- Pricing and telematics lead the charge as insurtech patents jump 40pc
- FCA puts general insurance pricing practices under review
- Volvo and Baidu reach agreement to produce autonomous vehicles
- Cyber and D&O exposures increasingly intertwined, Airmic report finds
- Arch selects Touchstone for cat risk modelling
AIR updates South America earthquake models
Written by staff reporter
Cat risk modelling firm AIR Worldwide has updated its earthquake models for South America based on new data and research on seismic risk in the region. The models now enable the analysis of high-value industrial facilities, builders’ risk, and public infrastructure. Modelled perils have been expanded to include liquefaction and tsunami, in addition to the most current understanding of ground shaking in South America.
The model domain has also been expanded to include Ecuador, along with existing models for Chile, Peru, Colombia, and Venezuela. The enhanced models will provide insurers, reinsurers, and other stakeholders with a comprehensive view of earthquake risk in South America and can also be used to satisfy regulatory requirements that base capital reserves on probabilistic loss estimates.
“AIR’s earthquake models for South America are an excellent method of estimating the seismic vulnerability of a portfolio specific to the insurance industry in a simple and practical way,” said peer reviewer Dr. Ing. Jorge Olarte Navarro, profesor del Departamento Académico de Estructuras, Facultad de Ingeniería Civil, Universidad Nacional de Ingeniería, Lima, Perú.
Located on the Circum-Pacific belt, South America has a long history of seismic activity and has given rise to some of the world’s largest earthquakes. More than a dozen damaging earthquakes have occurred there since 2007, including the powerful 2010 Maule and 2014 Iquique events. A wealth of data has also become available since the magnitude 8.8 Maule earthquake occurred off the coast of Chile, and AIR seismologists have since been conducting research into the resulting transfer of seismic stress and the impact of that stress transfer on the probability of other destructive earthquakes occurring in nearby regions.
To develop a time-dependent view of seismicity, AIR scientists have augmented historical earthquake data with more than 20 years of GPS data to reveal areas of strain accumulation and relaxation. The new AIR time-dependent seismicity model is a significant advance over other earthquake hazard models for the region.
In addition to the revised view of seismicity, the models feature extensive updates to the local intensity, vulnerability, and loss calculation components. Updated ground motion prediction equations use new, high-resolution soil maps to capture shaking intensity. Groundwater data is used to assess the potential for liquefaction, which is now modelled explicitly for major cities — the areas with the greatest concentration of exposure. Earthquakes off South America’s Pacific coast also have the potential to trigger tsunamis that can greatly increase the damage and loss. Following AIR’s introduction of tsunami models for Japan and Canada, the new South America earthquake models are said to provide the industry’s first comprehensive view of tsunami risk for the entire coastline.
The AIR earthquake models for South America estimate losses to residential, commercial, and industrial assets as well as to vehicles. The calculations have been tailored to each country’s unique building practices and have been peer-reviewed by local experts at leading South American institutions; incorporating findings from damage surveys, studies of local building codes, detailed claims data analysis, and structural engineering research.
“We’ve employed several innovative methodologies to achieve a comprehensive view of South America’s complex seismicity and the vulnerability of its building stock,” said Dr. Mehrdad Mahdyiar, PE, vice president and senior director, earthquake hazard, AIR Worldwide. “By covering earthquake-triggered perils such as tsunami and liquefaction in addition to ground shaking, AIR’s new earthquake models give companies a distinct advantage in preparing for the next great earthquake in the region.”
The earthquake models for South America are currently available in the Touchstone 3.0 and CATRADER 17 catastrophe risk management systems.