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Benfield, the world's leading independent reinsurance and risk intermediary, today announced the launch of GAPQuake Bulgaria, its latest fully probabilistic earthquake loss model capable of evaluating losses from all seismic sources in and around the country.
Bruce Selby Bennett, Head of the Central & Eastern Europe (CEE) team at Benfield commented, “The launch of GAPQuake Bulgaria underlines the unique ability of Benfield to help our customers in CEE to better assess their natural catastrophe exposures and optimise catastrophe reinsurance buying. Benfield has built probabilistic models covering all the major natural hazard perils in CEE which remains a region where the third party model vendors have yet to make a significant impact.”
The model was developed by Benfield ReMetrics Natural Hazards in co-operation with a team of Bulgarian scientists, led by Associated Professor Dimcho Solakov, who is the leading expert on seismic hazard in Bulgaria.
Vladimir Stejskal, the Project Leader for GAPQuake Bulgaria in the Benfield ReMetrics Natural Hazards Team explained, “The model’s Hazard component includes a set of more than 31,000 simulated earthquakes that could potentially affect Bulgaria. 14 seismic source zones are modelled in the country and its neighbours (Romania, Serbia, FYR Macedonia, Greece and Turkey). Professor Solakov commented, “The Vulnerability component was specifically built to reflect Bulgarian building standards.”
Professor Solakov also added, “Bulgaria is part of a seismically active zone in Southeast Europe. Several strong and damaging earthquakes have occurred in Bulgaria during the last two hundred years. In 1928 a sequence of two earthquakes of a magnitude of approx 7 hit central Bulgaria which resulted in 74,000 buildings being destroyed and 114 people were killed in the towns of Plovdiv, Chirpan and Parvomay.”
The GAPQuake Bulgaria model estimates that in today’s monetary terms a modelled insured as-if loss to residential property in Bulgaria to a 1928 magnitude 7 earthquake with an epicentre near Plovdiv is €1.08bn.
GAPQuake Bulgaria was launched at a World Bank organised workshop on Catastrophe Risk Insurance in Bulgaria held on 27 May and attended by over 80 representatives from local insurers, brokers, politicians, key ministries and academics.
The aim of the conference was to develop ideas for an affordable earthquake insurance scheme for Bulgaria. Tomas Novotny, Account Executive for Bulgaria at Benfield, was invited by the World Bank to present a review of natural catastrophe schemes globally and to recommend an affordable scheme for Bulgaria.
Tomas Novotny commented, “GAPQuake Bulgaria estimates that the 250 year loss for residential risks would be €1.7bn and to cover this potential loss would cost only €19 per household annually.”
GAPQuake Bulgaria is the latest addition to Benfield’s range of probabilistic regional modelling tools which enable customers to better quantify the risk to their insured portfolios from specific natural perils under the GAP (Geographical Analysis Project) brand. GAPQuake Bulgaria, is the second model Benfield has launched in May 2008, the other being GAPQuake Kazakhstan.
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