expertise and insight. At the start of a project, we strive to create partnerships with interested clients or companies to ensure we are aligned with market needs. These technical collaborations usually last for the duration of the model development process, and involve regular technical exchanges between RMS and partners to share methodologies and data sources. The exposure and claims data analysis becomes just one part of this broader initiative.

Over the past two years, we has been extremely fortunate to collaborate with two of Japan’s largest primary insurers, Tokio Marine and Sompo Japan, on the development of RMS’ earthquake and typhoon models for Japan.

Collaboration was in full force this June, when RMS’ typhoon modelers met with Hajime Sano, Head of Catastrophe Analytics, Sompo Japan, and his team in Tokyo for a day of technical discussions around hazard and vulnerability. The Sompo modeling team provided interesting ideas around open modeling features within the new model in order to better create their own view of risk.

Hajime Sano also joined us at our Exceedance conference in April as a featured guest speaker. At the event he explained why Sompo Japan develops in-house models, and why they decided to collaborate with RMS on the RMS Japan Typhoon Model update.

Tokio Marine in RMS London Office

At the end of June, Yuki Mizota from Tokio Marine Nichido Fire Insurance and Mizuki Shinohara from Tokio Marine & Nichido Risk Consulting visited our RMS London office. Yuki Mizota gave a very insightful presentation on the market conditions in Japan, and we had a number of productive discussions around exposure, hazard, and vulnerability.

Tour along Arakawa River

One highlight of the collaboration so far with Tokio Marine was a tour along the Arakawa river in Tokyo. During the visit we were able to see firsthand weak spots in the river defense system and witness the new super levees.

Such firsthand intelligence and data is vital in building a strong flood model. We conducted additional research leading to a much deeper understanding of the importance and state of the river defenses in Japan.

Partnerships with Tokio Marine and Sompo Japan

Our partnerships with Tokio Marine and Sompo Japan are great examples of what can be achieved when we work closely with clients to develop and update models. For us and our partners, this collaborative thinking is a win-win: the partner gains deeper insight into RMS modeling methodologies, a key element of their overall enterprise risk management, and RMS is able build better models based on the best science, the best data, and the additional expertise of local insurers. The industry as a whole benefits from state-of-the-art, well-calibrated models built collaboratively by some of the best minds across the insurance community.