Presenter Jagath Alwis B.Sc. FIII , FCII FIoD (UK) Director (Technical)/Chief Technical Officer

2. CATASTROPHE EVENTS A CHALLENGE Karachi – 10th to 12th April 2012Tsunami– Sri Lankan Experience Presenter Jagath Alwis B.Sc. FIII, FCIIFIoD (UK) Director (Technical)/Chief Technical Officer Ceylinco Insurance PLC, - Sri Lanka

3. Major NatCat Losses in 2011 • 175 major NatCat events incurred in 2011 with an Insured loss of US$ 110,021 Mn and around 30,000 casualties • The above is inclusive of 65 floods, 76 storms and 15 earthquakes • The most costly event was Japanese tsunami followed by Thailand floods and New Zealand earthquake

4. Tsunami 9.0 Magnitude : 9.0 Date - Time: Sunday, December 26, 2004 at 07:58:53 AM local time Location : 3.30N 95.96E Depth : 30 km Region : Off The West Coast of Northern Sumatra

5. Tsunami 9.0 • More than 300,000 people killed, including 14,100 listed missing and 1,126,900 displaced. • 10 countries in South Asia and East Africa were affected by the tsunami. • The earthquake was felt at Banda Aceh, at Meulaboh and at Medan, Sumatra. and the tsunami effected parts of Bangladesh, India, Malaysia, Maldives, Myanmar, Singapore, Sri Lanka, Thailand and Somalia. • The tsunami caused more casualties than any other in recorded history and was recorded nearly world-wide on tide gauges in the Indian, Pacific and Atlantic Oceans.

6. Off The West Coast Of Northern Sumatra

7. Satellite image of the origin

10. Affected Countries • Bangladesh • India • Indonesia • Malaysia • Maldives • Myanmar • Singapore • Somalia • Sri Lanka • Thailand

12. Banda Aceh Shoreline Before the disaster After the disaster

13. Banda Aceh North Shore Before the disaster After the disaster

14. Aceh City center Before the disaster After the disaster

15. Impact of Tsunami on Sri Lanka

16. Impact of Tsunami on Sri Lanka • In certain areas water has come 2 kms inland • Highest wave was about 30m

17. Impact of Tsunami on Sri Lanka contd.. • 66,120 Houses Completely Washed Off

18. Impact of Tsunami on Sri Lanka contd.. • 44,000 Houses Partly Damaged

19. Impact of Tsunami on Sri Lanka contd.. • 217,000 people were in Camps

20. Impact of Tsunami on Sri Lanka contd.. • 168 Public Schools damaged

21. Impact of Tsunami on Sri Lanka contd.. • Over 5,000 vehicles damaged

22. Impact of Tsunami on Sri Lanka contd..

23. Impact of Tsunami on Sri Lanka contd..

24. Impact of Tsunami on Sri Lanka contd.. • 10,000 fishing boats are missing or damaged. 300,000 fishermen have lost their jobs

25. Impact of Tsunami on Sri Lanka contd.. • 5,000 Small Businesses Completely damaged.

26. Impact of Tsunami on Sri Lanka contd.. • Large number of small businesses partly damaged

27. Impact of Tsunami on Sri Lanka contd.. • 4,700 Hotel rooms damaged. 27,000 jobs lost in the tourism industry.

28. Impact of Tsunami on Sri Lanka contd.. • Deaths 30,974 • Injured 23,176 • Missing 4,698 • Displaced 553,287 • Children who lost both parents - 1075

29. Impact of Tsunami on Sri Lanka contd.. • 200,000 jobs lost. Which is 3% of the labour force.

30. Impact of Tsunami on Sri Lanka contd.. Damages to Infrastructure • Bridges, Railway Tracks, Roads etc.,

31. Impact of Tsunami on Sri Lanka contd..

32. Impact of Tsunami on Sri Lanka contd.. • Total loss was around US $ 2.5 bn. Other than the economic loss • Insured loss was US$ 120 Mn where the size of the Non-Life market was US$ 170 Mn in 2004 • This is around 5% of the worldwide insured loss which was US$ 2,381 Mn

33. Impact on Sri Lankan Insurance Industry • Total General Insurance Market - US $ 170.M in 2004 • Total Life Insurance Market - US $ 130.M in 2004 • Total claims -US $ 120 Mn (including US $ 50 Mn from risks written from Maldives) • In addition to the above, Insurers have given various public commitments to settle claims on ex-gratia basis which was another US$. 50 M • These ex-gratia claims were on Insurers’ net accounts.

34. Sri Lankans who did not have experience of Natural Perils were not keen to purchase such cover.

35. Classes of Insurance Affected • Life • Health • Property • Engineering • Personal Accident • Motor • Marine Hull & Marine Cargo • Crop & Livestock • Miscellaneous accident sub classes such as • Goods in transit • Cash in Safe etc.,

36. Tsunami claims under property insurance • Natural perils are excluded under the standard Fire policy. • Floods, Cyclone, Storm & Tempest and Earthquake covers are available at an additional premium. • Above perils are included to the basic cover for large risks and approved Foreign investment projects. (similar to Industrial All Risks insurance, but perils are specified) • Inundation by sea water was excluded under Floods & CST extensions.

37. Tsunami claims under property insurance • Earthquake extension: • “Loss or damage to the property insured occasioned by or through or in consequence of an earthquake”. • Since the Tsunami was caused consequent to an earthquake, insurers admitted liability under this extension.

38. Tsunami Claims Payable Under Motor Insurance • Natural perils were excluded under all Motor policies. • Cover against floods was available at an additional premium. • Inundation by sea water was neither included nor excluded under floods extension. • All insurers agreed to pay claims on ex-gratia basis, if the insured has taken the flood cover. But on their own account.

39. Tsunami Claims Paid Under Non-property Classes • Life - Covered. if double / triple accident benefits are offered, Insurers are liable for the higher amounts. • Personal Accident – Covered. • Health – Covered • CAR/EAR – Covered. • Marine Cargo – Covered. • Marine Hull – Covered. • Miscellaneous Classes - Covered under most of the sub-classes.

40. Reaction by Insurers contd… • Special emphasis on Nat Cat perils during risk assessments and surveys • Re-looked at PML exposures and Excess of Loss covers • Construction details and asset valuations • Strategies on handling large volume of claims; resources, loss adjusters, staff, call centers etc • Strategies on post-loss minimizations; simplified documentation, salvage disposal, release of advance payments for reconstruction etc. • Increased awareness of Nat Cat perils amongst public

41. Reaction by Insurers contd… • The Government has set-up some early warning systems and created a buffer zone of 100 m from the coast-line • Insurers are collating data on past natural CATs to share data amongst the local players • Geo-coding of risks and accumulation controls • Mapping of ‘Red Spots’ for flood risks, especially risks in and around Colombo and suburbs • Rating and deductibles • Reduction in the number of years from 7 to 2 years for ‘Missing’ persons, thus processing death certificates and life claims

42. Thank You…