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Australia - October 15, 2018  RMS, the global risk modeling and analytics firm, today announces that Insurance Australia Group (IAG), a leading multinational insurer, has licensed the RMS High Definition New Zealand Earthquake Model.

The RMS High Definition (HD) New Zealand Earthquake model is the world’s first earthquake model to benefit from the RMS HD model simulation-based framework which models tens of thousands of realizations of future earthquake scenario losses. This strengthens IAG’s ability to perform granular risk quantification as well as assisting in strategic risk management decisions.

The RMS HD New Zealand Earthquake Model is the first to holistically consider losses due to ground shaking, liquefaction, landslide, tsunami and fire following earthquake as well as post-event loss amplification. The RMS HD New Zealand Earthquake Model incorporates important lessons learned from the 2010-2011 Canterbury Earthquake Sequence (CES). The Lyttelton Earthquake, in particular, caused widescale destruction, with building collapses in the Christchurch central business district, widespread liquefaction, and 185 fatalities. The CES resulted in an estimated $33-38 billion NZD ($22.8-26.2 billion USD) in overall insured losses, making this the second-largest insured loss from earthquake ever.

The RMS model was created in collaboration with local experts, scientific agencies, and insurers. Site-specific soil and groundwater data at thousands of locations in Christchurch served as the basis for a comprehensive re-design of the RMS liquefaction methodology. The simulated earthquake set uses the latest research from the national seismic hazard maps and includes complex event ruptures similar to the 2016 Kaikoura Earthquake. The modeled losses were validated against billions of dollars in CES claims data, to accurately capture the performance of New Zealand specific structures.

Dr. Philip Conway, natural peril specialist at Insurance Australia Group, commented: “Following the significant Canterbury and Kaikoura earthquakes, New Zealand now has one of the most technically advanced views of earthquake risk globally. Multivariate models such as the RMS HD platform leverage this large body of science which supports IAG’s own internal modeling. IAG has had a long relationship with RMS and we welcome its independent view of risk which provides an important contribution to reinsurance discussions as well as satisfying regulatory requirements. The flexibility afforded by the new platform represents a step change in discrete consideration of earthquake mechanisms.”

Dr. Pierre Wiart, managing director for RMS Australia, added: “By including features like high-resolution liquefaction and probabilistic tsunami in our High Definition New Zealand Earthquake Model, sophisticated clients like IAG, who understand the nuance required to optimize their risk management strategies, are better equipped with a holistic tool to meet their business needs. IAG’s selection of the RMS model allows them to better understand how earthquake risk in New Zealand could impact their diverse portfolio and demonstrates the value of this model for risk management in New Zealand.”

For more information on HD New Zealand Earthquake Model, click here

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Moody’s RMS Estimates US$5-7 Billion in Total U.S. Economic Losses from California Flooding

NEWARK, CA – January 25, 2023 – Moody’s RMS®, the leading global catastrophe risk modeling and solutions company, estimates total U.S. economic losses from the recent California flooding at US$5-7 billion. This estimate reflects inland flood impacts for the U.S. and includes damage to infrastructure. The insured losses are anticipated to be between US$0.5-1.5 billion, including losses to the National Flood Insurance Program (NFIP) and the private flood market. The overall economic loss estimate is based on an event reconstruction using the Moody’s RMS U.S. Inland Flood HD Model and reflects property damage, contents, and business interruption, across residential, commercial, industrial, automobile and infrastructure assets. A series of extratropical cyclones starting December 26, 2022, impacted the West Coast of the U.S, which resulted in heavy rainfall, overtopped rivers, flash floods, levee breaches, mudslides, fallen trees, debris flow, and heavy snow at high altitudes, together with some wind damage. The rainfall associated with these extratropical cyclones was exacerbated by a band of high atmospheric water vapor, also known as an ‘atmospheric river’. The rainfall intensity in California was so extreme that several locations in central California set new three-week rainfall records and certain locations received their annual average rainfall totals in less than one month. This led to widespread flash floods and river overtopping, for example, water depths in the San Lorenzo River upstream of Santa Cruz rose by more than 16 feet (4.87 meters) in less than eight hours. This was the highest recorded water depth for the San Lorenzo River since records began some 85 years ago. Infrastructure damage, which is accounted for within the economic loss estimates, was extensive. State highways and local roads bore the brunt of the damage due to a combination of flooding and mudslides. Trees previously stressed by dry conditions were uprooted due to high water velocities, saturated soils and heavy winds, which also caused damage to power networks, as well as to cars and properties. The continuous rainfall and compound impacts from riverine-groundwater-coastal interactions also resulted in prolonged flooding for certain urban coastal areas of California. Furthermore, the continuous drought preceding these extratropical cyclones events adds an extra dimension of complexity for reservoir operators and residents. It is important to highlight that 2022 was the second driest year in over 128 years for certain areas (e.g., Santa Cruz) and was categorized under ‘extreme drought’ according to the National Integrated Drought Information System. Although there has been a significant increase in the water levels of major reservoirs and snowpack, it remains unlikely that California is out of the drought, especially when it comes to aquifer replenishment, given the last three years of extreme drought and excessive groundwater withdrawals.  These storms generated high-intensity rainfall resulting in a high proportion of rainfall running off into the ocean, whereas aquifers generally recharge gradually from less intense rainfall systems and snow melt. “To put this event in historical perspective with the 1862 ARkStorm, although some impacted areas are similar, the ARkStorm produced much more severe precipitation, for example, 35 inches (88.9 centimeters) of precipitation in San Francisco compared to ~ 15 inches (38 centimeters) from this event. Another important mitigating factor for this event is the presence of flood defenses, which were mostly absent in 1862,” said Mohsen Rahnama, Chief Risk Modeling Officer, Moody’s RMS. A relatively small proportion of the economic damage is expected to be covered by insurance. The number of households in California with flood insurance stands at less than two percent – a figure that has been steadily declining. As of August 2022, there were only 193,281 residential National Flood Insurance Program (NFIP) policies in place, representing a decline of around five percent as compared to 2021. These low flood insurance take-up rates are attributed to the fact that only homeowners holding a government-backed loan who live in Special Flood Hazard Areas (SFHAs) are mandated to obtain a flood insurance policy. But these SFHA boundary ‘flood zones’ do not always reflect the current flood risk, are backward-looking, and are infrequently revised. 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January 18, 2023
Intelligent Risk Platform Adoption Across Insurance and Finance Markets Passes 100 Clients Landmark

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Ardonagh Specialty Reinforces Its U.S. Flood and Wildfire Capabilities in New Agreement With RMS

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About Moody's RMS

Moody’s RMS shapes the world’s view of risk for insurers, reinsurers, financial services organizations, and the public sector, with Moody’s RMS models underlying the nearly $2 trillion USD Property & Casualty industry. Moody’s RMS empowers organizations to evaluate and manage global risk from natural and man-made catastrophes, including hurricanes, earthquakes, floods, climate change, cyber, and pandemics.

Moody’s RMS helped pioneer the catastrophe risk industry, and continues to lead in innovation, unmatched science, technology, and 300+ catastrophe risk models. Organizations can address the risks of tomorrow with the Intelligent Risk Platform™, the only open cloud with collaborative applications and unified analytics that can power risk management excellence.

Further supporting the industry’s transition to modern risk management, in 2020, Moody’s RMS spearheaded the Risk Data Open Standard (RDOS), a modern, open-standard data schema designed to be an extensible and flexible asset within modeling/analysis systems.

In 2021, Moody’s Corporation acquired Risk Management Solutions, Inc. and as part of Moody’s Analytics, Moody’s RMS serves the P&C insurance industry as the leading provider of expertise, science, and technology in integrated risk. A trusted solutions partner, Moody’s RMS enables 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.

© 2023 Risk Management Solutions, Inc. and/or its affiliates and licensors (“Moody’s RMS”). All rights reserved. All names, logos, and icons identifying Moody’s RMS and/or its products and services are trademarks of Risk Management Solutions, Inc. and/or its licensors or affiliates. Third-party trademarks referenced herein are the property of their respective owners.

RMS is a subsidiary of Moody’s Corporation (NYSE: MCO) and operates as part of the Moody’s Analytics business segment. Moody’s Analytics is operationally and legally separate from the Moody’s Investors Service credit rating agency.

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Matthew Longbottom

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

Haggie Partners

PR Lead, Americas
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