Aon launches updated Thai flood model to help protect growing economy

Aon has launched an updated Thailand flood catastrophe model that uses the latest scientific advances in hydrological, hydraulic and statistical modelling to help insurers more accurately assess and manage this still rising risk. The Thai floods of 2011 caused more than $15bn of insured losses and served as a serious wake-up call to Asian and international insurers and reinsurers, which realised they had seriously underestimated this exposure. Risk and insurance managers with international companies, not least in the auto sector, were also rudely reminded of the inadequacy of their supply chain risk management processes as so many key suppliers were based within a relatively small industrial area outside of Bangkok and exposed to high flood risk. Aon said that Thailand’s risk continues to rise with the continued rapid growth of people and property exposed to frequent floods. The broker launched its first flood model for Thailand in June 2012 soon after the floods occurred. The updated tool from Impact Forecasting – Aon’s catastrophe model development team – takes into account the government’s significant flood protection and mitigation measures since 2011. Aon said it was imperative to invest in a new model to capture the most up-to-date flood defence information for the most accurate flood loss evaluation. The broker said the new model will support insurers that currently underwrite in Thailand – plus those looking to grow into this space – with “insights to drive their reinsurance purchase and manage their portfolio while using the data to underwrite effectively and monitor peak accumulations”. Aon said the model differentiates itself in the market with: A multi-source database of industrial estates that were heavily impacted during the 2011 floods and led to the global supply chain disruptions to allow more accurate modelling of these risks High-resolution elevation data: 10m for greater Bangkok area and 30m for the rest of Thailand Data from more than 200 gauging stations covering all aspects of local hydrological regimes including flood seasonality More than 700 improved vulnerability classes with many additional modifiers for construction types, number of stories, presence of basements and the like Multi-sourced latest information about flood protection measures to more accurately capture the flood risk. Panchit Ekaraphanich, head of treaty in Thailand for Aon’s Reinsurance Solutions business, said: “This is an exciting time for the Thai re/insurance market to play a critical role in supporting our ever-evolving economy. Following the 2011 floods, the industrial sector is bouncing back but with a higher awareness of the potential risks. The market needed a way to more accurately assess and mitigate these risks, so the launch of the updated flood model from Impact Forecasting is vital to give insurers the confidence to underwrite and in turn support businesses and communities in the region.” Himavant Mulugu, flood model developer at Aon’s Impact Forecasting team, added: “Our goal has been to produce one of the most detailed and advanced models in southeast Asia that shows how data and analytics can have an impact in the market by opening up new products and possibilities. A notable feature of the model is two scenarios of the 2011 floods: the situation as was in 2011 and the situation today, taking into account new flood defences, to enable more detailed insights and enhanced planning for insurers.”

Aon launches updated Thai flood model to help protect growing economy

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