Catastrophe risk modeling firm AIR Worldwide (AIR) has launched Multiple Peril Crop Insurance (MPCI) Model for China.
The new model provides a fully probabilistic approach for determining the likelihood of losses to the country’s major crops: corn, cotton, rapeseed, rice, soybeans, and wheat.
The model captures the significant effects that weather-related perils have on each crop during the growth stage, which help companies better prepare for and understand the exposure they carry based on China’s specific insurance programs, which tend to vary by province.
Because traditional methods have proven unreliable in quantifying and managing this complex risk, AIR has leveraged its considerable experience and success in modeling MPCI portfolios in the US to develop a model for China.
The AIR MPCI Model for China employs AIR’s advanced Agricultural Weather Index (AWI) to accurately capture the severity, frequency, and location of adverse weather events, while also correctly preserving the timing of events during the season.
The model explicitly models damages resulting from various weather perils, including drought, floods, and typhoons, which are the leading causes of loss in China.
The AIR Multiple Peril Crop Insurance Model for China is currently available in CATRADER , the industry standard application for analyzing catastrophe reinsurance and insurance-linked securities, and can also be used to assess a portfolio of crop insurance programs and assess combined risk to property exposed to typhoons.