By Julian Richardson Assistant business co-ordinator email@example.com
NEM Insurance Company Jamaica has adequate reinsurance coverage to cope with a magnitude 7.0 earthquake similar to the one that struck Haiti a year ago, data emerging from a earthquake simulation by the Mona GeoInformatics Institute and The Earthquake Unit revealed.
NEM commissioned the study last year after Haiti's infrastructure was devastated by the quake that struck close to the capital, Port-au-Prince, killing an estimated 300,000 people and left about 1.3 million, of Haiti's nine million people, homeless. Jamaica shares the same faultine with Haiti -- the Plantation Garden - Enriquillo Fault system which stretches from Jamaica to the Domican Republic.
"The event in Haiti a year ago was so shocking that we felt it was a real wake up call and invited us to do something special," NEM general manager Chris Hind told the Business Observer at a briefing of the findings of the study at the Knutsford Court Hotel yesterday.
"There is no reason why it was there and not here... we wanted to take it and put it in the worst possible position for Jamaica, run the model and find out if we had enough reinsurance to pay our claims, and the answer was a very positive 'yes'."
Losses on Nem's portfolio would amount to just under $11 billion, which represents about nine per cent of the company's insured aggregates while it has 15 per cent reinsurance coverage.
"So there is quite a lot of room before the bubble would burst," Hind noted.
Hind said local experts were commissioned because it is believed that they would be able to give a more accurate catastrophy model than the international ones generally available. The study can now be used for reinsurance negotiations and pricing.
"The reason why we did this study was because we were not entirely happy with the general international catastrophy modeling available and used in the market," said the NEM general manager, adding "The trouble with international models is that they are very sophistacated but they really don't have a great understanding of what happens on the ground here in Jamaica."
Director of Mona GeoInformatics Dr Parris Lyew-Ayee explained that the study revealed that the entire island would feel the effect of a similar magnitude 7.0 earthquake to the one that struck haiti. He said more than 75 per cent of the island would experience shaking serious enough to cause structural damage in buildings. Some of the areas of concern, he revealed, were Portmore, St Catherine; Norman Manley International Airport and downtown Kingston.
The NEM portfolio analysis was very detailed, with building types calassified by roof and wall types, with weights applied to their sum insured value as well as the probability for loss in category and each zone."