EQECAT Selected to Assist Taiwan Insurance Industry Earthquake Insurance Pool Study

Oakland, CA

October, 1999

EQECAT, Inc. was selected by government-owned Central Reinsurance Corporation (CRC) of Taiwan to assist in a feasibility study for a voluntary residential earthquake insurance pool. The action was in response to the September 21, 1999 Chi Chi Earthquake, in which 107,000 households were destroyed because they were in collapsed or partially collapsed buildings. EQECAT will use its advanced catastrophe models combined with expert consulting support to develop adequate rates or tariffs, establish appropriate underwriting criteria and assess the necessary reinsurance or securitization to ensure the solvency of the program.

The objectives of the insurance pool include:

• Availability: Earthquake insurance should be widely available to consumers.


• Underwriting: The program can either require risks to meet minimum underwriting standards or all risks can be accepted with rates that properly reflect the risk exposures.


• Actuarially Sound: Rates and exposures will be based on underwriting standards, using modern risk modeling techniques to estimate the loss potential.


• Economically Viable: Through the use of reinsurance and/or risk securitization techniques, ensure that the program is economically viable and will respond in the event of a major earthquake.

The achievement of the above objectives calls for a rating and underwriting system based on risk quantification. EQECAT will assist CRC in performing the following tasks:

• Development of probabilistic loss exceedance estimates.


• Development of rates based on annualized hazard occurrence, soil conditions and structure vulnerability functions.


• Establishment of Policy conditions (limits, deductibles and coverage provisions) and underwriting standards that support the overall program objectives.


• Active management of accumulations and total exposures to predetermined limits to achieve financial objectives.

EQECAT, Inc. provides state-of-the-art products and services to the global property and casualty insurance, reinsurance and financial markets. EQECAT is the technical leader and innovator of catastrophe risk management models that quantify exposure to a range of natural and man-made catastrophic risks.

Through its modeling software platform, WORLDCATenterprise™, EQECAT enables clients to quantify and manage the potential financial impact of natural hazards. WORLDCATenterprise includes 181 natural hazard software models for 95 countries spanning six continents. These models are based upon innovative applications of the latest science, engineering expertise, claims and exposure data and advanced mathematics.

EQECAT, a subsidiary of ABSG Consulting Inc., was founded in 1994 and is headquartered in Oakland, California.

For more information, contact:

pr@eqecat.com

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