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Swiss Re develops first global volcanic insurance model
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In this Monday, Aug. 8, 2016, photo, visitors look at lava from Kilauea, an active volcano on Hawaii's Big Island, as it flows toward the ocean in Volcanoes National Park near Kalapana, Hawaii. (AP/Caleb Jones)
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wiss-based reinsurance company Swiss Re has developed a global volcanic model to assess the risk of volcanic eruptions, to estimate the precise quantification of the risks into insurance coverage.
The global model, which assesses the volcanic eruption risk of 508 volcanoes, will quantify potential property losses caused by volcanic ash within 150 km from an active volcano.
Reinsurance Asia at Swiss Re CEO Jayne Plukett said that in some countries the volcanic threat was a substantial part of insurable risks, and the ability to assess and price such risk was crucial.
“Economic disruption and large-scale economic losses for people and businesses locally are only one part of picture,” he said. “For example, in the case of any large scale eruption, supply chains would be affected all around the world, causing both economic and insured losses,” he added.
It is the first insurance model that calculates volcanic eruption risk in the world. The model consists of four components, which are the hazard, the vulnerability, the value distribution and the insurance condition.
According to a study conducted by Swiss Re to predict the frequency of a substantial economic loss caused by volcanic ash, Bandung is in eighth position while Jakarta is number 10, considering that both of the big cities are located within a 150-km radius of a volcano.
Meanwhile Managua, the capital of Nicaragua, tops the list as it is located 23 km from Masaya, the country’s most active volcano. (ecn/ags)
