Page 6 - Risk Management Bulletin April -June 2021

RMAI BULLETIN APRIL TO JUNE 2021

However, there is no actionable Tropical Cyclone Risk The above two steps will enable Insurance companies
Assessment at the location where an individual has to Underwrite an individual risk based on realistic
assets or wants to build one. If an individual gets the Maximum Probable Loss (MPL) estimate and also to
Risk Assessment Report at his location then he can plan Reinsurance strategy on accumulated MPLs to
make a well informed decision to build the assets face the Tropical Cyclone catastrophic hazard.
which can withstand the fury of the Tropical Cyclone
and would enable him to come back to normalcy Unity Geospatial LLP has developed a web application
within a short period of time or alternatively can opt 'TROPCYC' is now available for use at the click of the
to shift the location or to transfer the risk at acceptable mouse. But it has to be on sound foundation, reliable
level to Insurers. to meet the need of the Insurers.

But the challenges before the Insurance companies are Data
very high. A Tropical Cyclone catastrophe can pose a
problem of underwriting viz. premium to be charged may Tropical Cyclone data in the form of Tracks of Cyclones
not be reflecting the risk exposure. Also since this is a of India Meteorological Department (IMD) from the
catastrophic event, Insurance companies may be exposed year 1891 to till date and also published reports of
to number losses/claims in one catastrophic cyclone (IMD) on Tropical Cyclones were studied and the data
event which can result in affecting the balance sheet of collected from them meticulously. From the year 1990
Insurance companies adversely and sometimes wiping data & tracks of cyclones & reports are available on
out the capital. On the other hand conservative approach the website of IMD while the report & Tracks of
in Underwriting such as applying high tariff rates may Cyclone available in paper format in the library of the
make many Insured not to opt for the cover while only IMD at Pune. IMD reports were available from the year
those Insured opting for it are exposed to the peril, 1948 onwards up to the year 1989 were available in
leading to selection against Insurer. paper form. However IMD reports from the year 1891
to 1947 were not available though the Tracks of
There are three types of catastrophic hazards in a Cyclones are available and are used.
Tropical Cyclone viz. High Winds/Gust Winds in
kilometers per hour, Flash Floods caused by heavy Tropical Cyclones which
downpour in a short time causing damages by high Y Hit the Indian Coast only are considered. Those
velocity of water, its depth& duration and Storm cyclones which dissipated over the sea or
Surges washing out assets near the sea coast causing weakened before hitting the coast are not
heavy life and property losses. We are not able to stop considered.
the Tropical Cyclones nor can we stop economic Y Depressions & Cyclonic Storms which do not cause
development. But what we do then? significant damages to reasonably built structures
are not considered in the analysis but are included
The only option left is we assess the risk we are
in the study.
exposed to and make efforts to reduce/mitigate it.
Y Tracks of Tropical Cyclones with intensities of
First step is to know the risk. Where you are located 'Severe to Super Cyclonic' storms and higher
or plan to put up your assets (identified by Latitude/ intensities are only considered in the study.Wind
Longitude), to know the exposure to the following Speeds, Rainfall & Storm Surge data is derived
hazards precisely: from IMD reports.
Y Velocity of wind in kilometers per hour,
Y Storm Surge Zones as defined & published by
Y Quantity of rainfall in centimeters. Not Indian National Center for Ocean Services (INCOIS)
millimeters. - ESSO at Hyderabad on their website are used.

Y Height of Storm Surge in meters and its depth INCOIS - ESSO is an Indian Government authority
inland to issue warnings on Tsunami caused by
Earthquakes and Storm Surges caused by Tropical
Second Step is to know how many Tropical Cyclones Cyclones. INCOIS - ESSO does not give penetration
may hit your client location and also to know their of sea water on land during the storm surge and
intensities in the next ten (10) years. the same is inferred from IMD reports.

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