Boston — AIR Worldwide Corp. (AIR) has updated its probabilistic catastrophe risk models for Japan. The enhanced models are designed to improve the management of earthquake and typhoon risk in Japan. The AIR Earthquake Model for Japan incorporates independent research by AIR seismologists in concert with the results of recent studies conducted by Japan’s Headquarters for Earthquake Research and Promotion (HERP).
“AIR’s models have been updated with the latest scientific data and research on earthquake and typhoon risk in Japan,” says Jayanta Guin, SVP of research and modeling at AIR Worldwide. “In our earthquake model, AIR supplemented the HERP recommendations on earthquake risk with research conducted by AIR’s own independent team of seismologists. For example, along the Nankai trough and in the Kanto region, where a significant proportion of Japan’s exposure is at risk, AIR incorporates a comprehensive treatment of uncertainty in the estimation of time-dependent probabilities.”
The AIR model includes three views of seismic risk in Japan: an AIR time-dependent view, which employs a logic tree approach to allow other credible scientific views to supplement the HERP view, as well as time-dependent and time-independent views based solely on information provided by HERP. A time-dependent approach takes into account prior historical rupture information when assessing the likelihood of future ruptures, whereas a time-independent approach is independent of the time that has passed since the last occurrence of an earthquake on that fault. By including three scientifically credible views of seismic risk in Japan, the AIR model provides the most comprehensive view of Japanese seismic risk by incorporating predominant sources of uncertainty while enabling companies to test the sensitivity of different scientific assumptions, according to the company.
Other updates to the earthquake model include the development of damage functions for classes specifically designed to align with fire insurance underwriting practices in Japan, as well as additional coverages and lines of business such as business interruption, marine cargo, construction all risks/erection all risks, auto and personal accident. Detailed damage data from the 1995 Kobe Earthquake and the 2004 Niigata Earthquake were used to validate the new damage functions, as was insured loss data from more recent, less damaging events. Additionally, recently published Japan-specific attenuation equations have been adopted, and new high-resolution soil maps have been incorporated into the model.
The AIR Typhoon Model for Japan has also been updated with damage functions to support additional construction types and occupancy classes as well as new business interruption damage functions for an increased number of construction and occupancy types. The AIR Typhoon Model for Japan captures storm duration to realistically simulate wind damage over time. The model was validated against post-disaster engineering survey data and loss data provided by Japanese insurers.
Source: AIR Worldwide Corp.
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