Caribbean catastrophes and the market
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Caribbean Catastrophes and the Market. Laurie A. Johnson May 17, 2005. Agenda. RMS CAT Modeling in the Caribbean 2004 CAT Response and Activities to Date Evaluating the Caribbean Hurricane Model Performance Next Steps. Overview of Caribbean Risk.

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Caribbean catastrophes and the market

Caribbean Catastrophes and the Market

Laurie A. Johnson

May 17, 2005


Agenda

Agenda

  • RMS CAT Modeling in the Caribbean

  • 2004 CAT Response and Activities to Date

  • Evaluating the Caribbean Hurricane Model Performance

  • Next Steps

Confidential


Overview of caribbean risk

Overview of Caribbean Risk

  • Considerable variations in risk by peril by island across the Caribbean:

    • Earthquake risk dominated by proximity to the Caribbean plate boundary

    • An average of 9.8 named storms form annually within the Atlantic and Caribbean basins with tracks trending WNW

  • Considerable variation in insurance practices across the region, including availability, policy types and deductibles

  • Significant amount of risk is transferred outside the region through reinsurance

Confidential


Rms caribbean models

RMS Caribbean Models

‡ Puerto Rico * Jamaica

+ Entire Caribbean basin

Confidential


Caribbean modeling and the 2004 storms

Frances

Jeanne

Ivan

Charley

Caribbean Modeling and the 2004 Storms

Confidential


Total economic damage in 2004 by country

Total Economic Damage in 2004 (by Country)

(Source: CDERA, 2004)

Confidential


Rms activities to date

RMS Activities To Date

  • CAT Response stochastic storm selections:

    • Post-landfall stochastic id’s issued based on best fit of track and central pressure

    • Updated stochastic id’s issued in Feb 2, with events providing better match of windspeeds at the exposure concentration:

      • For Grand Bahama (Freetown) and Cayman (Georgetown) extreme concentration of exposure

      • Modeled losses very sensitive to stochastic event windfield parameters

  • Bahamas and Caymans reconnaissance

  • Island-specific storm surge mapping

  • Client claims data collection initiated

Confidential


Bahamas two hurricanes within 3 weeks september 2004

Bahamas: Two Hurricanes Within 3 Weeks, September 2004

Confidential


Frances damage on grand bahama

Frances Damage on Grand Bahama

  • Frances crossed Grand Bahama Sept. 3

    • Stalled for nearly 2 days while weakening to cat 2 with 103 mph (165 km/hr) sustained winds

      • 100 mph (160 km/hr) gust recorded on Grand Bahama

    • Major north coast storm surge

  • High proportion island’s total insured exposure located in Freeport (pop 27,000) (west island)

  • Widespread low-level roof damage

  • Storm surge flooding came from the north and inundated airport, commercial and residential property in northFreeport and alongthe west end

Confidential


Jeanne damage on abaco

Jeanne Damage on Abaco

  • Jeanne’s eye crossed Abaco 3 weeks later on Sept. 25

    • Cat 2 with 103 mph (165 km/hr) sustained winds strengthening to Cat 3 as it passed north

    • Storm surge from northeast inundated capital Marsh Harbour (pop 4,000), Treasure Cay, Cherokee Bay

  • North coast of outer Cays subject to wave action and erosion causing isolated building collapses

  • Widespread low level roof damage, particularly shingles and clay tiles

Storm Surge Inundation

zone

Confidential


Bahamas insights

Bahamas Insights

  • Mandatory building code based on South Florida code

  • Concrete block construction on the main islands with wood frame on the outer cays

  • First major hurricane to directly hit Grand Bahama since 1960s/70s development of Freeport

    • Roof tiles cemented to roofing-felt meant that minor damage required replacement of all roof covering

  • On outer islands demand surge due to increased transportation and supply costs

  • Business interruption and contents policy uptake generally low reducing insured losses compared to economic damage

Confidential


Hurricane ivan s path across the caribbean

Impacted 5 islands in the southern/eastern Caribbean and 3 islands in the Northern Caribbean

Resulted in 48 lives lost and multi-billion damages

Southernmost cat 4/5 storm

Struck Grenada directly mid-day September 7

Hurricane Ivan’s Path Across the Caribbean

Confidential


Ivan s impact on the cayman islands

Ivan’s Impact on the Cayman Islands

  • Ivan tracked just 21 miles (34 km) southwest of Grand Cayman, borderline category 4  5 , strongest winds directly over the capital Georgetown (pop 24,000)

Confidential


Ivan s impact on the cayman islands1

1st wind

Surge heights

2nd wind

Ivan’s Impact on the Cayman Islands

  • Max sustained windspeed (airport) 149mph (240 km/hr)

  • Max official gust 171mph (275 km/hr); unofficial recording 190 mph (305 km/hr) on south coast

  • Eyewall replacement as RMax jumped from 11 to 23 miles (18 – 37 km)

  • Storm surge 8 – 10 feet (2.4 – 3 m)

    • 1st storm surge from northeast

    • 2nd from south as storm passed

  • 25% of island flooded

Track

Confidential


Grand cayman wind damage

Grand Cayman Wind Damage

  • Caymans adopted South Florida Building Code in 1992

    • Most high value buildings maintained structural integrity (but were subject to some level of roofing damage)

    • Building destruction restricted to older poorer quality buildings that were generally uninsured

  • Out of nearly 90% of properties damaged, only around 5% destroyed

Confidential


Grand cayman storm surge damage

Grand Cayman Storm Surge Damage

  • Commercial business district in Georgetown not flooded; the only high exposure area that was not flooded

  • Hotels concentrated along Seven Mile Beach sustainedsignificant flood damage from first surge

    • Only 25% hotel rooms restored by January 2005

  • 10,000 cars flooded

  • Southeast facing coastlines suffered damaging wave action from the 2nd storm surge from the south

    • Many buildings demolished at South Shore Road, Bodden Town, Breakers, East End

Confidential


Evaluating the caribbean model s performance

MDR (%)

Windspeed

Evaluating the Caribbean Model’s Performance

LOSS

Define Hurricane

Assess Wind speed

Calculate

Damage

  • Basin-wide stochastic tracks with realistic lifetime histories

  • Models clash and risk from by-passing storms

  • Time-stepping windfield calculations

  • Directional factors for surface roughness

  • High-resolution topography/land cover calculations

  • Regional code and construction variations

  • Detailed building inventory

  • Calibrated using claims and engineering studies

Confidential


Stochastic module robustness

Stochastic Module Robustness

  • RMS stochastic tracks represent the actual and potential correlation of risk between different regions (Clash)

CAT 1/2 storms that cross Barbados, Puerto Rico and north Bahamas

CAT 2/3 storms that cross the Bahamas

CAT 4/5 storms that cross Grenada and Jamaica

CAT 4/5 storms that cross Grenada, Jamaica and Caymans

Confidential


Hazard module evaluation 100 year return period windspeeds m sec

Hazard Module Evaluation: 100-Year Return Period Windspeeds (m/sec)

10 min winds at 10m above open water conditions; no roughness and topography factors applied.

Confidential


Reconstructing ivan s windfield in the caymans

Reconstructing Ivan’s Windfield in the Caymans

Confidential


Storm surge mapping inundation vs wave action

Ivan

mid S coast

(including waves)

Storm Surge Mapping: Inundation vs. Wave Action

Confidential


Storm surge modeling reconstructing ivan s surge on the caymans

Storm Surge Modeling: Reconstructing Ivan’s Surge on the Caymans

Confidential


Storm surge understanding risk by territory

Dominican Republic

Storm Surge – Understanding Risk by Territory

The Bahamas

Population: 301,790

Total Area: 13,940 sq km

Highest point: Mount Alvernia, on Cat Island, 63 m

Dominican Republic

Population: 8,950,034

Total Area: 48,730 sq km

Highest point: Pico Duarte 3,175 m

Nassau

Eleuthera

Andros

The Bahamas

Confidential


Next steps

Next Steps

  • Detailed post-mortem on 2004 Caribbean claims and losses:

    • Analysis by occupancy, building type, age, materials of construction, distance to coast, BI etc.

    • Differentiate between flood and wind claims at high resolution

    • Collect high-windspeed data useful for U.S. calibration as well

  • Initiating the 2006 Upgrade:

    • Residential and commercial vulnerability calibration

    • Addition of storm surge modeling

    • Caribbean Industry Exposure Data

Confidential


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