Page 6 - Risk Management Bulletin April -June 2021
P. 6

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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