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CRESTA Earthquake Zones
ICLR Hazards Earthquake Zones
OSFI Default Loss Estimates
September, 2004
Keith Fillmore
Senior Vice President
Aon Re Canada
Proprietary & Confidential
Outline
CRESTA
What is CRESTA
Who is CRESTA
Why CRESTA
Brief History of CRESTA
Canadian CRESTA Zones
Revision of CRESTA Earthquake Zones in 2003
CRESTA MAPS
ICLR Hazard Zones
Reason For Development
HAZARD MAPS
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Proprietary & Confidential
Outline
Default Loss Estimates ( DLE's)
What are DLE’s
Why DLE’s
Use of DLE’s
Revision of DLE’s 2004
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Who / What is CRESTA
From CRESTA . org “ CRESTA promotes the accurate and
efficient assessment and control of liabilities arising from the
insurance and reinsurance of natural perils”
CRESTA began in late 1970’s after “Tropical Cyclone Tracey”
hit Darwin Australia
Group of insurers and reinsurers
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Who / What is CRESTA
There are CRESTA zones for any country exposed to Natural
Perils Losses
Canadian CRESTA Zones developed in 1986
CRESTA Accumulation reporting is at the Aggregate Level
and continues to be the main way for Insurers to report
aggregates to reinsurers
In some countries (not Canada) insurers report these on a
quarterly basis
For Canada, CRESTA usually adopts any changes
recommended by the Reinsurance Research Council
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Why CRESTA
Tropical Cyclone Tracey produced large losses to pro rata
treaties, insurers and reinsurers realized that Cat loss
potential was greater than they had previously believed
Reinsurers needed a standard method to estimate their own
exposures
Today many Canadian insurers provide reinsurers with policy
level data but there are still some insurers who struggle to
provide this resolution of data
In the US policy level is the de factio standard but outside
North America aggregates are still the most common data
resolution
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Canadian CRESTA Zones
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2003 Update of the CRESTA Earthquake Zones
In order to update the Catastrophe Risk Evaluating and
Standardizing Target Accumulation (CRESTA) zones, the
Insurance Bureau of Canada and the Reinsurance Research
Council formed a joint committee.
A scenario approach defined areas where a single seismic event
would have roughly the same damage ratios.
Soil conditions, past seismic activity, and shifts in population
density (ie. Creation of new FSAs) and building construction
information updates, helped to create the new updated CRESTA
maps.
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Old CRESTA Earthquake Zones
Region Zone Nam e FSAs
1 Richmond, Fraser Delta V3M, V4G, V4K, V6V-Y, V7A-E
2 Rest of Greater Vancouver Rest of V3, V4, V5, V6, V7
Western
3 Victoria V8N-Z, V9A-E
V8A, V8L, V9L-Y, V2P-Z, V0M-S, V0X, V1M, V4W, V4X,
4 Rest of Vancouver Earth V4R, V3G
11 British Columbia (excl. 1 – 4) Remainder of the V Codes
5 Montreal H
6 Greater Montreal J3V-Z, J4, J5R, J6W-Z, J7A-R, J0N
7 Surroundings of Montreal J2S-X, J3A-L, J5Y-Z, J6A-T, J7V-Z, J0J-L, J0P-S
G8Y-Z, G9A-C, J1E-X, J2B-N, J3P-R, J5V, J8C-H, J0C-H,
Eastern
8 Rest of Montreal Earth J0T-V, K6A-K, K0B-C
9 Quebec City and Epicentral Region G1, G2, G5V, G6V-W, G0A, G0L, G0R, G0T
G5L-R, G5Y, G6G-T, G7, G8B-H, G8T-Z, G9, G0K, G0M-P,
10 Rest of Quebec Earth G0S, G0V, G0X-Z
15 Ontario Remainder of the K Codes and L, M, N, P
16 Quebec (excl. 5-10) Remainder of the G, H, J Codes
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New CRESTA Earthquake Zones
Region Zone Nam e FSAs
W1 West Extreme V3C, V3K, V3W, V4G, V6V
V3R, V3V, V3L, V3M, V3N, V3S, V3T, V4C, V4E, V4K, V4N,
W2 West Very High V6W, V6X
V1M, V2X, V2Y, V3B, V3H, V3J, V3X, V3Y, V4A, V4L, V4R,
W3 West High V5E, V5H, V6Y, V7A, V7B, V7C, V7E
Western
V2W, V2Z, V3A, V3E, V4B, V4P, V5A, V5B, V5C, V5G, V5J,
V5K, V5M, V5N, V5P, V5R, V5S, V5T, V5W, V5X, V5Z, V6A,
W4 West Moderate V6B, V7H, V7J, V7P
V2S, V2T, V2V, V4M, V4W, V4X, V5L, V5V, V5Y, V6C, V6E,
V6G, V6H, V6J, V6K, V6L, V6M, V6N, V6P, V6R, V6S, V6T,
W5 West Low V6Z, V7G, V7K, V7L, V7M, V7N, V7R, V7T
11 West Very Low (BC excl. W1-W5) Remainder of the V Codes
E1 East Extreme H2Z, H3A, H4P, H4S, H4Y, H5B, H9P, H9S
H2L, H2X, H2Y, H3B, H3N, H3R, H3S, H3T, H3W, H3X, H3Z,
H4A, H4B, H4L, H4M, H4T, H4V, H4W, H4X, H4Z, H5A, H8R,
E2 East Very High H8S, H9R, J6J, J6K
H0A, H1A, H1G, H1H, H1J, H1T, H1V, H1W, H1Y, H1Z, H2A,
H2B, H2C, H2E, H2G, H2H, H2J, H2K, H2M, H2N, H2P, H2R,
H2S, H2T, H2V, H2W, H3C, H3E, H3G, H3H, H3J, H3K, H3L,
H3M, H3P, H3V, H3Y, H4C, H4E, H4G, H4H, H4J, H4K, H4N,
Eastern
E3 East High H4R, H7A, H7G, H7L, H7R, H7S, H7T,
H1B, H1E, H1K, H1L, H1M, H1N, H1P, H1R, H1S, H1X, H7B,
H7C, H7E, H7H, H7J, H7K, H7M, H7N, H7P, H7Y, H9E, J0L, J0N,
J2W, J2X, J2Y, J3A, J3B, J3E, J3G, J3L, J3N, J3X, J3Z, J5Z,
J6A, J6S, J6T, J6V, J6W, J6X, J6Y, J7A, J7C, J7G, J7H, J7J,
E4 East Moderate J7K, J7L, J7N, J7T,
H0M, H1C, J0H, J0J, J0P, J0S, J2N, J2S, J2T, J3H, J3M, J3R,
E5 East Low J5J, J5M, J5W, J5X, J5Y, J6E, J7X, J7Y, J7Z, J8H, K6A
15 Ontario Very Low Remainder of the K Codes and L, M, N, P
16 Quebec Very Low (excl. E1-E5) Remainder of the G, H, J Codes
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Proprietary & Confidential
CRESTA #FSAs 2001 Population 2001 Dw ellings
1 11 220,609 83,199
2 76 1,630,651 653,450
3 14 262,168 120,674
4 34 793,438 341,413
11 53 1,000,872 445,233
Total 188 3,907,738 1,643,969
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CRESTA #FSAs 2001 Population 2001 Dw ellings
W1 5 174,183 56,633
W2 13 366,989 135,175
W3 18 459,013 174,162
W4 26 542,861 212,234
W5 30 531,763 237,374
11 96 1,832,929 828,391
Total 188 3,907,738 1,643,969
*Note: 2001 population and dwelling figures based on the full 2001 Canadian Census from Statistics Canada.
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CRESTA #FSAs 2001 Population 2001 Dw ellings
1 11 220,609 83,199
2 76 1,630,651 653,450
3 14 262,168 120,674
4 34 793,438 341,413
11 53 1,000,872 445,233
Total 188 3,907,738 1,643,969
*Note: 2001 population and dwelling figures based on the full 2001 Canadian Census from Statistics Canada.
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CRESTA #FSAs 2001 Population 2001 Dw ellings
W1 5 174,183 56,633
W2 13 366,989 135,175
W3 18 459,013 174,162
W4 26 542,861 212,234
W5 30 531,763 237,374
11 96 1,832,929 828,391
Total 188 3,907,738 1,643,969
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CRESTA #FSAs 2001 Population 2001 Dw ellings
5 120 2,155,728 979,646
6 40 765,621 300,149
7 30 901,431 388,354
8 43 799,034 392,150
9 37 776,688 369,429
10 48 731,822 319,938
15 512 11,268,993 4,497,264
16 86 1,213,590 522,582
Total 916 18,612,907 7,769,512
*Note: 2001 population and dwelling figures based on the full 2001 Canadian Census from Statistics Canada.
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CRESTA #FSAs 2001 Population 2001 Dw ellings
E1 8 34,740 15,968
E2 26 451,929 208,952
E3 95 1,816,674 805,624
E4 52 1,110,686 443,081
E5 22 430,848 183,638
16 206 3,526,345 1,628,596
15 513 11,276,303 4,500,577
Total 922 18,647,525 7,786,436
*Note: 2001 population and dwelling figures based on the full 2001 Canadian Census from Statistics Canada.
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ICLR Earthquake Hazards Zones
Proprietary & Confidential
ICLR Hazard Zones
Developed primarily for insurers
Funding provided by Insurance Bureau of Canada and
Reinsurance Research Council
Used CanadaQuake to simulate over 100,000 earthquake and
develop Annual Loss Cost for each FSA
6 Zones in each area (West = British Columbia, and East is
Ontario and Quebec )
Extreme, Very High, Moderate, Low, Very Low
These are not same Loss Cost in West and East
Paper “Earthquake Hazard Zones- The relative risk of damage
to Canadian buildings” available at iclr.org
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Proprietary & Confidential
Hazard Zones – Counts by FSA
West Hazard Zones # of FSAs %
HW1 13 6.91%
HW2 4 2.13%
HW3 12 6.38%
HW4 60 31.91%
HW5 51 27.13%
HW6 48 25.53%
Total 188 100.00%
East Hazard Zones # of FSAs %
HE1 107 12.00%
HE2 100 11.21%
HE3 136 15.25%
HE4 42 4.71%
HE5 40 4.48%
HE6 467 52.35%
Total 892 100.00%
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OSFI Default Loss Estimates
Proprietary & Confidential
OSFI Default Loss Estimates
What are DLE’s
Earthquake and Fire Following PML percentage for each earthquake CRESTA
zone
Developed in 1997
Used RMS, EQE and Munich Re model to create PMLs
Very conservative PMLs
Why DLE’s
OSFI needed some standard measurement of potential earthquake losses for
insurers
Used for all insurers
Especially important for insurers that do not model their earthquake exposures
Use of DLE’s
Insurers use own aggregates to produce DLE PMLs which are compared to
Modeled PMLs
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Proprietary & Confidential
OSFI Default Loss Estimates
Revision of DLE’s for 2004
IBC currently updating average PMLs for Munich Re, RMS and EQE
models as models have changed considerably since 1997 and
CRESTA zones just changed
Bases of DLEs may be New CRESTA Zones or New Hazard Zones
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The END
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