Multinational insurer Insurance Australia Group has licensed the RMS High Definition New Zealand Earthquake Model, strengthening its ability to perform granular risk quantification as perform strategic risk management decisions.
The RMS High Definition (HD) New Zealand Earthquake model is the world’s first earthquake model to benefit from the RMS HD model simulation-based framework which models tens of thousands of realizations of future earthquake scenario losses.
The decision to create the model was driven by the 2010-2011 Canterbury Earthquake Sequence.
The Lyttelton Earthquake in particular caused widespread destruction, with building collapses in the Christchurch central business district, widespread liquefaction, and 185 fatalities.
The CES resulted in an estimated USD$26.2 billion in overall insured losses, making this the second-largest insured loss from earthquake ever.
“Following the significant Canterbury and Kaikoura earthquakes, New Zealand now has one of the most technically advanced views of earthquake risk globally,” said Dr. Philip Conway, natural peril specialist at Insurance Australia Group.
“Multivariate models such as the RMS HD platform leverage this large body of science which supports IAG’s own internal modeling.”
“IAG has had a long relationship with RMS and we welcome its independent view of risk which provides an important contribution to reinsurance discussions as well as satisfying regulatory requirements.”
“The flexibility afforded by the new platform represents a step change in discrete consideration of earthquake mechanisms.”
Dr. Pierre Wiart, Managing Director for RMS Australia, added, “By including features like high-resolution liquefaction and probabilistic tsunami in our High Definition New Zealand Earthquake Model, sophisticated clients like IAG, who understand the nuance required to optimize their risk management strategies, are better equipped with a holistic tool to meet their business needs.”
“IAG’s selection of the RMS model allows them to better understand how earthquake risk in New Zealand could impact their diverse portfolio and demonstrates the value of this model for risk management in New Zealand.”