Asia Typhoon Model
EQECAT released the first basin-wide Asian typhoon model to provide a comprehensive and correlated view of typhoon risk across the entire western Pacific basin. Residing in EQECAT's global risk modeling platform RQE™ (Risk Quantification & Engineering), the model provides results for:
Results are available for wind only and combined wind, storm surge and rainfall-induced flooding, for all countries within the model.
Typhoon Risk in Asia
Asia typhoon damage to furniture showroom,
heavy damage sustained to contents
The western Pacific basin is known for producing some of the world's most intense tropical cyclones. The combination of regional economic growth and underlying risk has created an increased risk profile that has profound implications for the global insurance and reinsurance industry. Recent notable events include Asian Typhoons Morakot (2009), Hagupit (2008), Krosa (2007), and Saomai (2006), each of which resulted in over $1 billion in damage.
Features of EQECAT's Asia Typhoon Model
The Asia Typhoon Model is a single, basin-wide model for risk correlation in Asia. Model features include:
Broad Geographic Coverage
EQECAT's Typhoon model for Asia provides consistent risk assessment throughout the region and appropriately captures the relevant spatial correlations. Individual typhoon events in the region have the potential to affect multiple countries. Geographic coverage of the Asia Typhoon model includes:
The global property insurance market continues to evolve. EQECAT will expand its geographic coverage to include additional countries exposed to Asian typhoon risk with the potential for significant insured losses.
Robust Hazard Definition
The hazard definition is derived from four data sources available for the period from 1945 to 2009, including the Joint Typhoon Warning Center, the Regional Specialized Meteorological Center in Japan, the Hong Kong Observatory, and the Shanghai Typhoon Institute.
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Statistics for key storm parameters are developed directly from location-dependent distributions for wind speed and other parameters such as radius to maximum winds, translational velocity, and azimuth.
- Tropical cyclone frequencies are based on the long-term storm climatology and take into account temporal and spatial clustering of events.
Comprehensive Agents of Damage
Primary agents of damage from tropical cyclones worldwide are the direct action of:
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Extreme winds upon structures
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Damage due to storm surge
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Rainfall-induced flooding
The model allows analysis of wind only and combined wind, storm surge, and rainfall-induced flooding, providing clients with greater insight into the underlying model assumptions. Storm characteristics, local geography, topography and settlement patterns in Asia elevate the importance of storm surge and rainfall-induced flooding. The hazard model includes typhoons, tropical storms, and tropical depressions to appropriately capture the damage impacts from rainfall-induced flooding.
EQECAT’s Asia Typhoon Model has detailed hazard and vulnerability modeling for wind, with loss results calibrated to the total losses from all three perils via elevation and geographically-based algorithms to appropriately reflect the storm surge and rainfall-induced flood losses spatially.
Local, Region-Specific Vulnerability Functions
Separate damage functions are created for three main types of coverages—structure, contents, and time element. In addition to considering the variation in local building practices, design, and building codes, the model considers the age and height of the building to properly model damages caused by wind, storm surge, and rainfall-induced flooding. The model also includes separate damage functions for auto coverage.
EQECAT leveraged the expertise of ABS Consulting structural engineers throughout the region to gain valuable insights on:
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Regional variations in construction practices and quality;
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Historical evolution of building codes and their enforcement, and;
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Other regionally-dependent factors in damageability.
EQECAT uses a blended approach of claims data, engineering, and expert opinion to create vulnerability curves that relate wind speeds to damageability.
Lines of Business
Lines of business include residential, commercial, industrial, agricultural and automobile for all the countries in the model, as well as Kyosai in Japan.
Variable Import Resolution
Detailed risk differentiation is provided in the model, enabling the importation and evaluation of risks geo-coded to latitude/longitude coordinate pairs, selected levels of postal codes and other commonly used geo-political entities, large city/urban areas, and CRESTA zones. For aggregate levels of exposure data, the model performs appropriate disaggregation for analysis and risk estimation.
Detailed Financial Modeling
Asian financial loss model is consistent with the financial modeling in other regions of the world. It supports a wide variety of policy terms and conditions, aligned with the local underwriting practices. This model supports facultative and high-value insurance / reinsurance underwriting. In the last decade, Asian countries have had significant development in terms of infrastructure, commercial and industrial development, with large investments in production plants and real estate. This underlines the importance of having a detailed model that accurately measures risk for high-value insurance and facultative policies.
Flexible Reporting
Asia Typhoon Model's hazard definition
includes historical events since 1945
impacting Asia's western Pacific basin
EQECAT’s Asia Typhoon model is suitable for
risk differentiation and pricing,
risk aggregation, and
portfolio risk management, with suitable
risk metrics and reports.
Model Validation with Expert Review
and Historical Data
The model for typhoons in Asia is comprehensive and leverages historical data to create a robust probabilistic event set providing uniform extreme risk metrics for all locations in the basin. The event set includes approximately 150,000 stochastic and approximately 1,800 historical events. The model has been developed using detailed historical data, including storm footprint representations for each storm. The hazard and vulnerability models have been reviewed by the scientific community to ensure the model incorporates the best available science and provides plausible model outputs.
Model Output
Risk metrics include OEP and AEP loss exceedance curves, AAL, TVAR, and simulations of historic events.
In addition, RQE’s year loss table (YLT) uniquely features three dimensional output: simulation year, events, and sample outcomes. Instead of reporting mean losses with standard deviations, each loss in the YLT represents one possible outcome for the associated event. This allows users to retain the full distribution of uncertainty when using model
output in dynamic financial analysis and capital modeling. Conventional event loss results and other risk metrics can be derived from the YLT with arithmetic or simple database queries. YLT and event loss results are supported at the portfolio level. Other risk metrics are supported at multiple levels of refinement: from total aggregate portfolio results, to detailed output by policy and site.
Request Asia Typhoon Model information from EQECAT.
