analysis of earthquake risk exposure for china milan simic, benfield 3 june 2003

Analysis of Earthquake Risk Exposure for China

Milan Simic, Benfield

3 June 2003

The information contained in this document is strictly proprietary and confidential. ©Benfield 2003

• background

• what do we need to quantify earthquake risk?

hazard

exposure

vulnerability

loss calculation

• conclusions - way forward

Presentation overview


• third largest country in the world

• 2001 population ~1.3b

• GDP growth in excess of 7% a year

• 2001 joined WTO

• insurance premium statistics according to:

CIRC – China Insurance Regulatory Commission

Swiss Re

Background – key facts


Background – insurance premium

• ratio non-life to life premiums from 2:1 in early 1990s to 1:2-3 now

Year CIRC

total

($b)

Swiss Re

total

($b)

CIRC

increase

(%)

CIRC

non-life

($b)

Swiss Re

non-life

($b)

CIRC

increase

(%)

1999 16.9 17.0 - 6.5 6.3 -

2000 19.3 19.3 14 7.2 8.9 11

2001 25.4 26.0 32 8.3 9.9 15

2002 36.9 36.9 45 9.4 n/a 13


Background – historic earthquakes

• historic earthquakes

• M>6

• 780BC to 1994AD

1556 Guanzhong, M=8

1668 Shandong, M=8.5

1303 Linfen, M=8

1739 Ningxia, M=8

1920 Haiyuan, M=8.5

1976 Tangshan, M=7.8


Background - fatalities

• historic earthquake fatalities (official)

• RGCER (Research Group on Chinese Earthquake Risk) and Munich Re

Year Name Magnitude RGCER Munich Re

1303 Linfen 8 200,000 200,000

1556 Guanzhong 8 830,000 830,000

1622 Anxiang 7 12,000 150,000

1668 Shandong 8.5 50,000 50,000

1739 Ningxia 8 65,000 50,000

1850 Sichuan 7.5 20,650 300,000

1920 Haiyuan 8.5 234,117 235,000

1976 Tangshan 7.8 242,769 290,000


Catastrophe model components

insured loss

locationcoverage

portfolioexposure data

locationcharacteristics

physical model

locationintensity

damagefunction

locationtypesynthetic event

generation

locationintensity

parameters

spatialtemporalphysical

historic eventcatalogue

locationintensity

probabilitydistribution

frequencyseverity

loss

hazard

insurancecoverage

limitsdeductibles

exposure

vulnerability


Earthquake hazard in China

• physical background of hazard - tectonic setting

• 2 subduction zones under Eurasian plate and strong intra-plate deformation caused by complex stress fields



• physical background of hazard - 7 regions and faults

I – Xingjiang (compression faults)

II - Qinghai-Tibet Plateau (subduction – strongest earthquakes)

III - Northeast China (relatively quiet)

IV - North China (normal and strike/slip faults)

V - South China (relatively quiet)

VI - Taiwan

VII - South China Sea



• geographical distribution of hazard

• collect historic catalogues and create synthetic ones

• basic catalogue information: time, source, depth, M

• major (M>6) earthquakes between 780BC and 1994AD

• CSB catalogues between 1831BC and 1979?


• ground shaking (example of damage - soft storey collapse in 1999 Chi-Chi earthquake)

• shaking hazard measured either through intensity or instrumentally

Earthquake hazard in China - shaking


Earthquake hazard in China – shaking intensity

• intensity contours (1920 Haiyuan, M=8.5)


Earthquake hazard in China – surface faulting

• ground failure (surface faulting in 1976 Tangshan, M=7.8 earthquake)

• failure by shear or extension

• identify surface faults in catalogue


Earthquake hazard in China – landslides

• ground failure (landslide on Miyun reservoir dam in 1976 Tangshan, M=7.8 earthquake)

• collect or create landslide susceptibility maps


Earthquake hazard in China – liquefaction

• ground failure (liquefaction in 1976 Tangshan, M=7.8 earthquake)

• collect or create liquefaction susceptibility maps


Earthquake hazard in China – FFE

• estimate number of ignitions from floor area and PGA

• fire spread needs to be modelled

• fire suppression time needs to be obtained or calculated from building type and layout


Earthquake hazard in China – tsunami

• tsunamigenic earthquakes to be identified in catalogue

• hazard measured through existing tsunami run-up and inundation maps


• aggregation

selection of appropriate aggregation unit (CRESTA may not be fine enough)

administrative and/or postal boundaries

• specific portfolio information

value

LOB/coverage (generally commercial/industrial only)

limits/deductibles

age/style/construction type

population/GDP as surrogate when insurance information scarce

Exposure - aggregation


Exposure – provinces

• 22 provinces + 5 autonomous regions + 4 municipalities (Beijing, Tianjing, Shanghai and Chongqing) = 31

• + Taiwan, Hong Kong, Macao

• old CRESTA zones were provinces

• aggregates still mainly provided at this level


Exposure – CRESTA zones

• CRESTA zones declared as first 2-digit postcodes

• July 2002

• aggregates rarely provided at this level


• standard GUOBIAO codes

• State Statistical Bureau

• 31 provinces

• ~2,500 counties

Exposure – administrative regions


• administrative region hierarchy

31 provinces

~2,500 counties (XIAN)

cities/municipalities (SHI)

rural towns (ZHEN) } ~12,500

urban districts for 4 municipalities (QU)

• 1990 and 2000 census differences (~12,500 vs. ~ 25,000)

• significant mapping uncertainties (different sources and providers)

Exposure – administrative regions


• 2-digit postcodes

• 4-digit postcodes (~counties)

• 6-digit postcodes (~cities, towns and urban districts)

Exposure – postcodes


• importance of resolution

Exposure – resolution

##


• relationship between ground shaking and damage ratio

• empirical approach

observed loss data very limited

mainly intensity based (MMI, JMA etc.)

Seismic Intensity Zoning Map of China by CSB (1990)

• engineering approach

design codes, construction practices and standards

mainly instrument based (PGA, PGV, Sa etc.)

Seismic Zoning Map of China by CSB (1999)

• whole or component/assembly approach

Vulnerability


Vulnerability

MMI

Dr

50%

100%

Dr (%)

MMI

Type 3

Type 2

Type 1

• damage probability

matrices available for

China

• functions of ground

shaking (MMI) to give

damage ratio (Dr)

• building classification

important


• RGCER’s Atlas of Earthquake Risk Prediction in China 1995

• RGCER’s loss modelling results based on GDP/population

data

• historic experience long but potentially incomplete

• deterministic: analysis of postulated or historic events

• probabilistic: modelling of ‘synthetic’ events to capture full

hazard potential

• financial/statistical component

Loss calculation


• RGCER’s

expected

building losses

between 1995

and 2005

Loss calculation


Loss calculation - results

loss ($)

return period of loss (years)

Model 3

Model 2

Model 1

• loss exceedance

curves

• uncertainty (best

estimate, PML,

upper bound…)

• several models

• model

certification?


• risk quantification (via catastrophe modelling) is the first step of

any risk transfer

• cat models are relatively complex

• uncertainty needs to be measured and understood

• how many models are we going to see?

• is there a role for certification?

• government role in risk transfer?

Conclusions - way forward

analysis of earthquake risk exposure for china milan simic, benfield 3 june 2003

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