Risk modelling and analytics firm RMS has developed a new high definition risk model for Japanese Earthquakes and Tsunamis in collaboration with local experts, scientific agencies, and re/insurers.
RMS’s Japan Earthquake and Tsunami High Definition (HD) model leverages detailed damage statistics and claims data from recent events, and considers research from the 2017 Japan Seismic Hazard Maps and lessons from the 2011 and 2016 Tohoku and Kumamoto earthquakes.
It also allows for better integration of models into re/insurance pricing and underwriting to promote more precise selection and pricing of risks.
The new HD model can assess Japan-specific policies and provides flexible and transparent loss calculations that offer insight into contribution metrics and key drivers of risk.
It assesses terms of losses for buildings, contents, business interruption, industrial facilities, and builders risk due to factors like ground shaking, tsunami inundation, fire following earthquake, liquefaction, and landslides.
RMS has also incorporated modelling for post-event loss amplification, considered current local building codes and construction practices, and used Japan-specific data to more accurately assess liquefaction risks at a local level.
Mohsen Rahnama, Chief Risk Modeling Officer at RMS, said: “Our new model is more transparent and allows for a more realistic representation of claims processes and payout. The Japan Earthquake and Tsunami HD Model provides a comprehensive view of earthquake risk for Japan, with the flexibility to meet the requirements of the evolving catastrophe risk management market.
“Japan is one of the most seismically active areas in the world. Our new model offers a greater understanding of these risks, as well as improved risk differentiation, enabling better underwriting and risk management decision making.”
Japan’s magnitude 9.0 Tohoku earthquake in 2011 exceeded the loss expectations of the Japan Seismic Hazard Maps published at the time and triggered a series of devastating tsunami waves.
Since then, the Japanese Headquarters for Earthquake Research Promotion (HERP) has supported risk modellers by examining the impact of sub-perils on financial risk and studying key subduction zones surrounding Japan that drive seismic hazard and risk.