The world’s first marine catastrophe model has been developed by Sompo Canopius in partnership with Risk Management Solutions.

It comes seven months after the deadly Tianjin explosion at a container storage station in China, which killed 173 people.

On Wednesday, reinsurer Swiss Re said insurance payouts for the disaster could total up to $3.5 billion, making it the largest man-made loss in Asia.

Tianjin is one of a number of man-made and natural catastrophes to have occurred in the past few years, bringing into focus the need for a better way of quantifying and pricing insurance for marine-related risks.

That need spurred Sompo Canopius, which has offices in Par-la-Ville Road, to partner with RMS last year “in the specification and build of the world’s first marine cat model”.

The companies announced the development yesterday, and in a statement said they had worked together to address limitations to the industry’s ability to effectively quantify man-made and natural catastrophe risk to marine classes.

The companies, together with another six insurers and reinsurers, compiled data, build and calibrated models “to assess vulnerability of cargo and specie more realistically, particularly with respect to product classification, storage and packaging”.

Marek Shafer, head of catastrophe management at Sompo Canopius, said: “Significant marine losses such as the 2011 Tohoku earthquake, 2012 Hurricane Sandy and the 2015 Tianjin explosion have improved the understanding of the link between property and marine lines of business.

“They have also reinforced Sompo Canopius’s belief that the approach to catastrophe management should be holistic across our group. The practice of square pegging marine exposure into the round holes of property catastrophe risk models is now recognised as inappropriate.

“A new approach is needed to align these correlated classes and our collaboration with RMS represents a key step on this journey.”

RMS has released “Marine Cargo Catastrophe Modelling: Navigating the Challenges, Charting the Opportunities”, a report explaining key elements in the development of the new model. The report also examines the current state, best practices, and future of marine modelling.