Location
Chicago, Illinois
Date
01 May 2013, 2:00 pm - 4:00 pm
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
Meeting Name
7th Conference of the International Conference on Case Histories in Geotechnical Engineering
Publisher
Missouri University of Science and Technology
Document Version
Final Version
Rights
© 2013 Missouri University of Science and Technology, All rights reserved.
Creative Commons Licensing
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Document Type
Article - Conference proceedings
File Type
text
Language
English
Recommended Citation
Saldaña, James, "Insurance Industry Perspective on the Importance of Geotechnical Earthquake Engineering for Commercial Structures" (2013). International Conference on Case Histories in Geotechnical Engineering. 29.
https://scholarsmine.mst.edu/icchge/7icchge/session01/29
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.
