The natural catastrophe risk model for North West Australia offshore installations, launched by Sompo Japan Nipponkoa Insurance Inc, (SJNKI) and Sompo Canopius AG (Sompo Canopius) at the APPEA Conference and Exhibition 2017, offers the region a quantitative assessment of cyclone risk and its potential impact on the expanding offshore industry.
The model, developed by Sompo Risk Management & Health Care Inc., which provides analytics and model development within the Sompo group, uses three elements to deliver a comprehensive resource that can be used for underwriting, the design of terms and conditions, risk evaluation, and assessment of appropriate levels of cover, reinsurance, or capital needed.
These elements are the Hazard Module, which stochastically evaluates wind and wave levels; the Vulnerability Module that computes the storm’s potential level of damage; and the Financial Module that focuses on the losses that exploration and production property could sustain and applies insurance coverage to them.
Tatsuhiko Okubo, energy section manager at SJNKI, noted the vulnerability of properties located within the North West Shelf area of Australian territorial waters to the extreme cyclone activity in the region.
“Undoubtedly, the loss potential that powerful storm systems pose to operators and their partners in the offshore exploration and production industry is increasing with the ongoing expansion of infrastructure in the North West Shelf,” he said.
Steve Warren, Sompo Canopius group head of energy & engineering, commented: “This model will help us in supporting our brokers and clients to understand and manage their risks more effectively, as the region’s energy industry continues its ongoing rapid development.”
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The first stochastic natural catastrophe model for offshore North West Australia has been rolled out at a leading oil and gas industry event in Australia.