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Sompo Canopius, which operates in Bermuda, and Sompo Japan Nipponkoa Insurance (SJNKI) have launched a natural catastrophe risk model for North-West Australia offshore installations.
The new model was unveiled at the APPEA Conference and Exhibition 2017, an oil and gas industry event in Australia. The model development was carried out by Sompo Risk Management & Health Care, which provides analytics and model development within the Sompo group.
According to the companies, this is the first stochastic natural catastrophe model for offshore North West Australia that offers a quantitative assessment of cyclone risk and the impact it could have on the expanding offshore industry.
The model utilises three elements, Hazard Module, which stochastically evaluates wind and wave levels; Vulnerability Module, which computes the potential level of damage a storm could cause and the Financial Module, which drills down to the losses that exploration and production property could sustain and applies insurance coverage to them.
These three elements combined deliver a comprehensive resource that can be used in underwriting, the design of terms and conditions, risk evaluation and assessment of appropriate levels of cover, reinsurance or capital needed.
“The prevalence of frequent and extreme cyclone activity in the region clearly demonstrates the threat to property located within the North West shelf area of Australian territorial waters,” said Tatsuhiko Okubo, energy section manager at SJNKI. “Undoubtedly, the loss potential that powerful storm systems pose to operators and their partners in the offshore exploration and production industry is increasing with the ongoing expansion of infrastructure in the North West shelf.”
Steve Warren, Sompo Canopius group head of energy and engineering, added: “We are proud to have been part of the development of the first stochastic model of the region and to be talking about it at APPEA 2017. This model will help us in supporting our brokers and clients to understand and manage their risks more effectively, as the region’s energy industry continues its ongoing rapid development.”
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Sompo Canopius, Sompo Japan Nipponkoa Insurance, Catastrophe risk, Australia, Asia Pacific