Cresta, Catastrophe Risk Evaluating and Standardizing Target Accumulations

CRESTA (Catastrophe Risk Evaluation and Standardizing Target Accumulations) was founded as a joint project of Swiss Reinsurance Company, Gerling-Konzern Globale Reinsurance Company, and Munich Reinsurance Company. CRESTA has set itself the aim of establishing a globally uniform system for the accumulation risk control of natural hazards - particularly earthquakes, storms and floods. Nowadays, CRESTA sets widely accepted standards apply throughout the international insurance industry. CRESTA zone information is used by most insurances for assessing the insurance rates they will charge.

About CRESTA
CRESTA itself publishes very few information about themselves on the internet and no more than legally required contact information is available on their website.

According to their homepage: CRESTA was set up by the insurance industry in 1977 as an independent organisation for the technical management of natural hazard coverage. The information provided here is available to everyone but is aimed primarily at insurance and reinsurance companies, insurance and reinsurance brokers and risk managers. ” ………. Information given about their main tasks ……. CRESTA is administered by the appropriate CRESTA office, which can be presently contacted at the following address:

CRESTA Secretariat c/o Swiss Reinsurance Company CH-8022 Zurich e-mail: info@cresta.org (As of 07.11.2006 http://www.cresta.org/about.html)

Hazard and Disaster Risk Assessment
There is basically no risk that cannot be insured against, however it is difficult to asses how risky it is to give out insurance contracts to customers and to asses for insurance providers how high their rates should be. One main indicator for every insurance is the premiums they pay for their reinsurance. When applying for reinsurance the forms will often be based on the models provided by CRESTA. CRESTA (Catastrophe Risk Evaluating and Standardising Target Accumulations) is an independent group led by Munich Re and Swiss Re which promotes the accurate and efficient perils. CRESTA furthermore and most importantly, established a worldwide zone classification used within the insurance industry, the CRESTA Zones. The CRESTA Zones are defined for most of the world down to postcode level. CRESTA Zones are the basis for reinsurance negotiation and portfolio analysis.

CRESTA Zones are basically based on two facts. First, CRESTA Zones take into account the possibility of natural disaster for a region based on the 4 basic natural hazards, drought, flood, earthquakes and cyclones. Second, CRESTA Zones depend on the richness of a region. The higher the value of the settlements in a region, the more an insurance will have to pay for reconstruction in case of natural hazard. In order for an insurance to calculate the risk premium distribution for each natural disaster type CRESTA Zones will be taken into account.

In seismic risk analysis, for example, a successful loss estimation of insured and reinsured values depends on the seismic hazard analysis, on the vulnerability of facilities and on the ability to calculate the earthquake risk premium, also known as average annual loss (AAL). Some people consider CRESTA Zones to Insurance like fuel to a car. CRESTA is simply one of the biggest, if not the most comprehensive and most actual information resource for natural risks and hazards.

On the downside, CRESTA specific information is not available freely. CRESTA zone information can either be bought directly from CRESTA or bundled with map systems.