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🌊 '''Tsunami''' is a series of powerful ocean waves generated by large-scale underwater disturbances — most commonly earthquakes, but also volcanic eruptions and submarine landslides — that can cause devastating coastal destruction and represents a significant [[Definition:Catastrophe peril | catastrophe peril]] for the insurance industry. Unlike typical storm surge, tsunami waves can travel across entire ocean basins and strike coastlines with little warning, producing concentrated property damage, [[Definition:Business interruption | business interruption]] losses, and mass casualties. Insurers writing [[Definition:Property insurance | property]], [[Definition:Marine insurance | marine]], and [[Definition:Life insurance | life]] risks in tsunami-prone regions must account for this low-frequency, high-severity hazard in their [[Definition:Underwriting | underwriting]] and [[Definition:Catastrophe model | catastrophe modeling]] frameworks.

⚙️ Standard [[Definition:Homeowners insurance | homeowners]] and commercial [[Definition:Property insurance | property]] policies in many markets exclude tsunami damage, or treat it as part of a broader [[Definition:Earthquake insurance | earthquake]] or [[Definition:Flood insurance | flood]] exclusion, leaving coverage gaps that specialized products or government-backed programs must fill. [[Definition:Catastrophe model | Catastrophe modelers]] such as AIR Worldwide and RMS have developed tsunami sub-models that simulate wave propagation, coastal inundation, and resulting insured losses, enabling [[Definition:Reinsurer | reinsurers]] and [[Definition:Primary insurer | primary carriers]] to price [[Definition:Catastrophe reinsurance | catastrophe reinsurance]] layers and manage [[Definition:Aggregation risk | aggregation risk]]. After the 2011 Tōhoku tsunami — which generated an estimated $35 billion in insured losses worldwide — the industry significantly upgraded its modeling granularity and its understanding of correlated exposures between earthquake shaking and subsequent tsunami inundation.

💡 The insurance industry's approach to tsunami risk reflects a broader challenge with tail-end perils: events that occur rarely enough to resist credible statistical pricing based on historical data alone, yet carry catastrophic potential when they do strike. [[Definition:Insurance-linked securities (ILS) | Insurance-linked securities]] such as [[Definition:Catastrophe bond (cat bond) | catastrophe bonds]] have been structured to transfer tsunami risk to [[Definition:Capital markets | capital markets]], broadening the pool of available capacity beyond traditional reinsurance. For coastal communities and governments, the availability of tsunami coverage — or the lack thereof — directly influences economic resilience and post-disaster recovery, making this peril a focal point in discussions about [[Definition:Protection gap | protection gaps]] and [[Definition:Public-private partnership | public-private partnerships]] in disaster finance.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Catastrophe peril]]
* [[Definition:Catastrophe model]]
* [[Definition:Earthquake insurance]]
* [[Definition:Flood insurance]]
* [[Definition:Catastrophe bond (cat bond)]]
* [[Definition:Protection gap]]
{{Div col end}}

Definition:Tsunami - Revision history

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