State-owned earthquake insurer EQC is preparing to shift to the next generation of risk modelling technology, moving from the more than 20-year-old Minerva platform to a "new" one called RiskScape.
EQC chief financial officer Fraser Gardiner said ongoing investment in natural hazard science including the world-leading GeoNet platform, created in collaboration with GNS Science and LINZ, provided confidence to international reinsurance markets to continue providing cover for New Zealand.
Before 2001, scientists had already created a deep understanding of New Zealand's natural hazards, but the development of GeoNet supercharged their research.
Outside of the science community, most New Zealanders may only have become aware of GeoNet after the Canterbury earthquakes, he said.
Since then hundreds of thousands of New Zealanders look to the GeoNet app on their phone when they feel the earth moving to check the location and strength of any earthquake.
But the work to enable access to GeoNet information started well before.
GeoNet not only provides invaluable data to scientists and citizens but also enables EQC and private insurers to create sophisticated loss modelling to understand risks and potential losses in a natural disaster.
International reinsurers rely on loss models to assess whether or not to provide cover for New Zealand and how much they need to charge in premiums.
EQC provides a specific New Zealand-view of these risks that can be compared to other models developed by a number of US-based companies.
"Understanding our natural hazards and their potential impact is vital for New Zealand’s physical and economic security," Gardiner said.
In that cause, EQC and its international reinsurance agent Aon began the development of a bespoke risk-modelling tool for New Zealand called Minerva in 1998.
"We are currently transitioning to a new loss modelling platform, called RiskScape, that will support the inclusion of the latest research and a wider range of natural hazards," Gardiner said.
RiskScape, however, has been long in the making, being developed for over a decade within NIWA and GNS Science.
It has been under continual improvement with increasing flexibility for users to convert hazard exposure into risk to better inform choices on where and how to best reduce the risk.
"The holy grail NIWA is working towards is to combine weather and 'downstream' hazard forecasting with RiskScape to eventually provide councils and civil defence and emergency management groups with the ability to forecast risk ahead of the event, for example, how many people should we prepare to evacuate, or what damage and costs are we likely to incur during this event to start mobilising resources," NIWA told Parliament in 2018.
EQC selected RiskScape to replace its existing loss modelling tool, pooling resources with NIWA and GNS Science to work on the next version – RiskScape 2.0 – a web application, GNS Science's 2020 annual report said.
"The development of a web-based user interface will make RiskScape more accessible for government, councils, insurance and reinsurance users, as well as our existing researcher base.
Over the past 20 years, EQC has invested $189 million to allow GeoNet to record and collect data on earthquakes, tsunamis, volcanic activity and landslides that underpinned EQC's mission to reduce the impact of natural disasters on people and property.
Last year, EQC invested around $22 million into natural hazard research, the overwhelming majority allocated to GeoNet.
"Even the most sophisticated risk modelling tool relies on getting the best data available, so the input from GeoNet that is then used by GNS Science researchers and other Kiwi scientists is vital in making our loss models more accurate," Gardiner said.
Earlier this month, EQC confirmed a record-high reinsurance cover of nearly $7 billion for the 2021/22 financial year, a remarkable result in an international reinsurance market that has become increasingly tough due to COVID-19 and several major natural disasters.
"It also demonstrates the trust the market has in our risk model and our Kiwi scientists," Gardiner said.
"Reinsurers still use one of the international catastrophe models, but our New Zealand modelling carries significant weight and trust to be able to affect negotiations favourably."