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  • NEWARK, Calif. - August 08, 2016 -
  • RMS, the world’s leading catastrophe risk management firm, has analyzed the catastrophe risk of the world’s ports and ranked the top ten for greatest potential loss.

The analysis shows that while the riskiest two ports are in Japan (Nagoya — $2.3 billion) and China (Guangzhou — $2 billion), six of the top ten riskiest ports are in the U.S., with the remaining two in Europe. Surprisingly, it is not just the biggest container hubs that have a high risk of loss. Smaller ports in the U.S. such as Plaquemines, LA and Pascagoula, MS, as well as Bremerhaven in Germany also feature in the ranking due to their cargo type and the natural hazards they face.

The findings will cause concern among marine insurers and reinsurers coming after four years of marine catastrophes which have generated billions of dollars in marine insurance losses: 2015 Tianjin explosion (more than $3 billion), 2012 Superstorm Sandy (est. $3 billion marine loss of which approximately $2 billion was cargo loss), and the 2011 Tohoku earthquake and tsunami.

PORTS AT RISK FOR HIGHEST LOSSES

(500 year estimated catastrophe loss for earthquake, wind, and storm surge perils)


Estimated Marine Cargo Loss in Billions USD*

1Nagoya, Japan2.3

2Guangzhou, China2.0

3Plaquemines, LA, U.S.1.5

4Bremerhaven, Germany1.0

5New Orleans, LA, U.S.1.0

6Pascagoula, MS, U.S.1.0

7Beaumont, TX, U.S.0.9

8Baton Rouge, LA, U.S.0.8

9Houston, TX, U.S.0.8

10Le Havre, France0.7

* Losses rounded to one decimal place

Chris Folkman, director, Product Management at RMS, said: “Surprisingly, a port’s size and its catastrophe loss potential are not strongly correlated. For example, while China may be king for volume of container traffic, our study found that many smaller U.S. ports rank more highly for risk — largely due to hurricanes. Our analysis proves what we’ve long suspected — that outdated techniques and incomplete data have obscured many high-risk locations. The industry needs to cease its guessing game when determining catastrophe risk and port accumulations.”

To conduct the analysis RMS marine risk experts used the new RMS Marine Cargo Model™, the insurance industry’s first marine cargo and specie risk tool, to calculate the 1-in-500* year loss for each port. The team employed the model’s geospatial analysis of thousands of square kilometers of satellite imagery across ports in almost 80 countries and its proprietary technique for allocating risk exposure across large, complex terminals to assess the ports’ exposure and accumulations at a granular level never achieved before in the marine sector, to highlight the risk of port aggregations.

The modeling capability, the first of its kind, takes into account:

  • Cargo type (e.g. autos, bulk grains, electronics, specie)
  • Precise storage location (e.g. coastal, estuarine, waterside or within dock complex)
  • Storage type (e.g. open air, warehouse, container — stacked or ground level)
  • Dwell time (which can vary due to port automation, labor relations and import/export ratios)

While the use of containers in shipping has hugely benefitted the global economy, it has increased catastrophic risk exposures for marine insurers due to the increasing size of ships and the increasing capacities of ports and storage facilities. Larger vessels have rendered many river ports inaccessible forcing shippers to rely on seaside ports, which are more vulnerable to hurricanes, typhoons, and storm surge. Furthermore, many ports are built on landfill, amplifying their vulnerability to earthquake risk.

“The value of global catastrophe-exposed cargo is huge and is expected to continue growing,” continued Folkman. “After so much catastrophe loss to the cargo line since 2011, it is clear that ‘good enough’ modeling techniques are no longer fit for purpose. Better data and modeling will enable more effective portfolio management and underwriting for this dynamic line of business.”

Notes for editors

* Losses are based on a 500-year return period, which means a catastrophic event or combination of events of at least the indicated size, which carry a 1 in 500 chance of occurring in any given year.

The Tianjin port explosion occurred on August 12, 2015.

Methodology

Losses were calculated using RMS catastrophe models, which simulated several million windstorms, hurricanes, typhoons, storm surges, and earthquakes. High-resolution cargo data was the key input to the models, which calculated the principal hazards at each port, their impact on cargo, and the resulting financial loss. Factors influencing the loss outcome — including salvage values, cargo packaging, structural protection, and port elevation — were taken into account.

Related Resources
September 22, 2020
RMS Estimates Insurance Losses from Western U.S. Wildfires to Be Between US$4bn and US$8bn

NEWARK, Calif. – September 22, 2020 – RMS, the world’s leading catastrophe risk company estimates insured losses for the Western U.S. will be between US$4.0 and US$8.0 billion. These losses reflect estimates as of September 20, 2020, and further escalation in losses are likely as many fires are still ongoing in California, Oregon, and Washington. RMS estimates insured losses from major wildfires in Northern California, Oregon, and Washington as follows (US$ billions): Regions Insured Losses as of September 20, 2020 Northern California 3.0 - 5.0 Oregon & Washington 1.0 - 3.0 Wildfires in the Western U.S. have led to over four million acres burned so far (2.5 million in Northern California and over 1.5 million in Oregon and Washington) and over 13,500 structures damaged or destroyed as of September 20, 2020. Michael Young, Vice President, Product Management said: “While this season is exceptionally noteworthy on many fronts, I want to highlight a silver lining: 30 to 60 percent of structures in many of these mega complex footprints actually survived the fire. This is because building science has identified many factors that increase the survivability of structures such as wildfire-resistant vents. We need to find bold ways to duplicate those measures at scale. If this is the new normal, we can’t afford not to embrace effective steps towards mitigation.” RMS estimates include losses from property damage, including evacuation and smoke damage, business interruption (BI) across residential, commercial, industrial lines, and additional living expenses (ALE). Smoke and evacuation are significant contributors to losses during the ongoing Western U.S. wildfires, contributing about 20 percent of losses in Northern California fires and about 35 percent in Oregon and Washington fires, respectively. The RMS loss estimate is based on detailed modeling of fire spread, ember accumulations, and smoke dispersion of the fires utilizing the RMS U.S. Wildfire HD Model, part of the suite of RMS North America Wildfire High-Definition (HD) Models, released in February 2019. The model covers the contiguous U.S. and explicitly simulates ember and smoke to support detailed analysis of the impact of a wildfire beyond historical fire perimeters. The model’s findings were supported by Damage Inspection Specialist (DINS) damage surveys for California Fires, published damage reports for Oregon and Washington fires, and the RMS U.S. Wildfire Industry Exposure Database. As many major fires are still active in these states, additional increases in loss are possible. Learn more about the RMS North America Wildfire HD Model here. ENDS The technology and data used in providing the information contained in this press release are based on the scientific data, mathematical and empirical models, and encoded experience of scientists and specialists. As with any model of physical systems, particularly those with low frequencies of occurrence and potentially high severity outcomes, the actual losses from catastrophic events may differ from the results of simulation analyses. RMS SPECIFICALLY DISCLAIMS ANY AND ALL RESPONSIBILITIES, OBLIGATIONS AND LIABILITY WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THE CONTENTS OF THIS INFORMATION OR USE THEREOF, INCLUDING ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL RMS (OR ITS PARENT, SUBSIDIARY, OR OTHER AFFILIATED COMPANIES) BE LIABLE FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THE CONTENTS OF THIS INFORMATION OR USE THEREOF. …

September 03, 2020
RMS Estimates that Total Onshore U.S. Insured Losses from Hurricane Laura Will Be Between US$9bn – US$13bn

Newark, CA – September 3, 2020 – RMS, the world’s leading catastrophe risk solutions company, estimates that total onshore U.S. insured losses from Hurricane Laura will be between US$9.0 and US$13.0 billion. The estimate includes losses to the National Flood Insurance Program (NFIP) of between US$400m and US$600m. Onshore U.S. insured loss estimates for Hurricane Laura (US$ billions): Wind + Surge Inland Flood NFIP Total 8.5 – 12.0 0.1 – 0.4 0.4 – 0.6 9.0 – 13.0 “Although Laura avoided major metropolitan areas like Houston and New Orleans, it was still an extremely impactful U.S. event. After making landfall as a powerful Category 4 storm, it maintained its intensity as it moved inland, causing widespread wind and water-driven damage well into interior portions of Louisiana. The extent and severity of these damages has been verified by our development teams via web and aerial-based reconnaissance efforts”, said Jeff Waters, senior product manager, RMS North Atlantic Hurricane Models.   This estimate includes wind, storm surge, and inland flood losses across impacted states, including Louisiana and Texas, based on analysis of RMS ensemble footprints (hazard reconstructions of Laura’s wind field and storm surge) in Version 18.1 of the RMS North Atlantic Hurricane Models and the RMS U.S. Inland Flood HD (high-definition) Model. Ensemble footprints capture the uncertainties surrounding observed hazard, including wind speeds, storm surge, and wave heights.  Losses reflect property damage and business interruption to residential, commercial, industrial, and automobile lines of business, as well as post-event loss amplification and non-modeled sources of loss. Industrial losses include impacts to speciality lines, such as refineries and petrochemical plants, many of which lie along this part of the Gulf coastline.  The estimate also includes losses to the National Flood Insurance Program (NFIP), which RMS expects to reach US$400 million to US$600 million. NFIP losses were derived using an RMS view of NFIP exposure based on the 2019 policy-in-force data published by FEMA, and the Version 18.1 North Atlantic Hurricane Models. RMS estimates an additional US$1.0bn to US$2.0 billion of insured losses to offshore platforms, rigs, and pipelines in the Gulf of Mexico, due to wind and wave-driven damages. Offshore losses were estimated using the September 2020 vintage of the RMS Offshore Platform Industry Exposure Database. “Offshore assets have evolved significantly since the impactful hurricanes of Katrina and Rita in 2005 and Ike in 2008, but there is still a prevalence of platforms, rigs, and pipelines in the Gulf region. Many of these assets, including several high-value deep-water platforms, were exposed to the significant wind and wave impacts from Hurricane Laura. At landfall, Laura produced devastating sustained winds of 150 mph [240 km/h], according to both the National Hurricane Center and RMS HWind forecasting service. Our forecasts provided clients with estimates of Laura’s potential impacts in the critical days leading up to landfall,” said Pete Dailey, Vice President, Model Development.  In the two days following landfall, the system weakened considerably as it tracked further inland into Arkansas and parts of the Ohio Valley. Eventually, Laura became a “remnant low” and merged with a passing extra-tropical system, accelerating eastward off the Mid-Atlantic coast. Hurricane Laura was the twelfth named storm of the 2020 North Atlantic hurricane season, the first major hurricane of the season, and the third landfalling hurricane of the season. It was the Atlantic Basin's earliest forming twelfth storm on record, and a record seventh named storm to make landfall in the contiguous U.S. before the end of August. NOAA expects the Atlantic to remain highly active through the remaining three months of the official 2020 hurricane season.   END The technology and data used in providing the information contained in this press release are based on the scientific data, mathematical and empirical models, and encoded experience of scientists and specialists. As with any model of physical systems, particularly those with low frequencies of occurrence and potentially high severity outcomes, the actual losses from catastrophic events may differ from the results of simulation analyses. RMS SPECIFICALLY DISCLAIMS ANY AND ALL RESPONSIBILITIES, OBLIGATIONS AND LIABILITY WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THE CONTENTS OF THIS INFORMATION OR USE THEREOF, INCLUDING ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL RMS (OR ITS PARENT, SUBSIDIARY, OR OTHER AFFILIATED COMPANIES) BE LIABLE FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THE CONTENTS OF THIS INFORMATION OR USE THEREOF. …

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Preparing for future risk? Look to what’s happened in the past

About RMS

Risk Management Solutions, Inc. (RMS) helps insurers, financial markets, corporations, and public agencies evaluate and manage global risk from natural and man-made catastrophes, including hurricanes, earthquakes, floods, climate change, cyber, and pandemics.

RMS helped pioneer the catastrophe risk industry, and continues to lead in innovation by marrying data and advanced model science with leading-edge SaaS technology. Leaders across multiple industries can address the risks of tomorrow with RMS Risk Intelligence™ (RI), our open, unified cloud platform for global risk, enabling them to tap into RMS HD models, rich data layers, intuitive applications, and APIs.

Further supporting the industry's transition to modern risk management, RMS spearheaded the Risk Data Open Standard (RDOS), a new modern open standard data schema designed to be an extensible, flexible, and future-proof asset within modeling/analysis systems.

RMS is a trusted solutions partner enabling effective risk management for better business decision making across risk identification and selection, mitigation, underwriting, and portfolio management.

Visit RMS.com to learn more and follow us on LinkedIn and Twitter.

Media Contacts

Matthew Longbottom

PR Lead, EU and APAC
+44 20 7444 7706 prteam@rms.com

Devonne Cusi

PR Lead, Americas
+1 551 226 1604 prteam@rms.com
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