Oasis Loss Modelling Framework (Oasis LMF), together with the National Reinsurance Corporation of the Philippines (Nat Re), UP Disaster Risk and Exposure Assessment for Mitigation (UP-DREAM), the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA), and Willis Towers Watson recently unveiled the two-year project called the “Oasis Platform for Climate and Catastrophe Risk Assessment in the Philippines” or the Oasis Project.
This initiative envisions developing an open-access catastrophe model (“cat model”) for flood risk in the Philippines housed in the open-source catastrophe modelling platform Oasis. It also aims to build capacity among Philippine stakeholders—the government, insurance industry, academe, and the non-profit/development sector—on how they can use, modify, and develop catastrophe models. Cat models are computer applications that estimate the risk of different natural and man-made perils (e.g. earthquakes, hurricanes, floods) in certain areas and calculates the cost of potential damages to structures (e.g. houses, buildings, bridges, etc.) in those areas.
Reinsurance and flood experts team up to introduce the Oasis Project, a two-year plan envisioning the first open-access catastrophe model for flood in the Philippines. (From left to right) Christian Ladoux, Chief Underwriting Officer of Nat Re; David Simmons, Managing Director, Capital, Science and Policy Practice of Willis Towers Watson; Dickie Whitaker, CEO of Oasis LMF; Engr. Jun Paat, Officer-in-charge for the Flood Forecasting and Warning Section of PAGASA; and, Dr. Eric Paringit, Program Head of UP-DREAM.
International insurers and reinsurers have been using cat models to manage their catastrophe exposures, to price their insurance products, and to calculate how much risk they should retain or transfer. Governments can use these applications to develop disaster risk financing mechanisms and make risk-informed decisions on their risk reduction and mitigation efforts. The academe and other sectors meanwhile can use these to augment existing research, assess the impacts and effects of climate change, and analyze loss scenarios.
Funded by the International Climate Initiative (IKI) of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), the project hopes to provide new insights on catastrophe risk in the Philippines, identified as one of the countries most vulnerable to climate change impacts and hit by an average of over 20 typhoons per year.
In 2013, economic losses from Typhoon Haiyan (Yolanda), one of the most devastating calamities to hit the country recently, were estimated to be around 5% of the country’s GDP or approximately PHP 604 billion. This covered loss of human lives, buildings and infrastructure, agriculture, and general livelihood.
“The understanding of risks and its consequences is a fundamental requirement in creating a sustainable society. Barriers to entry and opaque global standards have denied this knowledge too often,” said Dickie Whitaker, CEO of Oasis LMF. “This is now changing. This project uses the best local and global experts to deliver knowledge on flood risk to the people of the Philippines. We at Oasis are privileged to play a small role in bringing the government, science, and the insurance industry together to make this a practical, sustainable solution.”
“It is an honor to be a part of this pioneering project as it is the first of its kind for developing nations,” said Allan Santos, CEO and President of Nat Re. “We are pooling together the expertise of key influencers of disaster risk management and disaster risk financing and insurance from the government, the academe, and the insurance sector, all of whom have a shared vision of more disaster resilient communities. In the end, the catastrophe model that we’ll build and the capabilities that we’ll develop will be more than just new tools to augment our decision-making and risk management processes, as they will serve as tangible proof of what the government and the private sectors—particularly the insurance industry—can achieve together.”
For the last 25 years, catastrophe models were used by the international (re)insurance industry in the process of assessing, measuring, pricing and transferring risk. Through this project, stakeholders may thoroughly identify high-risk areas, quantify and price the flood risk, spur the development of risk transfer mechanisms, and support the crafting of disaster risk reduction strategies. These will all lead to long-term resilience for the country.