Navigating earthquake risk for a Pacific port

The challenge

A large port in the Pacific insures 100% of its site value for earthquakes. Due to changes in the insurance market, insurers had placed a sub-limit on earthquakes, which was inconsistent with the insurance strategy of the port.

The solution

Marsh’s Advisory Property Risk Solutions undertook a comprehensive earthquake analysis for the port. Our natural catastrophe specialists assessed the client’s earthquake risk and evaluated the adequacy of current insurance arrangements. We also completed an earthquake loss modelling analysis of the port to provide evidence to support negotiations with insurers in respect to the required level of insurance.

The approach involved five phases:

Due diligence and data collection: Engaging the site’s Geographic Information System (GIS) team to gather detailed asset schedules, valuations and GIS data for all assets including berths, and services such as roads, electrical, water etc.
Detailed site survey: Completing a site survey to collect detailed quality risk engineering data to inform earthquake loss models, with a specific focus on berths and their construction characteristics.
Modelling: Collating site data and GIS layers to develop a detailed earthquake modelling input file for modelling.
Supporting analysis: Completing a liquefaction risk analysis.
Reporting: Supporting negotiations with key stakeholders through objective analysis of the earthquake risk.

The results

Through detailed analysis we were able to demonstrate that the modelled losses were significantly lower than the total declared values. By differentiating the risk this way – through risk-engineering analysis of the risk exposure and detailed loss-modelling results – Marsh was able to help the port secure 100% cover on earthquake risk at insurance renewal.

This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. LCPA 23/417

“Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”