So convenient or coincidental that insurance & academia have same view same time...

[Sabian]

Big regional quake likely within 30 years

 

S'pore almost sure to be affected, says top earth scientist

 

By LEE U-WEN

 

(SINGAPORE) A top earth scientist predicts that an earthquake measuring 8.8 or 8.9 on the Richter scale is likely to strike South-east Asia within the next 30 years - and will almost certainly cause tremors that would affect the region, including Singapore.

 

This is the view of Professor Kerry Sieh, founding director of the new Earth Observatory of Singapore (EOS) at Nanyang Technological University, who expressed concern that too many Singaporeans have the impression that the Republic is 'disaster-safe'.

 

'There's no such thing as a country that is perfectly safe. The chances of Singapore being affected by another major earthquake nearby is better than 50 per cent. We are only an arm's length away, so we've got to start planning as if we could be affected by an earthquake or tsunami,' the 57-year-old told BT in an interview.

 

Last year, when two earthquakes jolted the Indonesian island of Sumatra, hundreds of buildings in Singapore shook as a result of the ensuing tremors.

 

Prof Sieh, who will formally begin work full-time at EOS next month, is busy wrapping up a 30-year stint as a geologist at the California Institute of Technology in the US.

 

The EOS will focus on natural disasters in the region, including tsunamis, volcanic eruptions, earthquakes and climate change studies.

 

While forecasting a natural disaster is one thing, convincing the man-in-the- street to take these warnings seriously is a whole different ball game, according to Prof Sieh. 'You tell people that something is happening in 30 years' time. But many, especially those in the villages in China, simply cannot relate.

 

'To them, their only concern is putting food on the table, or worrying about what's going to happen tomorrow. Frankly, 30 years is not a long time as far as the earth is concerned. It's still within our lifetime,' he said.

 

The key to reaching out to the general population, he said, lies in education. He added that he has already mapped out plans to work with the Ministry of Education here to roll out a comprehensive learning package for students about how the earth functions.

 

'I believe that every child should have a basic, fundamental knowledge about how the planet works, why we feel tremors and how to react to them, what is the impact of climate change, and so on,' he said.

 

His vision is to see every primary and secondary school, junior college and polytechnic have in place such a programme as part of their curriculum for the younger generation to 'learn about life'.

 

To reach out to a wider audience, he said that it was likely the EOS would produce documentaries and films that could be used to educate Singapore and the region about natural disasters.

 

Although the EOS will mark its official opening only next January, Prof Sieh hopes to have a sizeable number of world-class faculty on board by then. Recruitment has already begun - the target is to have 20 faculty, 70 graduate students and post-doctoral fellows, and support staff in the next five years.

 

Even as most of the new staff are likely to be foreigners, the best way for South-east Asia to benefit in the long run is to have a steady pool of trained local earth scientists who can do good research for the region.

 

'It's not going to be difficult to bring the top people here. Singapore is a country that sells itself, really. The salaries are competitive and the government is highly supportive of building a solid research environment,' he said.

[Sabian]

Earthquake insurance underpriced in Singapore, say reinsurers

 

'Nat cats' global trend is increasing losses due to higher population density

 

By SIOW LI SEN AND EMILYN YAP

 

(SINGAPORE) Buildings in Singapore may not have adequate earthquake insurance or reinsurance cover. So if a major quake hits, there could be losses all round.

 

Also at risk could be insurance companies which have not adequately priced in the risk of natural catastrophes or 'nat cats'.

 

Reinsurers are paying more attention to this issue, especially after earthquakes which hit Sumatra last March and September were felt in many parts of Singapore. Workers streamed out of tall buildings in Suntec City, Raffles Boulevard, Raffles Place, Beach Road, Shenton Way and Chulia Street when the tremors were felt.

 

'We are addressing this with insurance companies and reviewing the nat cat coverage adequacy,' says Kua Ka Hin, chief executive of Munich Re's Singapore branch.

 

It's not that no building or structure here is covered against earthquake risk, he said. Rather, the cover may not be properly priced considering the value at risk. 'It's a case of price adequacy and risk management.'

 

Some primary insurance policies may even have earthquake cover effectively thrown in for free or cross-subsidised, in the belief that the island is not at risk from nat cats.

 

But 'from our geo-scientists' view, Singapore is not entirely immune from natural catastrophes', says Mr Kua.

 

Swiss Re's vice-president of property and specialty Peter Zimmerli also observes that Singapore is not entirely risk-free when it comes to nat cats.

 

'Swiss Re has discussed earthquake exposure with our clients in Singapore and is working to ensure that such exposure is part of their overall risk management strategy,' he adds.

 

For nat cats, Mr Zimmerli points out that 'as a general trend, globally, losses are increasing in frequency and severity due to factors such as increasing population density'.

 

Data from Munich Re also indicates rising losses from natural disasters over the years. Overall losses worldwide hit US$83 billion in 2007, and insured losses made up US$26 billion.

 

'This year could be very volatile when it comes to natural catastrophes,' says the chief executive of Munich Re Greater China and South-east Asia, Ulrich Trumpp. 'We are still ahead of two typhoon seasons, even though we have already seen large-scale disasters such as the snowstorm and earthquake in China.'

 

Rising urbanisation magnifies the impact of a natural catastrophe because of the large number of people and economic assets exposed.

 

'Even if natural catastrophes occur with the same frequency and severity as last year's, overall losses this year could be higher,' says Mr Trumpp.

 

Swiss Re believes it is too early to make a definite prediction on the size of insured losses for 2008.

 

'If looked at from a global perspective - that is, as a globally diversified reinsurer - then insured losses due to this year's Sichuan earthquake and snowstorm are well within expectations of event losses occurring in any year,' says Mr Zimmerli.

 

How would rising losses from natural catastrophes affect premiums for such insurance? 'To assure stability and sustainability for clients and companies, we need risk-adequate pricing. Therefore, we will not take on business that is priced too low,' says Mr Trumpp.

 

Mr Zimmerli also says that 'natural catastrophe premiums must be commensurate with the financial risk'.

 

Asia appears relatively underinsured for natural disasters, accounting for 49 per cent of overall losses last year, while only 11 per cent of insured losses were from the region, according to Munich Re.

 

In contrast, 29 per cent of overall losses were caused by natural disasters in Europe, but 54 per cent of insured losses were from there.