Risk modeller Eqecat says its new Australian earthquake tool is the first to implement this year’s hazard model update from Geoscience Australia.

It says the model has been developed for Australia’s unique mid-plate tectonic setting and features region-specific innovations in hazard and vulnerability.

Earthquake risk in Australia is characterised by infrequent, moderate events and highly variable losses, but Eqecat says they account for the largest portion of insured loss potential.

The new model shows multiple loss outcomes and is expected to help insurers make confident decisions about low-probability events with significant financial consequences.

It uses ground-motion prediction equations that show the unique shaking characteristics of stable regions and differentiate between west and east Australia, Eqecat says. It also includes events in Indonesia and Papua New Guinea, because large earthquakes there could damage the north and northeast coasts of Australia.

The model assumes seismic waves are amplified through soil, which more closely represents the majority of insured exposure. It also takes account of Australian construction practices and building code development.

The tool calculates damage to structures, contents and time, which includes business interruption and additional living expenses. Lines of business include residential, commercial, industrial, agricultural and automobile.