Oakland based EQECAT, a subsidiary of insurance and financial consulting firm EQE International, has been selected by the Central Reinsurance Corporation (CRC) of Taiwan “to assist in a feasibility study for a voluntary residential earthquake pool.”
The move is in response to the heavy loss of life and severe property damages suffered in last year’s earthquake and aftershocks on the island. The government is seeking ways to cover future risks.
“EQECAT will use its advanced catastrophe models combined with expert consulting support to develop adequate rates or tariffs, establish appropriate underwriting criteria and assess the necessary reinsurance or securitization to ensure the solvency of the program,” said the announcement.
Initially the study will examine four areas: 1) How to make coverage widely available; 2) What underwriting criteria should be used – all inclusive or with minimum standards; 3) How to make the program actuarially sound so that the risks can be accurately estimated, and 4) How to make the program economically viable through reinsurance and/or securitization.
EQECAT will be involved in developing loss estimates, and analyzing the the probabilities of occurrence, developing annualized rates based on variables such as soil composition and construction standards, the development of underwriting standards, and the management of the financial objectives.
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