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Analysis of Earthquake Risk
Exposure for China
Milan Simic, Benfield
3 June 2003
Presentation overview
• background
• what do we need to quantify earthquake risk?
- hazard
- exposure
- vulnerability
- loss calculation
• conclusions - way forward
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Background – key facts
• 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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Background – insurance premium
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
• ratio non-life to life premiums from 2:1 in early 1990s to 1:2-3 now
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Background – historic earthquakes
1556 Guanzhong, M=8
• historic
earthquakes
• M>6
1303 Linfen, M=8
1739 Ningxia, M=8
1920 Haiyuan, M=8.5
• 780BC to
1994AD
1976 Tangshan, M=7.8
1668 Shandong, M=8.5
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
historic event
catalogue
location
intensity
parameters
portfolio
exposure data
insurance
coverage
location
characteristics
limits
deductibles
exposure
insured loss
spatial
temporal
physical
damage
function
location
type
synthetic event
generation
location
intensity
location
coverage
probability
distribution
frequency
severity
loss
physical model
location
intensity
vulnerability
hazard
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 intraplate
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
Earthquake hazard in China - shaking
• ground shaking (example of
damage - soft storey collapse
in 1999 Chi-Chi earthquake)
• shaking hazard measured
either through intensity or
instrumentally
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 runup and
inundation
maps
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Exposure - aggregation
• 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
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
Exposure – administrative regions
• standard
GUOBIAO
codes
• State
Statistical
Bureau
• 31
provinces
• ~2,500
counties
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
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)
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Exposure – postcodes
• 2-digit
postcodes
• 4-digit
postcodes
(~counties)
• 6-digit
postcodes
(~cities,
towns and
urban
districts)
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Exposure – resolution
• importance
of
resolution
#
#
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Vulnerability
• 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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Vulnerability
• damage probability
matrices available for
China
Dr (%)
Dr
Type 3
100%
Type 2
• functions of ground
shaking (MMI) to give
damage ratio (Dr)
50%
Type 1
• building classification
important
MMI
MMI
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Loss calculation
• 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
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Loss calculation
• RGCER’s
expected
building losses
between 1995
and 2005
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Loss calculation - results
• loss exceedance
curves
loss ($)
Model 3
• uncertainty (best
estimate, PML,
upper bound…)
Model 2
• several models
Model 1
• model
certification?
return period of loss (years)
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003
Conclusions - way forward
• 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?
The information contained in this document is strictly proprietary and confidential. ©Benfield 2003