Impact Forecasting launches three new earthquake models at key science conference

Impact Forecasting, the catastrophe model development centre of excellence within Aon Benfield Analytics, is launching three new earthquake models at the European Geosciences Union conference in Vienna on 2 May 2010. The models will help insurers analyse the financial implications of earthquakes in Austria, Maghreb and the Western Balkans and develop reinsurance programs based on scientific assumptions.

Building upon Impact Forecasting’s extensive suite of global models, the new probabilistic seismic risk models assess how the likely frequency and magnitude of earthquake activity, coupled with the vulnerability of building structures, translate into potential losses based on an insurer’s portfolio.

The three models comprise:

1. Austria
Given Austria has experienced infrequent but damaging earthquakes, Impact Forecasting started working with the Austrian government and Austrian Insurance Association to assess the seismic risk. The team developed a new model using higher quality event data, than previously available, from the German Research Centre for Geosciences and the Central Institute for Meteorology & Geodynamics in Austria. An in depth Austrian building inventory from the Earthquake Damage Assessment Center enables understanding of the resilience of the structures and in turn estimates financial losses.

2. Maghreb
Two earthquake events in Algeria 1980 and 2003 each generated economic loss up to USD5 billion. The hazard risk, coupled with a growing insurance market in this region, has driven the need for enhanced seismic risk modeling. Impact Forecasting’s new model addresses this situation by helping re/insurers to gain a more accurate picture of the risk and make more informed decisions about underwriting in the Maghreb region. The model combines a synthetic seismic catalogue developed by Professor Andrzej Kijko from the Aon Benfield Natural Hazard Centre in South Africa, with advanced vulnerability methodology developed in the Risk-UE framework (a European project providing an advanced approach to earthquake risk scenarios) to estimate structural damages.


3. Western Balkans
The unique Western Balkans model means Aon Benfield is the only reinsurance intermediary with a model platform that can assess the earthquake risk in the seismically active zone stretching between Southern Alps and Greece. Impact Forecasting’s model was based on hazard and vulnerability data provided by local seismologists and civil engineers led by Slavica Radovanovic of the National Seismological Survey of Serbia and Lazo Pekevski from the University of Sts Cyril and Methodius in the Republic of Macedonia. Notably, its hazard component includes more than 45,000 stochastically simulated earthquakes that could potentially affect the territory. The region experienced the most devastating event in 1963 when a 6.1 magnitude earthquake hit the Macedonian capital Skopje and resulted in heavy damage and 1,070 fatalities. This new model completes Aon Benfield’s offering for the key catastrophe perils in Central and Eastern Europe.

Adam Podlaha, Head of Impact Forecasting’s International team at Aon Benfield, said: “Historic earthquake activity in Europe and northern Africa means that re/insurers require the most up to date science and modeling to help them estimate future losses. As the leading scientific event, we’re delighted to showcase our new models and demonstrate the results of our investment at the European Geosciences Union conference.”

Stephen Mildenhall, Chief Executive Officer of Aon Benfield Analytics, said: “The launch highlights how we’re redefining the way research, modeling expertise and insurance market knowledge can work in partnership to deliver practical results to re/insurers. With the increasing take up of insurance in Maghreb and the Western Balkans, this is testament of Aon Benfield’s commitment to developing models that are relevant, innovative and support new opportunities for our clients.”

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About Impact Forecasting
Impact Forecasting LLC is a catastrophe modeling center of excellence within Aon Benfield Analytics whose seismologists, meteorologists, hydrologists, engineers, mathematicians, GIS experts, finance, risk management and insurance professionals analyze the financial implications of natural and man-made catastrophes around the world. Impact Forecasting’s experts develop software tools and models that help clients understand underlying risks from hurricanes, tornadoes, earthquakes, floods, wildfires and terrorist attacks on property, casualty and crop insurers and reinsurers. Impact Forecasting is the only catastrophe modeling firm integrated into a reinsurance intermediary.

About Aon Benfield
As the industry leader in treaty, facultative and capital markets, Aon Benfield is redefining the role of the reinsurance intermediary and capital advisor. Through our unmatched talent and industry-leading proprietary tools and products, we help our clients to redefine themselves and their success. Aon Benfield offers unbiased capital advice and customized access to more reinsurance and capital markets than anyone else. As a trusted advocate, we provide local reach to the world’s markets, an unparalleled investment in innovative analytics, including catastrophe management, actuarial, and rating agency advisory, and the right professionals to advise clients in making the optimal capital choice for their business. With an international network of more than 4,000 professionals in 50 countries, our worldwide client base is able to access the broadest portfolio of integrated capital solutions and services. Learn more at aonbenfield.com.