State-backed reinsurer China Re Group has launched a new earthquake catastrophe model with independent intellectual property rights to improve the accuracy of earthquake loss assessment in China’s re/insurance industry.
The new model was developed in collaboration with state-level scientific research institutions and factors in China’s unique geological structure, seismic activity characteristics, and building structure information to simulate a total of more than 3 billion random incidents in China and its surrounding areas over a period of 5 million years.
China Re believes the new model will provide key technical support for seismic catastrophe re/insurance pricing, risk identification, business portfolio optimisation, and risk accumulation management.
Speaking at the company’s 2018 Catastrophe Risk and Insurance Summit, China Re’s Chairman Yuan Linjiang explained that catastrophe re/insurance is a critical tool in protecting the national economy and people’s livelihoods, and that this latest model will “emphasise reinsurance as the core business of China Re.”
China Re believes the launch of the earthquake catastrophe model will inject new impetus into China’s insurance industry and encourage companies to further participate in earthquake disaster prevention and reduction.
Panellists at the event, which commemorated the victims of China’s 2008 Wenchuan earthquake, also discussed the possibility of diverting seismic risk away from re/insurers by transferring earthquake risk to the capital markets.
