Challenges in Earthquake Risk Modeling from a Reinsurer’s Perspective

Earthquake risk modeling is a fundamental prerequisite for the reinsurance industry to calculate adequate insurance prices. Despite the fact that earthquake risk and, in particular, earthquake hazard modeling has gone through years of steady improvements, there are still enormous challenges to be solved. Looking at recent experiences of earthquake events, it seems that not only the occurred losses but even the earthquakes themselves and their characteristics have come as a surprise. Considering the risk modeling process as a work-flow that typically involves the three major part of hazard modeling, vulnerability assessment and exposure analysis, the problems can be split into two categories: (1) data availability or data quality and (2) modeling methodology and uncertainty treatment. Hazard-related data availability and quality varies for different regions and often entire earthquake hazard models already exist. Sometimes several views on seismic hazard are published, while in other regions no data on seismic hazard is available and even basic information like earthquake catalogues, soil characteristics, ground motion estimates, or secondary effects is scarce. Concerning vulnerability information of buildings, contents or business interruption the situation often is even worse. Similarly, the delivery of exposure data with a satisfying granularity in the sense of geographical location, building type, building age, etc., is only slowly improving in many parts of the world. However, such data is crucial to transform seismic hazard into risk. Also different modeling methodologies provide results with sometimes substantial deviations. In such cases it is extremely tedious to find out where these deviations come from and what are the main drivers of earthquake risk. Furthermore, uncertainties inherent to the entire risk modeling process and there potential correlations are treated very differently in the reinsurance industry and cause a huge range of possible views on seismic risk.

@inproceedings{id2358,
  author = {K\"aser, Martin},
  booktitle = {SSA 2015 Annual Meeting},
  language = {en},
  number = {15-523},
  organization = {Seismological Society of America},
  title = {Challenges in Earthquake Risk Modeling from a Reinsurer{\textquoteright}s Perspective},
  year = {2015},
}

%O Conference Proceedings
%A Käser, Martin
%B SSA 2015 Annual Meeting
%G en
%N 15-523
%I Seismological Society of America
%T Challenges in Earthquake Risk Modeling from a Reinsurer’s Perspective
%D 2015