LONDON, 15 November 2012 – Impact Forecasting, the catastrophe model development center of excellence at Aon Benfield, has launched new Algeria and Morocco earthquake models to achieve a more reliable estimation of the earthquake losses to insured properties in Algeria and Morocco. The models bridge a gap in the market as no vendor model currently exists for both countries. Aon Benfield is the global reinsurance intermediary and capital advisor of Aon plc (NYSE:AON).

Since the May 2003 earthquake in Algeria, which killed more than 2,000 people, left 150,000 homeless and caused economic losses of an estimated 10% of the country’s GDP, legislation has enforced mandatory insurance against natural catastrophes for all household, commercial and industrial property risks. Following the 2004 magnitude 6.5 Al Hoceima earthquake in Morocco that killed more than 620 people, injured 900 and caused economic losses estimated at USD400 million, market discussions have arisen about the creation of an obligatory coverage for natural catastrophes.

In response, Impact Forecasting has created models to help insurance and reinsurance markets to better understand the risks they write in Algeria and Morocco.

Key characteristics of the Algeria and Morocco earthquake models include:
 The models are a part of Impact Forecasting’s Regional Maghreb Earthquake Model, thus being able to assess trans-boundary loss effects.
 The hazard component of the model used the local expertise of Professor Kijko from the Aon Benfield Natural Hazard Centre in South Africa to generate a stochastic set of 55,000 events over a 50,000 year period
 The vulnerability module includes more than 2,400 intensity-based damage curves applicable to high resolution exposure data by considering both the structural properties of the insured properties and also the period of construction, maintenance conditions and the structural height.
 The model is calibrated and validated in all its phases of construction by use of local data such as macro-seismic maps, damage and losses from past events.
 The approach helps to satisfy the requirements of the proposed European Union Solvency II regulation by supporting insurers in gaining a better understanding of their exposures and delivering a transparent model validation process to demonstrate appropriate capital requirements.

Adam Podlaha, international head of Impact Forecasting, said: “As a major insured peril, it is crucial that modelling of earthquakes continues to evolve to mirror the latest science and changing insurance industry needs.  The Algeria and Morocco model launch reflects Impact Forecasting’s objective to deliver cross-country models, while using locally sourced information for various model components and a better knowledge of building properties. In addition, across all territories, the team is also exploring model development for secondary perils such as liquefaction, fire following and tsunami.”

Ahmed Rajab, CEO Middle East and North Africa at Aon Benfield, commented: “As insurance penetration increases in North Africa, insurers’ need for insightful risk quantification has become more important than ever. In response, Aon Benfield’s brokers combined forces with Impact Forecasting and have created a tool to support the demand.” 

The Algeria and Morocco earthquake models are implemented in Impact Forecasting’s proprietary loss calculation platform ELEMENTS which models complex financial structures and constructs an exceedance probability curve for loss to a portfolio that covers multiple locations over a wide geographical region. It is also able to calculate loss estimates for historical or any defined events.

Ends

About Impact Forecasting®
Impact Forecasting is a catastrophe modeling center of excellence whose seismologists, meteorologists, engineers, mathematicians, finance risk management and insurance professionals analyze the financial implications of natural and man-made catastrophes around the world.  Impact Forecasting’s experts develop software tools and models that help clients understand risks from hurricanes, tornadoes, earthquakes, wildfires and terrorist attacks on property, casualty and crop insurers and reinsurers.  To find out more about Impact Forecasting®, visit www.impactforecasting.com.

About Aon Benfield
Aon Benfield, a division of Aon plc, is the world’s leading reinsurance intermediary and full-service capital advisor. We empower our clients to better understand, manage and transfer risk through innovative solutions and personalized access to all forms of global reinsurance capital across treaty, facultative and capital markets. As a trusted advocate, we deliver local reach to the world’s markets, an unparalleled investment in innovative analytics, including catastrophe management, actuarial and rating agency advisory. Through our professionals’ expertise and experience, we advise clients in making optimal capital choices that will empower results and improve operational effectiveness for their business. With more than 80 offices in 50 countries, our worldwide client base has access to the broadest portfolio of integrated capital solutions and services. To learn how Aon Benfield helps empower results, please visit aonbenfield.com.

About Aon
Aon plc (NYSE: AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and
human resources solutions and outsourcing services. Through its more than 61,000 colleagues worldwide, Aon unites
to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through
industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker,
best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm
by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited
to learn about Aon's global partnership and shirt sponsorship with Manchester United.

Media contacts

David Bogg
Aon Benfield
t: +44 (0)20 7522 4016
e: david.bogg@aonbenfield.com

Andrew Wragg
Aon Benfield
t: +44 (0)20 7522 8183
e: andrew.wragg@aonbenfield.com    

Alexandra Lewis
Aon Benfield
t: +44 (0)20 7882 0541  
e: alexandra.lewis@aonbenfield.com