1. Catastrophe Risk Modelling Benefits for Emerging African Markets
Image: used under license from shutterstock.com
Catastrophe Risk Modelling Benefits for Emerging African Markets
06th September 2016
Thabo Twalo – Munich Re of Africa

2. The Journey Which NatCat Risks? How to model them?
The benefit for emerging African Markets
Instead of calling it the agenda, we talk about the journey of NatCat issues during the next hour.
Picture: wold map of natcat scenarios (Munich Re – via Nathan)
OESAI conference Namibia
06 September 2016

3. NatCat Risks for Africa in general1
NatCat Risks for Africa in general
Image: used under license from shutterstock.com

4. Loss events in Africa 1980 – 2015 Geographical overview
Earthquake, tsunami
21/28 May 2003
Algeria
Overall losses: US$ 2.5bn
Insured losses: US$ 0.01bn
Fatalities: 2,200
Earthquake
12 Oct 1992
Egypt
Overall losses: US$ 1.2bn
Insured losses: minor
Fatalities: 561
Meteorological events
(Tropical storm, extratropical storm, convective storm,
local storm)
Hydrological events
(Flood, mass movement)
Climatological events (Extreme temperature,
drought, forest fire)
Geophysical events (Earthquake, tsunami, volcanic activity)
Selection of catastrophes
Overall losses ≥ US$ 500m (in original values)
Loss events
Earthquake
10 Oct 1980
Algeria
Overall losses: US$ 3bn
Insured losses: minor
Fatalities: 2,590
Drought
Mar 2000
Morocco
Overall losses: US$ 0.9bn
Insured losses: minor
Floods
Jul–Dec 2012
Nigeria
Overall losses: US$ 0.5bn
Insured losses: minor
Fatalities: 363
Drought
Jun–Dec 2015
Ethiopia
Overall losses: US$ 0.5bn
Insured losses: minor
Drought
Jan–Dec 2015
Southern Africa
Overall losses: US$ 1.7bn
Insured losses: minor
Floods
Dec 2010–Feb 2011
Southern Africa
Overall losses: US$ 0.55bn
Insured losses: US$ 0.005bn
Fatalities: 203
Floods
Feb–Mar 2000
Southern Africa
Overall losses: US$ 0.52bn
Insured losses: US$ 0.05bn
Fatalities: 1,000
Drought
Nov 1990–Mar 1993
Southern Africa
Overall losses: US$ 1.4bn
Insured losses: minor
Drought
Jan 1982–Dec 1984
Southern Africa
Overall losses: US$ 1.1bn
Insured losses: minor
Floods
25–29 Sep 1987
South Africa
Overall losses: US$ 0.52bn
Insured losses: US$ 0.25bn
Fatalities: 487

5. Loss events in Africa 1980 – 2015 Number of relevant events by peril
Meteorological events
(Tropical storm, extratropical storm, convective storm,
local storm)
Hydrological events
(Flood, mass movement)
Climatological events (Extreme temperature,
drought, forest fire)
Geophysical events (Earthquake, tsunami, volcanic activity)
Accounted events have caused at least one fatality and/or produced normalized losses ≥ US$ 100k, 300k, 1m, or 3m (depending on the assigned World Bank income group of the affected country).

6. Weather-related loss events in Africa 1980 – 2015 Number of relevant events by peril
Meteorological events
(Tropical storm, extratropical storm, convective storm,
local storm)
Hydrological events
(Flood, mass movement)
Climatological events (Extreme temperature,
drought, forest fire)
Accounted events have caused at least one fatality and/or produced normalized losses ≥ US$ 100k, 300k, 1m, or 3m (depending on the assigned World Bank income group of the affected country).

7. Significant loss events in Africa 1980 – 2015 10 costliest events ordered by overall losses
OESAI conference Namibia
06 September 2016

8. Significant loss events in Africa 1980 – 2015 10 costliest events ordered by insured losses
OESAI conference Namibia
06 September 2016

9. Significant loss events in Africa 1980 – 2015 10 deadliest events
OESAI conference Namibia
06 September 2016

10. Flood in Africa Events 2000 - 2016 Flood Hazard Map
Flood is most present peril in Africa
Not only limit to a specific area in Africa
Flood has different types – river flood, flash flood, storm surge …
Influence of certain weather conditions (e.g. El Niño & La Niña)
Key areas highlighted – close to rivers, lakes, coast
OESAI conference Namibia
06 September 2016

11. Earthquake in Africa Events 2000 - 2016 Earthquake Hazard Map
Most unpredictable peril in Africa as experience is quite low
Peril for southern and eastern part of Africa
Scientific models are quite good (lot’s of studies from university and common developments of model)
Most dangerous is not only where the epicentre is but also in which direction the fault line is heading
Example of Ethiopia, Addis Ababa
OESAI conference Namibia
06 September 2016

12. Earthquake in Africa – Backup Example
epi centre
fault line
Very important where epi centre AND fault line are
Of course magnitude of Richter scale is important too!
Africa not a EQ „hot-spot“
Example of Ethiopia, Addis Ababa
OESAI conference Namibia
06 September 2016

13. Storm in Africa Events 2000 - 2016 Tropical Cyclone Hazard Map
specific peril for south-east Africa especially the islands like Madagascar, Mauritius, Reunion
climate has an impact on this peril
difficult to model
OESAI conference Namibia
06 September 2016

14. Hail is a risk too! Hail Hazard Map
Example South Africa: Gauteng area is heavily affected
Hail hardly predictable as certain weather constellations have to be given
Influenced by storms
Since of the hail has a massive impact
Lot’s of experience which could be used for modelling
Nevertheless development of a specific hail model remains a challenge
OESAI conference Namibia
06 September 2016

15. How to model NatCat risks2
How to model NatCat risks
Image: used under license from shutterstock.com

17. Cat Modelling Develop own internal stochastic models Exposure Data
Risk location
Type of risk (commercial, industrial)
Coverage (building, content …)
Insurance conditions (deductibles, limits, …)
Loss Data
Internal data per line of business / location
External data & analysis from broker / reinsurer …
(loss data, exposure data, involved lines of business, accumulation values)
(e.g. on basis of NatCat models from external vendors (event sets) and data from insurer )
Storm events
Hail events
Flood events
Earthquake events
Generation of event loss tables
Derivation of return periods and respective PMLs from event loss table
Determination and Parametrization of loss frequency distributions and loss severity distributions
Simulation of Events
* Storm * Hail * Flood * Earthquake
OESAI conference Namibia
06 September 2016

18. Cat Modelling Use external vendor models Use broker models
OESAI conference Namibia
06 September 2016

19. Benefits for the emerging African market3
Benefits for the emerging African market
Image: used under license from shutterstock.com

20. Benefits for emerging African markets
3 main components which will benefit:
CLAIMS
CLIENTS
RISKS
OESAI conference Namibia
06 September 2016

21. Benefits for emerging African markets
worst case scenarios
know your exposure / max loss
CLAIMS
transparency
immediate actions possible
faster claims handling
OESAI conference Namibia
06 September 2016

22. Benefits for emerging African markets
risk depending premiums (risk adequate)
locations & insured values are linked
buy necessary cover – individually adjusted
CLIENTS
emergency contacts possible
risk awareness
OESAI conference Namibia
06 September 2016

23. Benefits for emerging African markets
loss mitigation measures
risk management
RISKS
safety measures
influences loss severity and loss frequency
impact on economy
OESAI conference Namibia
06 September 2016

24. Benefits for emerging African markets
Biggest Challenge
OESAI conference Namibia
06 September 2016

25. Thabo Twalo – Munich Re of Africa
Image: used under license from shutterstock.com
THANK YOU!
Thabo Twalo – Munich Re of Africa