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Earthquake insurance pricing: a risk-based approach
1Professor, Department of Architecture, Hwa Hsia University of Technology, Taiwan.
Disasters
|May 26, 2017
Summary
Earthquake insurance premiums should reflect building-specific risks, not uniform rates. A new risk-based approach accurately estimates earthquake insurance rates by considering building type and seismic design factors.
Area of Science:
- Civil Engineering
- Risk Management
- Insurance Actuarial Science
Background:
- Current earthquake insurance premiums are often uniform, failing to account for diverse building vulnerabilities.
- Earthquake damage risk is influenced by numerous factors that are not adequately addressed in current premium setting.
Purpose of the Study:
- To propose and demonstrate a risk-based approach for estimating earthquake insurance rates.
- To analyze how various factors influence earthquake insurance premiums for buildings.
Main Methods:
- Buildings were classified into 15 model types based on construction materials and height.
- Seismic design levels, seismic zones, and construction years were incorporated into the rating model.
- The approach was applied to buildings in Taipei, Taiwan, to calculate and tabulate insurance rates.
Main Results:
- A risk-based methodology was developed to estimate earthquake insurance rates.
- Calculated insurance rates varied based on building characteristics and seismic considerations.
- The study provides a framework for more accurate and equitable earthquake insurance pricing.
Conclusions:
- A risk-based approach offers a more precise method for setting earthquake insurance premiums.
- Accurate insurance rating requires consideration of building-specific risk factors and seismic design.
- This methodology can benefit insurers and policymakers in managing earthquake-related financial risks.
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