AIR releases pandemic flu model and updates Japanese earthquake offering

The catastrophe risk modelling firm's new Global Pandemic Flu Model captures potential excess morbidity, mortality and insurance losses resulting from pandemic influenza. It includes more than 18,000 simulated events ranging in severity from mild to severe. It allows the modelling of risk from outbreaks starting and then spreading anywhere in the world and lasting from months to years. "Pandemics are low-frequency events with a potentially high level of severity and impact to insurers and reinsurers in the areas of life, health, and disability," said Nita Madhav, Senior Scientist at AIR. "Other lines such as worker's compensation, personal accident and business interruption may also incur significant losses, depending on policy specifics. This is the first AIR model to estimate losses due to infectious disease risk, and we're confident that the pandemic flu model will provide clients with a more robust understanding of the risk and advanced capabilities for managing it."hideAIR developed the model to capture disease transmission dynamics along with short- and long-range population movements. The model also explicitly accounts for mitigation efforts during any pandemic, such as the development and administration of vaccines, antivirals and travel restrictions. Infection severity, medical outcomes and insurance losses are estimated by gender and age. In developing the model, AIR created a unique exposure database that includes worldwide population data, age distributions, sex ratios and preexisting health conditions, all of which can mitigate or exacerbate a pandemic, explained the modelling firm. "The 1918 Spanish flu pandemic was one of the largest public health catastrophes of the past century, causing life insurance losses of nearly $100m, which is comparable to nearly $20bn today," continued Mr Madhav. "Insurers striving to manage pandemic risk need to know that a modern-day pandemic on par with the Spanish flu of 1918 could occur. Of course, post-1918 medical advancements and the graying of the global population would affect the severity of a pandemic today. Probabilistic modelling accounts for medical advancements and other societal changes and enables a more complete understanding and management of pandemic risk than relying on the historical record alone." Meanwhile AIR has it updated its Earthquake Model for Japan to include insights gained from the Tohoku earthquake of 2011. AIR claims the model represents the 'first and currently only comprehensive view of seismic risk in Japan post-Tohoku'. "AIR seismologists undertook an intensive reexamination of information from various sources, including physical and statistical models that calculate how the Tohoku rupture affected stress accumulation on nearby faults," said Dr Jayanta Guin, Senior Vice President of Research and Modeling at AIR. "The Tohoku event had important implications for our understanding of seismic risk in Japan and has also highlighted the importance of explicitly modelling earthquake-associated perils like tsunami and liquefaction." Using extensive claims data following the Tohoku earthquake, AIR has taken a new look at damage functions across all lines of insurance, including marine hull and cargo, complex industrial facilities and personal accident. "The Tohoku earthquake triggered new research in the seismological community, which AIR has closely followed," concluded Dr Guin. "This update incorporates those new findings into a robust, scientifically sound and extensively validated model, providing clients with a forward-looking view of earthquake risk assessment in Japan."

AIR releases pandemic flu model and updates Japanese earthquake offering

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Want to read this article?

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