AIR Worldwide Corp. (AIR) announced its Mediterranean Region Earthquake Model is now available in its detailed risk modeling software system, CLASIC/2.
The update enables European primary insurers, brokers, and reinsurers to more accurately estimate earthquake losses by incorporating risk specific information, such as building characteristics and policy conditions. AIR’s Mediterranean Region Earthquake Model, first released in 2001, includes Italy, Portugal, Greece, Turkey, and Israel.
“This region is capable of producing very large earthquakes,” said Dr. Jayanta Guin, AIR vice president of research and modeling. “The most recent example is the magnitude 7.4 earthquake that struck Izmit, Turkey in 1999, killing more than 15,000 and destroying more than 75,000 housing units. Earthquakes of much lower magnitude can also produce significant losses due to the nature of the building stock, particularly across southern Europe.” In 1997, a series of four earthquakes in Italy ranging in magnitude from 5.3 to 6.4 left 40,000 people homeless and caused $4.5 billion in total damage.
Building quality varies widely in this region and the design and construction of individual buildings reportedly play a very important role in how structures will react to the ground motion caused by an earthquake.
To account for the variations in building stock and construction codes in the region, AIR has developed detailed damage functions specific to construction types in each modeled country.
CLASIC/2 enables insurers to model earthquake losses at the location level by incorporating highly detailed information on each risk, such as age, occupancy, structural details, and other risk-specific information. Risk-specific modeling is available to insurers with detailed information about individual properties.
If risk-specific data is not available, post code and CRESTA-level data import is also supported. Furthermore, aggregate data can be automatically distributed to higher resolution in CLASIC/2 for more detailed analysis.
Since its initial release, reinsurers have reportedly been using AIR’s Mediterranean Region Earthquake Model in AIR’s CATRADER system to assess their portfolio risk.
Insurers, reinsurers and intermediaries can now run location-level analyses within CLASIC/2 that incorporate detailed policy conditions. Model output can be used for a variety of risk management decision-making, including pricing, portfolio optimization, and reinsurance buying.
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