Earthquake Risk Transfer for Iceland

Fig.1 Learn more about how Earling issued Earthquake Preparedness Alert for the greatest Iceland earthquake since 2008 and how this data can be used to manage and transfer financial earthquake risks.

Overview

The seismicity in Iceland is related to the Mid-Atlantic Plate boundary that crosses the country. Within the country, the boundary shifts eastward in the south and back toward the west in North Iceland through two complex fracture zones. The southern zone, called the South Iceland Seismic Zone, is located in the South Iceland lowland, while the other, the Tjörnes Fracture Zone, lies mostly off the northern coast of Iceland. The largest earthquakes in the country have occurred within these zones. Since A.D. 1700, 16 earthquakes of magnitudes greater than 6.0(Ms) have occurred in the the South Iceland Seismic Zone, and 9 earthquakes in the Tjörnes Fracture Zone. The maximum possible magnitude is estimated to be around 7.0(Mw) for both zones; this upper bound is caused by relatively low rock strength and thincrust in the earthquake zones. In the year 2000, two earthquakes (17 and 21 June) of magnitude 6.5(Mw) occurred in South Iceland. The highest recorded PGA in these quakes was 0.84g at the Thjórsá Bridge site.

On 29 May 2008, a 6.3(Mw) earthquake shook the area again. The distances between the epicenters of these three earthquakes are less than 35 km. These three events constitute an earthquake sequence, typical for the area. The last sequence before the 2000 and 2008 earthquakes occurred in 1896, when five earthquakes (Ms > 6) struck in the area, starting in the eastern part of the South Iceland Seismic Zone and migrating west during a two-week period, with the last major earthquake around the Selfoss farm (now a small town).

EPA Effect on Iceland Probable Maximum Loss

Fig.2 EPAs can increase Iceland's earthquake insured loss up by $50.5 million in 2020.

Affordable Risk Transfer

Once a loss occurs, it is too late to revise an insurance policy. Consequently, the policyholder must be extremely diligent during policy purchase and renewal. Understanding specific insurance requirements, carefully calculating the property and business interruption values, outlining contingency plans, and anticipating the potential losses at each location are all key steps in maximizing future insurance recoveries. In sum, paying close attention to the potential impact of a loss at the insurance procurement stage will help to minimize issues and maximize recovery when a loss does occur.

Proposing the best time-window(s) for maximizing insurance coverage before a catastrophe is the Earling solution to transfer earthquake risks. Instead of 365 days insurance, maximize the current coverage only for a few days in each year.

Now that revising insurance policies once a loss occurs is too late, Earling helps to know the best time to transfer risk through new policies or extending the current coverage for a limited period of time for example only for 10 days and not for 365 days of year.
Maximizing insurance coverage after a catastrophic loss is difficult for any company but Earling Earthquake Preparedness Alerts assists to do it before a catastrophe occur.

Well Known Risk Takers

Tackle your risks with our solutions to the big players. We propose enterprise companies as well as SMEs and individualizes the best time to purchase a new earthquake policy or extending the current coverage to make it inexpensive.
risk takers
Currently, Japan, New Zealand, Greece, Turkey, Caribbean, Chile, Ecuador, Taiwan, Romania, Indonesia, California are the regions, which Munich Re accepts their risks. In addition, South Africa, Oklahoma and Utah are subject to further work. Also, between the regions that Earling issues Earthquake Preparedness Alerts, Japan, New Zealand, Caribbean, Chile, Ecuador, Taiwan, Indonesia and US (California, Utah) are undercover by Swiss Re to take the risks.

How we can help?

In general, Earling has a global seismic monitoring network and specialists that are subject matter experts. Regarding the challenges mentioned above, Earling is been able to deliver support.

  • In the pressure on profitability, performance management and key performance indicator settings.
  • In the entrance of parametric insurance markets and issuing alternative products, Earling can deliver independent advice by our global resources.
  • To keep control on the impact of catastrophic events, Earling can assist in optimizing, validating on Cat and reinsurance programs modelling.

Requirements

Schedule a meeting to see how Earthquake Preparedness Alerts can transfer your risks.
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