Wednesday, May 13, 2020

Re/Insurance: "Pandemic could inflate hurricane industry losses by up to 20%..."

Of course the jackpot for risk modelers is to have a volcano go off triggering an earthquake leading to the collapse of an underwater seamount, causing a tsunami as a hurricane roars through a pandemic zone.

Most likely location for this unlikely occasion: the Lesser Antilles.

Unlike Fukushima, no nukes though.
So it would be hard to recreate the typhoon approaching the nuke plant devastated by tsunami caused by the earthquake* but, but volcano and pandemic!

I believe for the remainder of 2020 our motto should be "Hey, it could be worse!""

From Artemis:
Catastrophe risk modelling specialist RMS has said that a hurricane striking the United States while pandemic restrictions remain in place could end up inflating the ultimate insurance and reinsurance industry loss by up to 20%.

RMS looks at post-loss amplification as part of its normal catastrophe risk modelling process and in the case of the Covid-19 coronavirus pandemic warns that this could be significantly elevated.
It’s been widely discussed that a major catastrophe loss event hitting during the pandemic lockdown would likely significantly exacerbate the claims process and could inflate claims just due to the challenge of assessing and servicing insurance claims in a severely restricted environment.

But RMS has modelled out the potential impacts to insurance and reinsurance market losses much more fully, exploring how the Covid-19 pandemic could impact elements of post-loss amplification such as demand surge, claims inflation, coverage expansion, deterioration vulnerability (how damage can be exacerbated if left unattended) and secondary consequences of major disaster such as long-term evacuation orders and how that could affect the costs.

RMS analysed exceedance probabilities for hurricane events that coincided with a pandemic and associated restrictions, finding that, “The results show an escalation in impacts across all parts of the exceedance probability curve.”

“Overall, the RMS analysis suggested that, given a lockdown situation, a major hurricane making landfall in 2020 could result in costs 20 percent greater than in a typical hurricane season,” an article in RMS’ blog states.

Adding that, “Replicating this analysis for other geographies and other perils would likely yield similar results.”
It’s a moving target though, as the modelling outcome changes depending on the political approach to lockdown and pandemic restrictions it seems....

We'll have more on the risks in the Lesser Antilles later in this hurricane season but if you just can't wait here's the U.S. Geological Survey:
Earthquake, Landslide, and Tsunami Hazards in the Northeastern Caribbean—Insights from a 2013 E/V Nautilus Expedition

Relatedly, Dominica obviously has the most volcanoes but Montserrat and Grenada with its Kick 'Em Jenny submarine volcano are also possibilities:
*People sometimes forget that the first of the 2011 season's typhoons was headed at Fukushima in May after the March 11 earthquake and tsunami.
From the Oman Daily Observer via the Internet Archive:
Sun, 29 May 2011
Strong typhoon to hit coast - TOKYO — Japan has revealed radiation up to several hundred times normal levels has been detected on the seabed off the crippled Fukushima nuclear plant, a report said yesterday. The Science Ministry announced late on Friday highly radioactive materials were detected in a 300-km north-south stretch from Kesennuma in Miyagi Prefecture to Choshi in Chiba Prefecture, the Kyodo news agency reported.

The ministry warned that the contamination could affect the safety of seafood, the report said, without giving figures for the radiation levels detected. The science ministry said it detected iodine and caesium on the seabed at 12 locations 15 to 50 km from the coastline between May 9 and 14. The news follows an announcement by environmental activist group Greenpeace that marine life it had tested in waters more than 20 km off the Fukushima nuclear plant showed radiation above legal limits.

Meanwhile, Japan’s southern island of Okinawa was bracing for a powerful typhoon expected to slam into the region, the Japanese Meteorological Agency said. A storm warning was issued as Typhoon Songda, the first major storm to threaten the region this year, was forecast to hit Okinawa later in the night, 1,600 km south-west of Tokyo. The typhoon is expected to pass over the south-western part of the country today.
A couple months later another typhoon dumped 16 inches of rain on the scene as a magnitude 5.3 earthquake was going off.