OREANDA-NEWS. Sizeablebusiness interruption losses in Taiwan from the Tainan earthquake in early 2016 is a reminder to the insurance industry that mega-risk industrial losses could be severe in the event that an earthquake interrupts the country’s science-based industrial parks’ production.

Taiwan plays an important role in the world for its high-tech industry focus, and its science parks, where production of semi-conductors used in high-tech products is concentrated, are subject to natural catastrophe risks such as earthquakes. The Best’s Special Report, titled, “Taiwan Earthquakes Threaten Science Parks,” notes that Taiwan insurers have prudent reinsurance protection and have set aside special reserves in the past years to ensure adequate capital for paying potential catastrophe losses. Hence, the risk-adjusted capitalization levels, as measured by Best’s Capital Adequacy Ratio (BCAR), of Taiwan non-life insurance companies have not significantly deteriorated as a result of the Tainan earthquake.