Impact Forecasting, Aon Benfield's catastrophe model development team, launched a catastrophe model to estimate the financial impact of earthquakes in the Arabian Peninsula. Aon Benfield is the global reinsurance intermediary and capital advisor of Aon plc(NYSE:AON).
The demand for catastrophe modelling in the countries of Gulf Cooperation Council (GCC) is increasing as a result of the region's rapid economic growth. The new probabilistic earthquake model for the Arabian Peninsula addresses this market demand and can be used by insurers and reinsurers to gain a more accurate view of the seismic hazard for risk pricing and reinsurance purchasing.
The model covers Saudi Arabia, Yemen, Oman, the UAE, Qatar, Bahrain and Kuwait. Key features include:
- up-to-date understanding of the seismic risk in the region with the model incorporating state-of-the art research on the
- regional seismic risk published in leading academic forums
- 500,000 stochastic events capturing the full range of potentially damaging events
- understanding of the insured building stock of the region, drilling down to 24 different structural types, three building age and height categories, and detailed residential, commercial and industrial occupancies
- ability to model buildings, contents and business interruption
- incorporation of model uncertainty with regards to hazard, location and vulnerability in order to quantify the intrinsic variability behind the model.
Cristina Arango, seismologist and catastrophe model developer at Impact Forecasting, commented: “Our Arabian Peninsula model is built upon the latest scientific data gathered during recent earthquakes as well as research on regional seismic hazard. The model allows insurers and reinsurers to understand how their portfolio will stand up in events of varying severity, as they look to expand their business in the region. Earthquake is considered to be the number one peril in the region, however, countries such as Saudi Arabia have also experienced flood so this peril is also being investigated by the Impact Forecasting team.”
Ahmed Rajab, CEO of Aon Benfield in the Middle East, added: “The new model for the Arabian Peninsula will help insurers and reinsurers to quantify their exposure, making sure that they are adequately protected against this risk and preserving the capital that they have been entrusted with by their shareholders. Crucially, the new insight into the hazard will develop knowledge, open new opportunities and allow better designed insurance products for households, commercial and industrial buyers as well as for governments and reinsurer buyers. This is a clear statement of Aon's contribution and long-term commitment to the region.”