Better modelling of tsunami zones could help insurance quotes

25 November 2013

A new model to examine the risk of tsunamis to homes and businesses could help insurance and reinsurance companies give more accurate quotes.

The model, which is currently being tested on a small scale, has just been awarded a grant by NERC that will help it reach a business market through collaboration with the Oasis open loss modelling framework.

At present, insurance companies use very basic risk models to tell them whether a business or home is at risk from a tsunami, and the likely insured losses they would incur. Many of these are tacked on to existing earthquake models, and are based on earthquake data instead of accurate tsunami data. But the 2011 tsunami in in Tohoku, Japan, proved that current models are unable to provide accurate estimates of tsunami risks.

"Previously we had the idea that places like Sumatra and Tohoku wouldn't experience huge earthquakes, so when these devastating scale 9 earthquakes happened, they caught scientists by surprise," explains Dr Simon Day of University College London, a researcher on the project. "The models reflected the idea that we weren't going to get giant earthquakes and tsunamis in these areas, so we were overconfident in our hazard and risk estimates. The question arose, how do we make a better job of these estimates for insurance and other purposes?"

"The new model was built to help answer this question. It will look at an area's geological history, and use advanced statistical methods to build maps based on the possible hazard posed. Insurance companies will then be able to input their portfolio of insured properties and businesses into the model to see which fall into at risk zones to assess what losses might be incurred." To test the reliability of the model, the team are using the West Coast of North America as a test site.

Detailed records of the geological history of the Cascadia region - an area along the United States West coast, encompassing California and Oregon - show that many large tsunamis have occurred there in the past, and the researchers are testing the model to see whether it would have predicted these.

"We assess the hazard posed to an area and look at what could lead to huge earthquakes and in turn giant tsunamis, and then test it against the past record and ask whether the model has a reasonable chance of reproducing that record, or whether it would say that the historical record is unlikely," says Dr Day.

"The human records we have only go back to about 1790, and no one has witnessed a major tsunami in Cascadia during that time. But we need to demonstrate, since this is a subduction zone area, that people not witnessing it in the past doesn't mean that it won't happen in the future" explains Dr Serge Guillas, the principal investigator leading the research.

The team hope to use the funding to move on from the current proof-of-concept stage, to quantify the uncertainties in the model and open it up to the insurance companies for use. Their aim is to run the model for minimum cost, eventually allowing NGOs and governments to also use it.

Further information

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Press release: 85/13