CATASTROPHE EVENTS A CHALLENGE Karachi – 10 th to 12 th April 2012 Tsunami – Sri Lankan...

CATASTROPHE EVENTS A CHALLENGE

Karachi – 10th to 12th April 2012

Tsunami – Sri Lankan Experience

CATASTROPHE EVENTS A CHALLENGE

Karachi – 10th to 12th April 2012

Tsunami – Sri Lankan Experience

PresenterPresenterJagath Alwis B.Sc. FIII, FCII FIoD (UK)Jagath Alwis B.Sc. FIII, FCII FIoD (UK)

Director (Technical)/Chief Technical OfficerDirector (Technical)/Chief Technical OfficerCeylinco Insurance PLC, - Sri Lanka Ceylinco Insurance PLC, - Sri Lanka

• 175 major NatCat events incurred in 2011 175 major NatCat events incurred in 2011 with an Insured loss of US$ 110,021 Mn with an Insured loss of US$ 110,021 Mn and around 30,000 casualties and around 30,000 casualties

• The above is inclusive of 65 floods, 76 The above is inclusive of 65 floods, 76 storms and 15 earthquakes storms and 15 earthquakes

• The most costly event was Japanese The most costly event was Japanese tsunami followed by Thailand floods and tsunami followed by Thailand floods and New Zealand earthquakeNew Zealand earthquake

Major NatCat Losses in 2011Major NatCat Losses in 2011

Magnitude :Magnitude : 9.0 9.0

Date - Time:Date - Time: Sunday, December 26, 2004 Sunday, December 26, 2004

at 07:58:53 AM local time at 07:58:53 AM local time

Location :Location : 3.30N 95.96E 3.30N 95.96E

Depth Depth : : 30 km 30 km

Region :Region : Off The West Coast of Off The West Coast of

Northern Sumatra Northern Sumatra

Tsunami 9.0Tsunami 9.0

Tsunami 9.0Tsunami 9.0• More than 300,000 people killed, including 14,100 listed More than 300,000 people killed, including 14,100 listed

missing and 1,126,900 displaced. missing and 1,126,900 displaced.

• 10 countries in South Asia and East Africa were affected 10 countries in South Asia and East Africa were affected by the tsunami.by the tsunami.

• The earthquake was felt at Banda Aceh, at Meulaboh The earthquake was felt at Banda Aceh, at Meulaboh and at Medan, Sumatra. and the tsunami effected parts and at Medan, Sumatra. and the tsunami effected parts of Bangladesh, India, Malaysia, Maldives, Myanmar, of Bangladesh, India, Malaysia, Maldives, Myanmar, Singapore, Sri Lanka, Thailand and Somalia.Singapore, Sri Lanka, Thailand and Somalia.

• The tsunami caused more casualties than any other in The tsunami caused more casualties than any other in recorded history and was recorded nearly world-wide on recorded history and was recorded nearly world-wide on tide gauges in the Indian, Pacific and Atlantic Oceans. tide gauges in the Indian, Pacific and Atlantic Oceans.

Off The West Coast Of Northern Sumatra

Satellite image of the origin

Affected CountriesAffected Countries

• BangladeshBangladesh• IndiaIndia• Indonesia Indonesia • MalaysiaMalaysia• MaldivesMaldives• MyanmarMyanmar• SingaporeSingapore• Somalia Somalia • Sri LankaSri Lanka• ThailandThailand

Banda Aceh Shoreline

Before the disaster

After the disaster

Banda Aceh North Shore

Before the disaster

After the disaster

Aceh City center

Before the disaster

After the disaster

Impact of Tsunami on Sri Lanka

Impact of Tsunami on Sri Lanka

• In certain areas In certain areas water has come 2 water has come 2 kms inlandkms inland

• Highest wave was Highest wave was about 30mabout 30m

Impact of Tsunami on Sri LankaImpact of Tsunami on Sri Lanka

• 66,120 Houses Completely Washed Off

• 66,120 Houses Completely Washed Off

Impact of Tsunami on Sri Lanka contd..Impact of Tsunami on Sri Lanka contd..


• 44,000 Houses Partly Damaged

• 44,000 Houses Partly Damaged

• 217,000 people were in Camps• 217,000 people were in Camps


• 168 Public Schools damaged• 168 Public Schools damaged


• Over 5,000 vehicles damaged• Over 5,000 vehicles damaged


• 10,000 fishing boats are missing or damaged. 300,000 fishermen have lost their jobs

• 10,000 fishing boats are missing or damaged. 300,000 fishermen have lost their jobs


• 5,000 Small Businesses Completely damaged.• 5,000 Small Businesses Completely damaged.



• Large number of small businesses partly damaged

• Large number of small businesses partly damaged

• 4,700 Hotel rooms damaged. 27,000 jobs lost in the tourism industry.

• 4,700 Hotel rooms damaged. 27,000 jobs lost in the tourism industry.


• Deaths 30,974

• Injured 23,176

• Missing 4,698

• Displaced 553,287

• Children who lost both

parents - 1075


• 200,000 jobs lost. Which is 3% of the labour force.

• 200,000 jobs lost. Which is 3% of the labour force.


Damages to InfrastructureDamages to Infrastructure

• Bridges, Railway Tracks, Roads etc.,• Bridges, Railway Tracks, Roads etc.,


• Total loss was around US $ 2.5 bn. Other than the economic loss

• Insured loss was US$ 120 Mn where the size of the Non-Life market was US$ 170 Mn in 2004

• This is around 5% of the worldwide insured loss which was US$ 2,381 Mn

• Total loss was around US $ 2.5 bn. Other than the economic loss

• Insured loss was US$ 120 Mn where the size of the Non-Life market was US$ 170 Mn in 2004

• This is around 5% of the worldwide insured loss which was US$ 2,381 Mn


Impact on Sri Lankan Insurance Industry

Impact on Sri Lankan Insurance Industry

• Total General Insurance Market - US $ 170.M in 2004

• Total Life Insurance Market - US $ 130.M in 2004

• Total claims - US $ 120 Mn (including US $ 50 Mn from risks written from Maldives)

• In addition to the above, Insurers have given various public commitments to settle claims on ex-gratia basis which was another US$. 50 M

• These ex-gratia claims were on Insurers’ net accounts.

• Total General Insurance Market - US $ 170.M in 2004

• Total Life Insurance Market - US $ 130.M in 2004

• Total claims - US $ 120 Mn (including US $ 50 Mn from risks written from Maldives)

• In addition to the above, Insurers have given various public commitments to settle claims on ex-gratia basis which was another US$. 50 M

• These ex-gratia claims were on Insurers’ net accounts.

Sri Lankans who did not have experience of Natural Perils were not keen to purchase such cover.

Sri Lankans who did not have experience of Natural Perils were not keen to purchase such cover.

Classes of Insurance AffectedClasses of Insurance Affected

• Life• Health• Property• Engineering• Personal Accident• Motor• Marine Hull & Marine Cargo• Crop & Livestock• Miscellaneous accident sub classes such as

– Goods in transit– Cash in Safe etc.,

• Life• Health• Property• Engineering• Personal Accident• Motor• Marine Hull & Marine Cargo• Crop & Livestock• Miscellaneous accident sub classes such as

– Goods in transit– Cash in Safe etc.,

Tsunami claims under property insurance


• Natural perils are excluded under the standard Fire policy.

• Floods, Cyclone, Storm & Tempest and Earthquake covers are available at an additional premium.

• Above perils are included to the basic cover for large risks and approved Foreign investment projects. (similar to Industrial All Risks insurance, but perils are specified)

• Inundation by sea water was excluded under Floods & CST extensions.

• Natural perils are excluded under the standard Fire policy.

• Floods, Cyclone, Storm & Tempest and Earthquake covers are available at an additional premium.

• Above perils are included to the basic cover for large risks and approved Foreign investment projects. (similar to Industrial All Risks insurance, but perils are specified)

• Inundation by sea water was excluded under Floods & CST extensions.

• Earthquake extension:– “Loss or damage to the property insured

occasioned by or through or in consequence of an earthquake”.

– Since the Tsunami was caused consequent to an earthquake, insurers admitted liability under this extension.

• Earthquake extension:– “Loss or damage to the property insured

occasioned by or through or in consequence of an earthquake”.

– Since the Tsunami was caused consequent to an earthquake, insurers admitted liability under this extension.



Tsunami Claims Payable Under Motor Insurance

Tsunami Claims Payable Under Motor Insurance

• Natural perils were excluded under all Motor policies.

• Cover against floods was available at an additional premium.

• Inundation by sea water was neither included nor excluded under floods extension.

• All insurers agreed to pay claims on ex-gratia basis, if the insured has taken the flood cover. But on their own account.

• Natural perils were excluded under all Motor policies.

• Cover against floods was available at an additional premium.

• Inundation by sea water was neither included nor excluded under floods extension.

• All insurers agreed to pay claims on ex-gratia basis, if the insured has taken the flood cover. But on their own account.

Tsunami Claims Paid Under Non-property Classes

Tsunami Claims Paid Under Non-property Classes

• Life - Covered. if double / triple accident benefits are offered, Insurers are liable for the higher amounts.

• Personal Accident – Covered. • Health – Covered • CAR/EAR – Covered.• Marine Cargo – Covered.• Marine Hull – Covered.• Miscellaneous Classes - Covered under most of

the sub-classes.

• Life - Covered. if double / triple accident benefits are offered, Insurers are liable for the higher amounts.

• Personal Accident – Covered. • Health – Covered • CAR/EAR – Covered.• Marine Cargo – Covered.• Marine Hull – Covered.• Miscellaneous Classes - Covered under most of

the sub-classes.

Reaction by Insurerscontd…

• Special emphasis on Nat Cat perils during risk Special emphasis on Nat Cat perils during risk assessments and surveysassessments and surveys

• Re-looked at PML exposures and Excess of Loss coversRe-looked at PML exposures and Excess of Loss covers

• Construction details and asset valuationsConstruction details and asset valuations

• Strategies on handling large volume of claims; resources, Strategies on handling large volume of claims; resources, loss adjusters, staff, call centers etc loss adjusters, staff, call centers etc

• Strategies on post-loss minimizations; simplified Strategies on post-loss minimizations; simplified documentation, salvage disposal, release of advance documentation, salvage disposal, release of advance payments for reconstruction etc.payments for reconstruction etc.

• Increased awareness of Nat Cat perils amongst publicIncreased awareness of Nat Cat perils amongst public

• Special emphasis on Nat Cat perils during risk Special emphasis on Nat Cat perils during risk assessments and surveysassessments and surveys

• Re-looked at PML exposures and Excess of Loss coversRe-looked at PML exposures and Excess of Loss covers

• Construction details and asset valuationsConstruction details and asset valuations

• Strategies on handling large volume of claims; resources, Strategies on handling large volume of claims; resources, loss adjusters, staff, call centers etc loss adjusters, staff, call centers etc

• Strategies on post-loss minimizations; simplified Strategies on post-loss minimizations; simplified documentation, salvage disposal, release of advance documentation, salvage disposal, release of advance payments for reconstruction etc.payments for reconstruction etc.

• Increased awareness of Nat Cat perils amongst publicIncreased awareness of Nat Cat perils amongst public

Reaction by Insurerscontd…

• The Government has set-up some early warning systems and created a buffer zone of 100 m from the coast-line

• Insurers are collating data on past natural CATs to share data amongst the local players

• Geo-coding of risks and accumulation controls

• Mapping of ‘Red Spots’ for flood risks, especially risks in and around Colombo and suburbs

• Rating and deductibles

• Reduction in the number of years from 7 to 2 years for ‘Missing’ persons, thus processing death certificates and life claims

• The Government has set-up some early warning systems and created a buffer zone of 100 m from the coast-line

• Insurers are collating data on past natural CATs to share data amongst the local players

• Geo-coding of risks and accumulation controls

• Mapping of ‘Red Spots’ for flood risks, especially risks in and around Colombo and suburbs

• Rating and deductibles

• Reduction in the number of years from 7 to 2 years for ‘Missing’ persons, thus processing death certificates and life claims

Thank You…

CATASTROPHE EVENTS A CHALLENGE Karachi – 10 th to 12 th April 2012 Tsunami – Sri Lankan...

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