Location

Chicago, Illinois

Session Start Date

4-29-2013

Session End Date

5-4-2013

Abstract

Pricing in the commercial catastrophe insurance market is primarily driven by computer models. For the evaluation of commercial earthquake insurance risk, the majority of insurers, reinsurers and more recently, rating agencies, rely heavily on the output models developed by a few software vendors. Insurers and reinsurers evaluate their total risk based on output from one or more of these models, and develop prices that depend on the loss estimate data from the models. In an effort to most accurately potential, soil conditions and engineering practices are recognized by the model vendors and incorporated into the loss calculation algorithms.When an insurer receives information from a building owner regarding quality seismic engineering of their structure, such as geotechnical engineering to mitigate risk caused by insurer is able to input the data into the models and reduce the final loss estimate, thereby reducing the premium they charg risk. When premiums are affordable, a building owner is more likely to purchase adequate insurance. The consequence for a commercial building owner of not purchasing insurance and not mitigating earthquake risk through seismic engineering could be financial ruin. In addition, the widespread consequences of a devastating earthquake involving many unicommercial entities, or inadequately engineered structures, could have a significant negative impact on the economy, in additional loss of life. However, incorporating geotechnical engineering practices into the construction or retrofit of commercial structures benefits the building owner, insurance industry and the economy.

Department(s)

Civil, Architectural and Environmental Engineering

Appears In

International Conference on Case Histories in Geotechnical Engineering

Meeting Name

Seventh Conference

Publisher

Missouri University of Science and Technology

Publication Date

4-29-2013

Document Version

Final Version

Rights

© 2013 Missouri University of Science and Technology, All rights reserved.

Document Type

Article - Conference proceedings

File Type

text

Language

English

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Apr 29th, 12:00 AM May 4th, 12:00 AM

Insurance Industry Perspective on the Importance of Geotechnical Earthquake Engineering for Commercial Structures

Chicago, Illinois

Pricing in the commercial catastrophe insurance market is primarily driven by computer models. For the evaluation of commercial earthquake insurance risk, the majority of insurers, reinsurers and more recently, rating agencies, rely heavily on the output models developed by a few software vendors. Insurers and reinsurers evaluate their total risk based on output from one or more of these models, and develop prices that depend on the loss estimate data from the models. In an effort to most accurately potential, soil conditions and engineering practices are recognized by the model vendors and incorporated into the loss calculation algorithms.When an insurer receives information from a building owner regarding quality seismic engineering of their structure, such as geotechnical engineering to mitigate risk caused by insurer is able to input the data into the models and reduce the final loss estimate, thereby reducing the premium they charg risk. When premiums are affordable, a building owner is more likely to purchase adequate insurance. The consequence for a commercial building owner of not purchasing insurance and not mitigating earthquake risk through seismic engineering could be financial ruin. In addition, the widespread consequences of a devastating earthquake involving many unicommercial entities, or inadequately engineered structures, could have a significant negative impact on the economy, in additional loss of life. However, incorporating geotechnical engineering practices into the construction or retrofit of commercial structures benefits the building owner, insurance industry and the economy.