Seismic risk management through insurance and its sensitivity to uncertainty in the hazard model

Abstract

Acknowledging the devastating consequences of past earthquakes, current research efforts focus on the development of tools for assessing and controlling the risk and losses associated with future earthquakes, in addition to trying to minimize construction costs. Apart from providing a control of these levels, earthquake engineering can also provide solutions to manage the financial implications of the expected hazardous events. The first part of this article focuses on the management of the expected losses through the mechanism of transfer of the financial risk via earthquake insurance. Various insurance models are explained and applied in different case studies, and numerous analyses are performed across Europe, for a benchmark four-storey reinforced-concrete frame building. The results highlight significant variation in the premiums with seismicity, design practices and properties of the insurance model. It is crucial that any mitigation or transfer framework should use probabilistic methods to consider the uncertainties inherent in the hazard and structural response estimates. For example, different studies for the same region often indicate considerable differences in seismic hazard estimates. The uncertainty inherent in the hazard input model is transferred to and affects the results of the structural design and the performance assessment. Thus, the second part of the article investigates the impact of the epistemic uncertainty in the hazard model on the structural design and consequently the estimated future losses and risk levels, again for the benchmark building. First, a comparison is performed between the hazard data from two studies for different locations in Italy, in order to assess the possible range of variation in estimated hazard levels amongst different studies. The effects of these hazard variations on the seismic design and risk and loss metrics for the benchmark building are also investigated for these locations. Finally, a simplified approach for modelling hazard uncertainty is introduced and various sensitivity analyses are performed to investigate the effects of the hazard uncertainty across Europe. It is shown that hazard uncertainty can be of differing importance for the various involved stakeholders.

Prospective study on risk-targeted seismic hazard maps for Northeastern Brazil: case study in Zone 1 of ABNT NBR 15421:2006

“…In terms of accelerations (Figure 4a), 60% of the grid cells have PGA [19] larger than the code's [8], which is 0.05g for the entire region, but this number reduces to 20% for PGA/ code PGA > 2, and these cells are located right at the previously mentioned zone. The point of this comment is to illustrate that, in most of the analyzed territory, accelerations are not so different in terms of what is expected between different hazard assessments (e.g., Douglas et al [41], Gkimprixis et al [42]), not to mention the fact that they were developed using very different methodologies. As mentioned, Petersen et al [19] used smoothed seismicity models, whereas in [8] a diffuse seismicity was used; the former also used logic trees to account for the epistemic uncertainties.…”

Urban seismic resilience mapping: a transportation network in Istanbul, Turkey

“…First, the analysis aims to support the local authorities’ decisions on urban planning and infrastructure investment and therefore, should be aligned with their design hazard map or scenario 24 . Second, and more important, the uncertainty in hazard occurrence and spatial distribution is generally much greater than the uncertainty in robustness and recovery of the system, whereby considering hazard uncertainty is bound to obscure the uncertainties in structural damage and recovery processes, which are of genuine interest for mitigation and resilience 25 . In other words, to perform the probabilistic analysis over the performance of structures, it is proposed to disregard the uncertainty in It is noteworthy, though, that if the probabilistic treatment of ground motions is needed, the analysis can be repeated for different hazard intensity measures with a given probability of occurrence.…”

Natural Disasters—Origins, Impacts, Management

“…On the other hand, Italy, which has observed the most seismic activity and damage in Europe, as noted in Figure 3, has seen a steady rise in the uptake of seismic insurance since 2009, with a nearly 0% insurance rate of residential properties to about 20% in 2019 [119]. This low uptake ratio in the majority of these countries could be due to high premiums, owner's perception of risk, insurance history, governmental participation, uncertainties in the seismic loss models, involvement of insurers in development and promotion of seismic research and code development, and other issues [120,121].…”