29 August 2013

Aon releases Mexican flood model

Impact Forecasting, the catastrophe model development centre at Aon Benfield, has developed a model for Mexican river flood risk. The new model, which is integrated in ELEMENTS, models the eight most exposed states and features two sets of vulnerability curves.

Vaclav Rara, flood model developer at Impact Forecasting, said: “floods in Latin America have recently caused widespread damage. Therefore Impact Forecasting’s main goal is to bring more understanding to the insurance industry of this peril and help insurers to better manage their risk using the latest technology and hazard data.”

Flooding is considered one of Mexico’s most significant natural perils, with severe events occurring six times over the last two decades. The new model means that loss estimates for these floods can be calculated to gauge the financial impact of their potential reoccurrence.  In addition, new scenarios can be generated.

Michael Hughes, CEO of Aon Benfield in Latin America, explained: “as demand for catastrophe insurance and reinsurance increases in Latin America, catastrophe models need to develop alongside. In comparison to models in global peak catastrophe zones, the models in Latin America face the challenges of fewer historical events, reduced underlying data and less development resources. In response, impact forecasting is stepping up by increasing its focus on models for the region—notably for its flood, earthquake and tsunami risk.”

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