AIR Worldwide: AIR Worldwide Releases Updated Multiple Peril Crop Insurance Model for China

Boston, Sept. 22, 2020 (GLOBE NEWSWIRE) -- Catastrophe risk modeling firm AIR
Worldwide (AIR) today announced that it released an updated Multiple Peril
Crop Insurance (MPCI) Model for China to support probabilistic assessments for
five newly modeled crop lines of business and a newly modeled sub-peril. This
update also includes a new livestock module that adds six additional lines of
business and two new sub-perils. AIR Worldwide is a Verisk (Nasdaq:VRSK)
business.

“In 2011, AIR leveraged its considerable experience and success in modeling
MPCI portfolios in the United States to develop a model for mainland China.
Since then, the model has been updated several times to keep it current with
the fast-changing Chinese agricultural insurance market,” said Dr. Jeff
Amthor, assistant vice president, AIR Worldwide. “The MPCI Model for China
captures the severity, frequency, and location of drought, flood, wind, frost,
and heat events nationwide, covering over 90% of the weather-related crop
losses.”

Because China is the leading producer of chickens, pigs, goats, ducks, and
sheep, and is the fourth-largest producer of cattle in the world by head, the
potential for livestock losses is considerable. Livestock (including poultry)
are susceptible not only to extreme weather events but also disease, which can
result in extreme livestock losses. For example, an outbreak of African swine
fever—a highly infectious and deadly disease—started impacting pigs in China
in 2018, resulting in a loss of half of China’s 400 million pigs, or 40% of
the world’s total agricultural pig population, as of the first half of 2020.

The AIR Multiple Peril Crop Insurance Model for China leverages a 10,000-year
stochastic catalog that contains losses reflecting the most recent assumptions
regarding policy conditions. The stochastic catalog includes the addition of
the heat sub-peril for all crops and the weather and disease sub-perils for
livestock.

Mainland China has multiple climatic zones, ranging from subtropical to
subarctic, and is subject to a wide range of weather events. The updated model
captures the effects of drought, flood (due to excessive local precipitation,
the runoff from more remote rainfall, and/or snowmelt), wind, frost, and heat,
for crops; fire, wind, and pest/disease/rodent damage for forests. The model
captures critical geographic variation in weather (for example, drought is
more common in the arid north and west) and the different impacts (for
example, dehydration in the case of drought, or crop disease in the case of
flood).

The AIR MPCI Model for China estimates damage to all of the country’s major
crops with federal subsidies for crop insurance premium. Newly supported lines
of business in this update are barley, peanut, potato, sugar crops (cane and
beet), and rubber. The model simulates changes in crop vulnerability to
damage, and resulting insured losses, that occur during the course of the
growing season.

“China is a leading global producer of wood and paper products; the country’s
forests can be insured under the national crop insurance scheme and incur
large losses not only from extreme weather but also fire, pests, and disease,”
said Yizhong Qu, assistant vice president, AIR Worldwide China. “In addition,
livestock (including poultry) policies now make up about a quarter of
agricultural premiums in the country and have a large potential for losses. To
get a comprehensive view of agricultural risk in China, companies must
consider the risk to crops, forests, and livestock.”

The AIR Multiple Peril Crop Insurance Model for China is available in the 2020
release of the Touchstone Re catastrophe risk management system.

About AIR Worldwide
AIR Worldwide (AIR) provides risk modeling solutions that make individuals,
businesses, and society more resilient to extreme events. In 1987, AIR
Worldwide founded the catastrophe modeling industry and today models the risk
from natural catastrophes, terrorism, pandemics, casualty catastrophes, and
cyber incidents. Insurance, reinsurance, financial, corporate, and government
clients rely on AIR’s advanced science, software, and consulting services for
catastrophe risk management, insurance-linked securities, longevity modeling,
site-specific engineering analyses, and agricultural risk management. AIR
Worldwide, a Verisk (Nasdaq:VRSK) business, is headquartered in Boston, with
additional offices in North America, Europe, and Asia. For more information,
please visit www.air-worldwide.com. For more information about Verisk, a
leading data analytics provider serving customers in insurance, energy and
specialized markets, and financial services, please visit www.verisk.com.

                                     ###