With volcanic ash and tsunamis wreaking disruption and billion-dollar losses this year, the Aon Benfield UCL Hazard Centre has released a guide on the important characteristics that global insurers should know and consider when assessing risk.

Getting to Grips with Non-Modelled Perils focuses on hazard and vulnerability from tsunamis, landslides and volcanoes.

The London-based centre has found there are at least 1500 active volcanoes and about 10% of the world’s population lives within range of one of them. It says the insurance industry should focus on volcanic hotspots such as Japan, New Zealand, the northwestern US, Chile, Iceland and Italy, noting that only one in 10 active volcanoes are monitored.

“Volcanoes erupt at long enough intervals for populations and businesses to risk settling within range,” the report says. “A volcanic event may not have triggered large insured losses recently, but the potential remains and this emphasises the need to learn more about the hazards and their interactions with insured assets.”

It says eruptions can also cause tsunamis, although about 80% of them are started by earthquakes.

“High levels of tsunami damage from the Japan earthquake highlight the insurance industry’s need to understand more about this peril.”

Although historical records might not be an accurate pointer to future hazards, computer models can predict the impact of tsunamis hitting land. The guide notes that designing for tsunamis is challenging because structures have to sustain loads as well as allow water to flow through.

The researchers say landslides are the most widespread geological hazard. Precipitation, earthquakes and land-use changes usually trigger them and they are often reactivated.

They say risk can be assessed by examining pre-existing landslides, estimating the location, frequency and volume of potential landslides, and by combining these assessments with estimates of building vulnerability.

“This will allow for the quantification of risk to landslides within a portfolio and to build this into multi-peril loss estimates.”

The guide says large landslides can have a severe impact, potentially with total loss to a small number of insured risks, so accurate and detailed location and exposure data are critical.