Catastrophe risk modelling and analytics firm RMS has said that the Asia Pacific region can expect to experience even more destructive events at the 1% level of annual probability, which could have a major impact on both governments and re/insurers.
The Asia Pacific region has already experienced several disasters over 2018, such as the Palu earthquake in Indonesia, or Typhoon Jebi in Japan, and RMS has now developed a list of ten ‘one in 100 year’ catastrophe events that highlight the ongoing vulnerability of many areas.
The list attempts to identify more unusual catastrophe events, which have the potential to be particularly devastating precisely because they are not being prepared for by governments or re/insurers.
For example, RMS observed that in New Zealand, earthquakes have been migrating towards the city of Wellington, and could cause massive liquefaction in the roads and harbour reclaimed from the sea if a direct hit occurred, as well as some localised changes in coastal land levels.
Similarly, a magnitude 7.8 earthquake between the cities of Baoding and Shijiazhuang in the Hebei Province of China could lead to widespread destruction and tens of thousands of casualties, while a magnitude 6.9 earthquake occurring on the Uemachi Fault to the southeast of the city of Osaka in Japan would cause comparable damage.
RMS also modelled the occurrence of a shallow magnitude 6.7 earthquake on the Shanchiao Fault next to the city of Taipei in Taiwan, which it said would cause huge destruction as well as coastal flooding from tectonic subsidence.
Flooding could also cause devastating losses in Seoul, South Korea if a succession of stalled depressions caused widespread river flooding, or in the greater Mumbai area of India if a Category 4 Cyclone made landfall close to the city, which would also cause extensive wind damage.
Destructive wind damage could also be experienced in the Philippines if a Category 4 typhoon hit Manila, and in Australia if a Category 3 cyclone hit Perth.
In Thailand, RMS found that an unusual Category 3 typhoon has the potential to completely submerge Bangkok with a combination of shallow-water storm surge and intense rainfall, along with long-term land subsidence from water extraction.
Finally, RMS modelled a scenario in which a massive volcanic eruption covers Indonesia’s Lombok and Bali with a 20 centimetre plus layer of ash, causing roofs to collapse, killing agricultural crops, and closing the tourist industry.
“Asia Pacific has always been important to RMS,” said Robert Muir-Wood, Chief Research Officer at RMS. “We picked this list of events to reflect credible catastrophes, not so extreme as to be beyond the concerns of the insurance sector. These are the kinds of events for which nations should also be managing their disaster risk reduction strategies.”
“As we develop large stochastic simulations in catastrophe loss models, we discover a very large number of potential extreme events,” Muir-Wood continued. “This list should be considered illustrative and by no means exclusive. From major earthquakes in New Zealand, Sumatra or Japan, to flooding in India and Korea, or volcanic eruption shrouding Bali in ash; any one of these catastrophic events would have major implications for the region, country, people and insurance industry.”