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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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
• 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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Earthquake hazard in China
• 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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Earthquake hazard in China
• 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?
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
• 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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Earthquake hazard in China – shaking intensity
• intensity contours (1920 Haiyuan, M=8.5)
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Earthquake hazard in China – liquefaction
• ground failure (liquefaction in 1976 Tangshan, M=7.8 earthquake)
• collect or create liquefaction susceptibility maps
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Earthquake hazard in China – tsunami
• tsunamigenic earthquakes to be identified in catalogue
• hazard measured through existing tsunami run-up and inundation maps
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
• 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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Exposure – CRESTA zones
• CRESTA zones declared as first 2-digit postcodes
• July 2002
• aggregates rarely provided at this level
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
• standard GUOBIAO codes
• State Statistical Bureau
• 31 provinces
• ~2,500 counties
Exposure – administrative regions
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
• 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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
• 2-digit postcodes
• 4-digit postcodes (~counties)
• 6-digit postcodes (~cities, towns and urban districts)
Exposure – postcodes
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
• importance of resolution
Exposure – resolution
##
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
• 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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
• 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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
• RGCER’s
expected
building losses
between 1995
and 2005
Loss calculation
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
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?
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
• 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