Document / Publication
Swiss Reinsurance Company (Swiss Re)
This document presents a global probabilistic model for the re/insurance industry to calculate the effects of volcanic ash fall. The publication contains a ranking of the cities most at risk. It also discusses how to apply the ranking to better prepare for these events and to manage the financial consequences
Volcanic eruptions have remained a largely unmodelled peril in the re/insurance industry. To enable the insurance industry to quantify this risk, Swiss Re has developed the insurance industry’s first exposure-based, probabilistic volcano model. The model covers the entire globe, assessing the risks of 508 active volcanoes.
Since it is possible to mitigate the loss of life and injuries through adequate early warning and evacuations, loss and damage to property is the largest loss potential from volcanic eruptions. Swiss Re’s global volcano model consequently quantifies the loss potential in the context of property. The model focuses on the loss potential from volcanic ash fall because this is the hazard with the most widespread impact.
As global urbanisation gathers pace and new technologies emerge, the protection gap for volcanic hazards widens. Precise quantification of volcanic risk can enable adequate insurance coverage. Moreover, accurate volcanic risk assessment can help urban authorities devote proper attention to reduce misconceptions about volcanic risk exposure, increase public risk awareness and draw up appropriate emergency response plans in a timely fashion.