Weather-related risks in India, China and Japan have been the subject of new risk modelling arrangements made over the past few weeks.

AIR Worldwide has released a cyclone model for India that includes the effects of wind and precipitation-induced flooding on insured properties.

MD India operations Praveen Sandri says that as India’s economy grows and global markets become more interdependent, the insurance industry is mindful of potential large losses in the region.

Cyclones are more likely to form east of India than to the west, but insurance penetration is higher on India’s west coast.

“On the west coast, the 1998 Gujarat cyclone caused damage of about $US500 million ($481 million) and insured losses exceeding $US200 million ($192 million),” Dr Sandri said. “The exposure throughout this region is far more concentrated today, which can result in higher losses, even with fewer storms.”

The model calculates total precipitation and distributes it based on soil type, land use and slope to determine how much rain will accumulate as flooding.

A relatively weak but wet and slow-moving cyclone near Mumbai could cause more than 40cm of rain and insured losses of over $US600 million ($577 million), AIR Worldwide says.

Further east, China Property & Casualty Reinsurance Company (CPCR) has licensed AIR Worldwide’s typhoon, earthquake and multiple-peril crop insurance models for China.

CPCR says catastrophe risk management is important because of rapid urbanisation in catastrophe-exposed regions of China and the overall growth in insurance penetration.

In Japan, Risk Management Solutions (RMS) and Tokio Marine & Nichido Fire Insurance have agreed to share information about earthquake and typhoon risk and collaborate in the development of catastrophe risk models.

RMS says the collaboration will improve natural catastrophe risk analysis in Japan and may be valuable to insurers, auditors and risk managers.