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How DFA Can Help the Property/Casualty Industry, Part 4
Hurricanes Katrina, Rita, Wilma...
Catastrophes: Models and Reserving
Risk Measures
Reinsurer Results:
Catastrophe and Strengthening
Hurricanes: 2003 and 2004 Results, Clustering and TransitioninG
Brushfire and Fire Following Exposures
Tsunami Exposure Worldwide and U.S.
Wind and Hail: Relative Hazard Levels
Cat Modeling Class
Introduction to Reinsurance
Holborn Technical Seminar
Catastrophe, Injury, and Insurance
Chapter 1: Summary
Chapter 2: Background
Chapter 3: Study Methology
Chapter 4: Population at Risk
Chapter 5: Earthquake
Chapter 6: Terrorism
Chapter 7: Industrial Accident
Chapter 8: Infectious Disease
Chapter 9: Impact of Data Quality
Chapter 10: Managing the Risk
Chapter 11: The Future
Review of Myers & Read ARIA Paper
A Perfectly Ordinary Tuesday Morning
This is Not Your Father’s Cat Model
Global Warming and Increased Catastrophes?
Reinsurer Risk Loads from Marginal Surplus Requirements, PCAS LXXVII
Reinsurance Markets
Risk Transfer Assessment
Introduction to Asset Returns and Risks
CAS Call Paper Panel
Ceded Reinsurance Issues in DFA
Catastrophe Reinsurance Simulation Game
Reinsurance by any other name
Clash Pricing
ALLOCATION OF SURPLUS FOR A MULTI-LINE INSURER
Optimization to Improve Business Performance

 

 
2004
Andrew Coburn and Alexandra Cohen
Risk Management Solutions, Inc.
 
Page: 1 2 3 4 5 6 7 8 9 10 11

5. Earthquake

Small but damaging earthquakes can occur almost anywhere in the U.S. Large magnitude earthquakes mainly occur in the seismic zones of California, Alaska, and the Western coastal states.There are also rare, damaging earthquakes in the Central U.S. and occasional significant events in the East have the potential to cause sizeable losses.

5.1 Greater Earthquake Exposure

Major earthquakes can affect very large areas---a M7.0 event can shake an area of 800 square miles (2,072 square km) with an intensity capable of destroying buildings. It is the size of the footprint of large earthquakes that makes them so catastrophic.

Population movements have shown that California and other areas of high seismic risk have grown in population by 50% since the 1970s. As the populations of cities increase, and the density of populations grow, the potential for greater losses also increases. The 1906 San Francisco Earthquake was one of the most destructive earthquakes in the U.S. It killed at least 700 people (some estimates suggest more than 3,000) and injured thousands. But in 1906, San Francisco was a city of around 340,000 people and just over half a million people were likely within the area strongly shaken by the event. Today, the San Francisco Bay Area is the fourth largest metropolitan area in the U.S., with a population of over 7 million. The area affected by the 1906 earthquake contains nine times as many people today as it did in 1906. If the casualties from the event were scaled by population growth, over 8,300 would be killed.

5.1.1 Safer Buildings

The buildings and infrastructure in California today are very different from the artisan-built wood and brick houses that formed San Francisco in 1906. Several decades of seismic building codes and advances in engineering have made successive generations of buildings more resilient and safer against earthquake shaking. Fire awareness and improvements in fire-fighting systems have decreased the likelihood of fires, making containment much easier than in 1906.

But even with these very significant advances, earthquakes remain a serious hazard to inhabitants of seismic areas. The energy unleashed in an earthquake is one of the largest natural forces---a M8.3 earthquake, like the 1906 event, releases approximately 1,013 kilojoules of energy, equivalent to more than 400 nuclear bombs detonated underground.The vibrational energy tests buildings to their limits, and often beyond their limits, causing structural failures and collapse before the occupants can get out. Design and construction faults that are invisible in normal building usage are suddenly revealed under the massive stress that an earthquake imposes.


Figure 5.1 Collapse of major engineered facilities in an earthquake can cause deaths
as is seen in the damage to Interstate 880 from the 1989 Loma Prieta Earthquake (Image:Associated Press)

5.1.2 The Acid Test

Almost every large earthquake reveals new patterns of defects in design and construction that were not well understood in previous building codes or construction practice. In the 1994 Northridge California Earthquake, steel moment frame buildings revealed construction defects that resulted in much higher damage than was expected, leading to a major overhaul of the building codes for this construction type. In the 1995 Kobe Japan Earthquake many unexpected collapses occurred in modern steel and concrete frame buildings thought to have been designed to safely withstand the forces they experienced. Earthquakes causing the collapse of modern buildings in Mexico and Turkey showed that systems of building inspection and quality control can be secretly bypassed and only revealed after a strong earthquake.

Modern building stock in U.S. city centers remains largely untested against the strong ground motions generated by a large magnitude earthquake. U.S. engineering design, construction quality, and building inspection standards are generally considered to be among the best in the world. Design standards require that buildings withstand strong earthquake forces without collapse. But even the best quality construction contains some defects, and if a large population of buildings is shaken strongly enough, a small number of them will fail. The financial cost required to make buildings safe under any groundshaking conditions may be too cost-prohibitive or economically impractical.

RMS analyzes earthquake events around the world and its engineers assess the vulnerability of different types of buildings from statistical damage surveys of past earthquakes. Masonry buildings are generally more vulnerable and injure more of their occupants than wood frame buildings. Engineered buildings, particularly those conforming to the seismic design codes required for the most earthquake-prone areas, have lower failure rates and are usually designed to sustain damage without endangering their occupants, but small percentages of them still fail under extreme loads.

5.1.3 Collapse Rates

Building collapse rates in earthquakes are a critical component in the estimation of casualties, and the modeling is very sensitive to the assumptions made. This is also an area of considerable uncertainty. Of particular sensitivity is the probability of collapse of large high-rise buildings with high occupancies. These buildings have been engineered to withstand high earthquake loads, so estimating collapse rates means estimating the construction errors or material failures they could experience.This is done by extrapolating from rates of ‘light damage’ levels observed under low intensities to ‘likely collapse’ levels at the high intensities generated by a large magnitude earthquake. In a city of several thousand engineered buildings with large numbers of occupants, collapse rates are likely to be low and variations in the collapse rates could make a large difference to the casualty estimates from the event.

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