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On May 22, 1960 the most powerful earthquake ever recorded struck approximately 100 miles off the coast of southern Chile. The 9.5 Mw event released the energy equivalent to 2.67 gigatones of TNT (178,000 times the energy yielded from the atomic bomb dropped on Hiroshima) leading to extreme ground shaking in cities such as Valdivia and Puerto Montt, triggering landslides and rockfalls in the Andes as well as resulting in a Pacific basin wide tsunami. In Chile, 58,622 houses were completely destroyed with damages totalling $550 million (~$4 billion today adjusted for inflation).

However, the effects in the far field were also significant. While the majority of the damage and approximately 1,380 fatalities occurred in close proximity to the earthquake, a proportion of the tsunami death toll and damage occurred over 5,000 miles away from the epicentre and reached as far away as Japan and the Philippines.

Such tsunamis with the potential to cause damage and fatalities at locations distant from their source are known as tele-tsunamis or far-field tsunamis and require a large magnitude earthquake (>7.5) on a subduction zone to be triggered. Recent events, such as the 2011 Tohoku and 2010 Maule earthquakes, demonstrated that even if these criteria are met, the effects of any resulting tsunami may not be felt significantly beyond the immediate coastline. As such, it can be easy to forget the risks at potential far field sites. However, the 55th anniversary of the 1960 Chilean earthquake and tsunami provides a useful reminder that megathrust earthquakes can have far reaching consequences.

Across the Pacific, the 1960 tsunami caused 61 deaths and $75 million damage (~$600 million today) in Hawaii, 138 deaths and $50 million damage (~$400 million today) in Japan, and left 32 dead or missing in the Philippines.

Hilo Bay, on the big island of Hawaii, was particularly hard hit with wave heights reaching 35 feet (~11 meters), compared to only 3-17 feet or 1-5 meters elsewhere in Hawaii. Approximately 540 homes and businesses were destroyed or severely damaged, wiping out much of downtown Hilo.

hilo tsunami   hilo tsunami
                          Aftermath of the event in Hilo (USGS)                                               Inundation extent of the 1960 tsunami in Hilo (USGS)

Despite an official warning from the U.S. Coast and Geodetic Survey and the sounding of coastal sirens, 61 people in Hilo died as a result of the tsunami and an additional 282 were badly injured. The majority of these casualties occurred because people did not evacuate, either due to misunderstanding or not taking the warnings seriously. Many remained in the Waiakea peninsula area, which was perceived to be safe due to the minimal damage experienced there during the event triggered by the 1946 Aleutian Islands earthquake.

Others initially evacuated to higher ground but returned before the event had finished. A series of waves is a common feature of far field tsunamis, with the first wave typically not being the largest. This was the case with the 1960 event with a series of 8 waves striking Hawaii. Thethird of these was most damaging, killing many of those who returned prematurely.

These avoidable casualties highlight the need for adequate tsunami mitigation measures, including education to ensure that people understand the warnings and the correct actions to take in the event of a tsunami. This is particularly important in areas exposed to far field tsunami hazard, where people may be less aware of the risk and there is enough time to evacuate. The introduction of a Pacific Tsunami Warning System in 1968 as a consequence of the event was a big step forward in improving such measures, the presence of which would no doubt substantially reduce the death toll were the event to reoccur today.

Mitigation efforts can also be supported by tools like the RMS Global Tsunami Scenario Catalog, which provides information on the inundation extent and maximum inundation depth for numerous potential tsunami scenarios around the globe. This can be used to identify areas at risk to far-field tsunami events, including those with no historical precedent, enabling the quantification of exposures likely to be worst impacted by such events.

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August 02, 2019
Climate Change – What’s the GIST?

From our numerous client conversations, climate change as a business issue has risen high on the agenda, and this has certainly escalated over the last twelve months. There is a growing recognition of the need to quantify the impact that climate change will have on your business. But – where do you start with this? One of the major challenges is knowing what question to ask. With the inclusion of climate change scenarios within the General Insurance Stress Test (GIST 2019), which the larger U.K. insurers and Lloyd’s syndicates are required to respond to, the Bank of England Prudential Regulation Authority (PRA) is outlining one approach. RMS is particularly well placed to support insurers in responding to the “Assumptions to Assess the Impact on an Insurer’s Liabilities” portion of the climate change section within GIST, which examines how changes in U.S. hurricane and U.K. weather risk under different climate change scenarios may affect losses. Stochastic models are the perfect tools to evaluate such physical climate change risk to liabilities, with the ability to reflect changes to the hazard under different climate change views and providing a clear link between cause and effect. Our contribution to the landmark “Risky Business” report in 2014 looking at sea-level rise in the U.S. to 2100 is a key example of this. As such, RMS has developed internally adjusted views of its U.S. hurricane, U.S. flood, U.K. windstorm and U.K. flood models to reflect most of the assumptions and scenarios from the PRA, detailed in the table below: The PRA is asking for the potential impact of these assumptions and scenarios on the Annual Average Loss (AAL) and 1-in-100 Aggregate Exceedance Probability (AEP) loss for all relevant U.S. and U.K. insurance contracts. Getting to a reasonable assessment of these numbers however is not a trivial exercise, requiring the appropriate adjustment of model data in up to 18 possible assumption scenario combinations, and then the analyses of the relevant exposure against these. To help insurers start thinking about how to respond to the PRA request, RMS can provide broad industry-wide factors derived by running industry exposure over the adjusted models. This “Industry Factors Package” will be made available to RMS clients, while others who wish to access these will be able to license them separately. The industry-wide factors will allow for the approximation of losses under the assumptions and scenarios laid out in the table above, however there could be significant limitations to this approach for individual companies and portfolios. Your exposure, or risk profile, will not reflect that of the industry and therefore the application of industry-wide factors may not reasonably reflect your own risk. The uncertainty around this approach means you may decide this is not a satisfactory solution for your submission. For a more detailed bespoke view, we are offering to run insurers’ own exposures through the adjusted models, via RMS Analytical Services, to better satisfy the PRA’s requirements. This “PRA-ready Package” provides unique results for submission to the PRA which reflect your book of business and allow for comparisons with those of the industry. Even if you fall out of the larger U.K. insurers and Lloyd’s syndicates for whom this applies, you should take note. This might be the start of a new wave of analytical rigor around climate change, and more regulators are likely to follow. Beyond regulation, it is also becoming fundamental to understand the impact of climate change for business decisions. For example, to answer what is insurable in 2050 and whether you need to adjust your underwriting and portfolio management strategy accordingly. RMS can assist in getting answers to such questions through a customized climate change consulting engagement as part of an “Enhanced Climate Change Package”, utilizing advanced climate change analytics to provide more detailed results based on the PRA or other similar scenarios. This package can include the PRA-ready results and basic PRA climate change submission information or be a separate engagement depending upon your needs. RMS clients who are interested in these solutions should reach out to their Client Success Manager for details on how they can be accessed, while other insurers can email sales@rms.com. With the submission date of October 31 looming, and many with tighter internal deadlines, it is important not to delay! Indeed, we are already engaging with several clients on how we can help them.…

Higgins AU flood
February 07, 2019
Townsville in the Trough
Callum Higgins
Callum Higgins
Product Manager, Model Product Management

Callum is the product manager for RMS’ severe weather models in Australia. As part of the Asia-Pacific climate hazards product management team and based in London, Callum has experience supporting the commercial and technical success of this suite of models, helping to ensure product quality and market acceptability.

Most recently he has been focused on the 2018 update to the Australia Cyclone Model, defining model requirements, supporting development, and bringing the product to market.

Callum is a Certified Catastrophe Risk Analyst and holds an integrated master’s degree (MEarthSci) in Earth Sciences from Oxford University.

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