New earthquake simulator called a technological breakthrough

The China Earthquake Catastrophe Model 2.0 is an important technological breakthrough in the country's catastrophe risk management field, said attendees of the model's launch event in late August.

China Reinsurance, which launched the model, said that it has used innovative methods to apply for invention patents. One of the filings has been accepted by the National Intellectual Property Administration.

The accepted application uses new algorithm and processing methods to analyze how soil amplifies and shrinks seismic waves.

Despite a few similar foreign models, the company said it wanted to develop a model in China that has proprietary IP rights.

Different from those from overseas, the new model developed by the Chinese reinsurance company is based on the newest data from domestic organizations, which enables it to reflect real situations in China.

Niu Zhijun, deputy head of the China Earthquake Administration, said the model is of "milestone significance" in the country's earthquake insurance development and the authority will continue to support China Reinsurance's innovation in earthquake insurance, hoping to reduce disaster losses.

The model comprises modules of hazard, engineering and finance. It can assist insurance companies in recognizing earthquake risks in different regions and decide premium rates. It also helps government agencies quickly evaluate economic losses in earthquakes and formulate comprehensive plans to reduce damage.

In addition, the model can also be used as a quick calculation tool for pricing in reinsurance.

The model's introduction video said it is difficult to quantify earthquake risks and that an earthquake catastrophe model that suits China's conditions is necessary.

Insiders said insurance is significant for reducing disaster losses and rebuilding. Insurance indemnities only accounted for 0.2 percent of the direct economic losses in the 2008 Wenchuan earthquake, much lower than the 30 to 40 percent in the overseas insurance industry.

The new model can simulate more than 300 million synthetic earthquake events in 5 million years in the Chinese mainland and surrounding regions, its designers said. It can calculate economic and insurance losses of more than 10,000 types of buildings, which vary in building construction type, occupancy, year built, height and earthquake fortification level in a simulated earthquake.

China Reinsurance gathered experts from different fields including earthquake, civil engineering, remote sensing, actuary and mathematics to develop the model.

Chen Sen, chief actuary at China Pacific Property Insurance, said his company hopes to be the first user of the model.

A quantification tool is necessary for insurance companies to manage catastrophe risks, Chen said. Empirical insurance data in past decades is of little use, since it can neither project future insurance losses nor help with pricing insurance services.

The company launched the model 1.0 last year for its own research while the 2.0 version is designed for commercial use, the company said.

songmengxing@chinadaily.com.cn

(China Daily 09/12/2019 page17)