New Zealand - The Shaky Isles

New Zealand is a land in motion - it is prone to earthquake and volcanic activity. The most severe earthquake in New Zealand's modern history was in Wellington in 1855, estimated to be more than 8 on the Richter Scale. This caused widespread damage, movement of land and some deaths. There have been more than 10 earthquakes over 7 on the Richter scale since then. New Zealand is a world leader in the use of building codes and designs to lessen the impact of natural disasters, particularly earthquakes. It also has a comprehensive and compulsory natural disaster insurance scheme for private property and an insurance industry willing to offer cover to owners of non-residential property.

The Earthquake Commission (EQC)

EQC is New Zealand's primary provider of geological disaster insurance to residential property owners. In an earthquake, EQC works through its Catastrophe Response Program, which determines how EQC will cope with the substantial increase in resources that will be required.

The EQC Catastrophe Response Model

As part of its planning for large earthquakes EQC commissioned Future Impact Ltd to develop a system dynamics simulation model of its Catastrophe Response Program. The model is designed to determine how long it will take, what it will cost and how much will be paid out for different combinations of resources when recovering from earthquakes of different magnitudes in different locations. EQC does not payout until properties are repaired and delays in this can occur depending on the availability of repairers and materials. EQC is particularly interested in expected cash flow demands so that it can draw down the necessary funds from reinsurers. The model is known within EQC as the "Logjam Model" because of its ability to identify capacity constraints on personnel and bottlenecks in the flow of claims.

The following screens show selected Control Panels from within the model. These demonstrate how the model operates and the way the results are presented.

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