RMS, the the Newark, Calif.-based catastrophe risk management firm, has received approval from the Colombian insurance regulator, Superintendencia Financiera de Colombia (SFC), to offer catastrophe modeling services to national and global insurance companies writing earthquake risk in Colombia.
Insurers writing earthquake risk in Colombia may only use SFC-approved catastrophe models to determine their probable maximum loss, average annual loss and to manage their capital reserves, RMS explained.
(RMS’ approval comes on the heels of Colombian regulatory approval for AIR Worldwide’s earthquake model).
“Colombia has one of the highest seismic hazards in South America, with significant exposure concentrations on active faults, including three of its most populous cities – Bogotá, Medellín, and Cali. And yet, despite the country’s steadily increasing economic growth, insurance penetration is still low,” said Victor Roldán, regional head for Latin America at RMS.
“Now, insurers can access the latest scientific understanding of the regional earthquake hazard and modeling capabilities from RMS to improve their risk selection and pricing,” Roldán said. “This will enable the re/insurers to develop coverages to help strengthen the country’s resilience to earthquake risk while also improving their portfolios and capital reserves to grow their business.”
The RMS Colombia Earthquake Model is one of eight models in the company’s suite of South America Earthquake Models. The model suite also includes Argentina, Bolivia, Brazil, Chile, Peru, Ecuador, and Venezuela.
To develop the models, RMS said it collaborated with South American seismology and engineering experts, including Colombia-based Universidad de Los Andes and the Instituto Colombiano de Geología y Minería.
“Based on a single region-wide catalog of crustal and subduction zone seismic sources and including more than 134,000 stochastic events across South America, the models also capture the influence of local soil conditions on earthquake shaking and incorporate local design and construction practices into assessments of building vulnerability,” said RMS.
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