AIR Worldwide Releases Updated Multiple Peril Crop Insurance Model for China
September 22 2020 - 5:11AM
Catastrophe risk modeling firm AIR Worldwide (AIR) today announced
that it released an updated Multiple Peril Crop Insurance (MPCI)
Model for China to support probabilistic assessments for five newly
modeled crop lines of business and a newly modeled sub-peril. This
update also includes a new livestock module that adds six
additional lines of business and two new sub-perils. AIR Worldwide
is a Verisk (Nasdaq:VRSK) business.
“In 2011, AIR leveraged its considerable experience and success
in modeling MPCI portfolios in the United States to develop a model
for mainland China. Since then, the model has been updated several
times to keep it current with the fast-changing Chinese
agricultural insurance market,” said Dr. Jeff Amthor, assistant
vice president, AIR Worldwide. “The MPCI Model for China captures
the severity, frequency, and location of drought, flood, wind,
frost, and heat events nationwide, covering over 90% of the
weather-related crop losses.”
Because China is the leading producer of chickens, pigs, goats,
ducks, and sheep, and is the fourth-largest producer of cattle in
the world by head, the potential for livestock losses is
considerable. Livestock (including poultry) are susceptible not
only to extreme weather events but also disease, which can result
in extreme livestock losses. For example, an outbreak of African
swine fever—a highly infectious and deadly disease—started
impacting pigs in China in 2018, resulting in a loss of half of
China’s 400 million pigs, or 40% of the world’s total agricultural
pig population, as of the first half of 2020.
The AIR Multiple Peril Crop Insurance Model for China leverages
a 10,000-year stochastic catalog that contains losses reflecting
the most recent assumptions regarding policy conditions. The
stochastic catalog includes the addition of the heat sub-peril for
all crops and the weather and disease sub-perils for livestock.
Mainland China has multiple climatic zones, ranging from
subtropical to subarctic, and is subject to a wide range of weather
events. The updated model captures the effects of drought, flood
(due to excessive local precipitation, the runoff from more remote
rainfall, and/or snowmelt), wind, frost, and heat, for crops; fire,
wind, and pest/disease/rodent damage for forests. The model
captures critical geographic variation in weather (for example,
drought is more common in the arid north and west) and the
different impacts (for example, dehydration in the case of drought,
or crop disease in the case of flood).
The AIR MPCI Model for China estimates damage to all of the
country’s major crops with federal subsidies for crop insurance
premium. Newly supported lines of business in this update are
barley, peanut, potato, sugar crops (cane and beet), and rubber.
The model simulates changes in crop vulnerability to damage, and
resulting insured losses, that occur during the course of the
growing season.
“China is a leading global producer of wood and paper products;
the country’s forests can be insured under the national crop
insurance scheme and incur large losses not only from extreme
weather but also fire, pests, and disease,” said Yizhong Qu,
assistant vice president, AIR Worldwide China. “In addition,
livestock (including poultry) policies now make up about a quarter
of agricultural premiums in the country and have a large potential
for losses. To get a comprehensive view of agricultural risk in
China, companies must consider the risk to crops, forests, and
livestock.”
The AIR Multiple Peril Crop Insurance Model for China is
available in the 2020 release of the Touchstone Re catastrophe risk
management system.
About AIR WorldwideAIR Worldwide (AIR) provides
risk modeling solutions that make individuals, businesses, and
society more resilient to extreme events. In 1987, AIR Worldwide
founded the catastrophe modeling industry and today models the risk
from natural catastrophes, terrorism, pandemics, casualty
catastrophes, and cyber incidents. Insurance, reinsurance,
financial, corporate, and government clients rely on AIR’s advanced
science, software, and consulting services for catastrophe risk
management, insurance-linked securities, longevity modeling,
site-specific engineering analyses, and agricultural risk
management. AIR Worldwide, a Verisk (Nasdaq:VRSK) business, is
headquartered in Boston, with additional offices in North America,
Europe, and Asia. For more information, please visit
www.air-worldwide.com. For more information about Verisk, a leading
data analytics provider serving customers in insurance, energy and
specialized markets, and financial services, please
visit www.verisk.com.
###
For more information, contact:
Kevin Long
AIR Worldwide
+1-617-267-6645
klong@air-worldwide.com
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