BOSTON, July 17, 2012 — Catastrophe risk modeling firm AIR Worldwide (AIR) announced that China Property & Casualty Reinsurance Company Ltd. (CPCR) has licensed AIR’s typhoon, earthquake, and multiple-peril crop insurance models for China to better manage its catastrophe risk.
“Because of the rapid urbanization in catastrophe-exposed regions of China, as well as the overall growth in insurance penetration, we recognize the increasing importance of managing our catastrophe risk holistically,” said Yuanyuan Li, deputy general manager, CPCR. “AIR offers a full suite of models for China, including a multiple-peril crop insurance model, which is a growing and important line of business for us. The complete view of catastrophe risk provided by AIR will enhance our understanding of our loss potential and enable us to fashion better risk management strategies.”
“AIR has had an office in Beijing since 2005, and we continue to leverage our regional knowledge and experience to offer our clients superior customer support and scientifically advanced models,” said Uday Virkud, P.E., executive vice president at AIR Worldwide. “Our business relationship with China Property & Casualty Reinsurance Company reflects our continued focus on and growth in this evolving insurance market, where companies are increasingly turning to AIR for sophisticated tools to assess and manage their exposure to catastrophe risk.”
AIR released the industry’s first Multiple Peril Crop Insurance Model for China in 2011. It provides a fully probabilistic approach for determining the likelihood of losses to the country’s major crops of corn, cotton, rapeseed, rice, soybeans, and wheat. The model employs AIR’s advanced Agricultural Weather IndexTM to capture the significant effects that weather-related perils have on each crop during different growth stages. It explicitly models damages resulting from various weather perils, including drought, floods, and typhoons, which are the leading causes of crop loss in China. The model accommodates China’s complex policy conditions, which vary depending on crop type, peril, and province.
The AIR Typhoon Model for China captures the risk from both wind and flood — a critically important feature because standard residential, commercial, and construction-all-risks/erection-all-risks (CAR/EAR) policies cover both perils. The model features a unified catalog of nearly 300,000 events affecting China and other modeled countries in the northwest Pacific, allowing local direct insurers in China to analyze country-specific risk. The model also allows global insurers and reinsurers to seamlessly assess the risk to policies and portfolios that span multiple countries, thereby accounting for loss correlations in a physically realistic way.
AIR’s Earthquake Model for China — the development of which was informed by strategic alliances with leading local research institutions — draws on the country’s long historical catalog, including written records of earthquakes dating back to 780 B.C. The model incorporates a catalog of more than 580,000 simulated events, as well as damage functions for more than 200 construction types and occupancy classes, including damage functions for the CAR/EAR line of business. That line comprises a higher portion of insurance business here than in many other regions because of China’s continued and rapid growth.
About China Property and Casualty Reinsurance Company Ltd.
China Property and Casualty Reinsurance Company Ltd. (CPCR) was founded as the sole subsidiary for operating property and casualty reinsurance business under the umbrella of China Reinsurance (Group) Corporation (China Re Group). The company has a capital base of RMB 8.53 billion with headquarter domiciled in Beijing and branch offices in Shanghai and Shenzhen. CPCR has inherited the brand, business, client base, and the professional team of the former China Reinsurance Company and is committed to promoting the development of both China’s insurance industry and the whole national economy by providing not only adequate underwriting capacity but also professional reinsurance service to clients through long term cooperation for mutual benefit.
About AIR Worldwide
AIR Worldwide (AIR) is the scientific leader and most respected provider of risk modeling software and consulting services. AIR founded the catastrophe modeling industry in 1987 and today models the risk from natural catastrophes and terrorism in more than 90 countries. More than 400 insurance, reinsurance, financial, corporate, and government clients rely on AIR software and services for catastrophe risk management, insurance-linked securities, detailed site-specific wind and seismic engineering analyses, and agricultural risk management. AIR is a member of the Verisk Insurance Solutions group at Verisk Analytics (Nasdaq:VRSK) and is headquartered in Boston with additional offices in North America, Europe, and Asia. For more information, please visit www.air-worldwide.com.