by David Welsh
A GOVERNMENT-backed scheme launched in the United Kingdom will link Britain's insurance industry with the science community to improve insurers' understanding of natural hazards such as earthquakes, floods, hurricanes and tornados.
The UK insurance industry is a worldwide operation, earning around
five billion pounds sterling last year. With 92 billion pounds
sterling of premium income (some 14 per cent of gross domestic
product - GDP) it is an important contributor to the country's
The aim of the Tsunami initiative is to gain knowledge from the UK's
strong science base that can be exploited to further improve the
industry's risk assessment capabilities and sharpen its
competitiveness in world markets. Tsunami stands for: Technology and Science in Universities, NERC (Natural Environment Research Council) and the MetOffice for Insurance.
A consortium of eight companies including underwriters and brokers
has been formed to stimulate new research proposals specifically to
meet the needs of insurers. Under the scheme, the Government's
Department of Trade and Industry (DTI) will provide "pump-priming" funds
amounting to 480,000 pounds sterling over the next three years that
will be matched by contributions from consortium members.
They are already considering 55 research project proposals from
scientists in a many UK institutions, ranging from studies of
storm-surge probability around the UK coastline to the correlation of
earthquake risks in various parts of the world with space "weather"
events such as solar storms.
John Battle, the Minister for Science, Energy and Technology,
described the Tsunami (also, appropriately, the Japanese word for
tidal wave) initiative as a good example of how an industry could
"build new bridges with the science community and make the vital
connections between blue sky research and business success in the
Tsunami will help change the way in which the insurance industry taps
into the wealth of research expertise in the UK. The initiative has
been led by Dr Dougal Goodman, Acting Director of the British
Antarctic Survey (BAS).
Dr Goodman said: "Both insurance and reinsurance are international
businesses in which successful players are using increasingly
sophisticated techniques and spending more on scientific research."
He pointed out that BAS's parent body, NERC, already spends 165
million pounds sterling a year on environmental research, of which
about 12 million pounds sterling is devoted to studies of various
environmental risks and hazards.
"The new scheme would help the insurance industry to communicate its
own specific needs to scientists and would also identify research
already done that could answer some of the industry's risk management
Floods, cyclones, subsidence, erosion, radiation damage to satellites
and timely prediction of extreme climatic events are areas likely to
be of interest to insurers and reinsurers. Further research proposals
from the country's leading research laboratories, universities and
research councils are being invited.
Nick Golden, Group Underwriting and Reinsurance Manager of consortium
member Royal and Sun Alliance Group, said that insurance essentially
involves "the intelligent application of knowledge". The new project was
designed to increase this knowledge, to illuminate the changing
pattern of insurance risks around the globe and to alert insurers to
the implications of these.
Changes in weather patterns were, he pointed out, of special
importance to the industry in view of the wide-scale damage that
could result from climatic disasters, as well as long-term effects
such as changes in the level of water tables. It was important to
recognise the inter-relationship - "teleconnections" - between weather
changes in one part of the globe and those in another, such as the "El
Nino" effect - an extensive prolonged warming of the eastern tropical
Pacific occurring every few years, with major meteorological results.
The Tsunami consortium members are: Benfield Ellinger Ltd, Catlin
Underwriting Agencies Ltd, Commercial Union Assurance Company plc, D
P Mann Underwriting Agency Ltd, Royal & Sun Alliance Insurance Group
plc, Sedgwick Reinsurance Brokers Ltd, Greig Fester Group Ltd, and
Wren Syndicates Management Ltd. The British Antarctic Survey will
represent the DTI in the consortium.
Responsible for the Government's research in Antarctica, the
Cambridge-based British Antarctic Survey is one of the NERC's five
research institutes. BAS is funded by government via NERC and the
Office of Science and Technology.