Asian News - ASEAN: Flood models developed for Malaysia and Jakarta
Source: Asia Insurance Review | Dec 2015
Impact Forecasting, Aon Benfield’s catastrophe model development team, has developed catastrophe models for Malaysia and Jakarta floods to help (re)insurers better underwrite and manage their exposures in Asia.
The average frequency of a major flood in Malaysia is once every three years, though major insurance losses have been less frequent. However, due to increased exposure concentrations and evolving urban environments, these historical events are poor indicators of future loss potential. Impact Forecasting conducted field studies that indicated large accumulations from high value commercial and industrial properties in the flood plains. This data was used as the basis for the new model.
Jakarta, with its continual history of flooding, demonstrated the need for a flood model to fully understand the potential financial implications. Impact Forecasting worked with the Jakarta City Government to take into account land subsidence and recent mitigation works when developing the probabilistic tool.
Mr Adityam Krovvidi, Head of Impact Forecasting in Asia, said: “Ever since the Thai floods of 2011, the (re)insurance industry has been keen to grasp the implications of this peril throughout the Asia region.”
Mr Brad Weir, Head of Aon Benfield Analytics for Asia, added: “Malaysia’s costliest economic loss of US$580 million came from the December 2014 flood while an event in January 2013 left Jakarta with economic damages around $3.4 billion. Hence, we have seen how flood events have the ability to impact the industry from both a severity and frequency perspective.”
Both models have the ability to analyse portfolios with residential, commercial and industrial estate lines of business.