Impact of Spatial Scale and Building Exposure Distribution on Earthquake Insurance Rates: A Case Study in Tangshan, China

Abstract

In order to examine the effect of spatial scale and building exposure distribution on the pure rate of earthquake catastrophe insurance, this study described three modules for rate determination, put forward the general assumptions and principles for calculating the pure insurance rate, and introduced three types of building distribution and their calculation. Taking Tangshan City of Hebei Province in China as an example, we analyzed the pure rate of regional earthquake insurance in terms of spatial scale and building exposure distribution by using the method of control variables. The results show that for districts (or counties) with large differences in seismic risk, the risk areas can be further divided to apply differential rates. In areas with a diverse distribution of potential earthquake source areas and large differences in building density, there is a risk of overestimating or underestimating the pure rate of earthquake insurance when buildings are distributed evenly or partially evenly. This violates the break-even principle of rate setting. This study also provides a reference for earthquake catastrophe insurance companies to choose the spatial scale and the detailed level of exposure distribution in rate determination.

Keywords

Catastrophe insurance / Earthquake exposure / Premium rate / Spatial scale / Tangshan / China

References

[1] Afsari N, Abdipour MS, Taghizadeh-Farahmand F. Seismic hazard analysis from deterministic method using fuzzy logic in Anzali Port. Earth Science Informatics, 2022, 15(1): 563-572

[2] Algermissen ST, Steinbrugge KV. Seismic hazard and risk assessment: Some case studies. The Geneva Papers on Risk and Insurance – Issues and Practice, 1984, 9: 8-26

[3] Asteris PG, Chronopoulos MP, Chrysostomou CZ, Varum H, Plevris V, Kyriakides N, Silva V. Seismic vulnerability assessment of historical masonry structural systems. Engineering Structures, 2014, 62–63: 118-134

[4] Azizi-Bondarabadi H, Mendes N, Lourenço PB, Sadeghi NH. Empirical seismic vulnerability analysis for masonry buildings based on school buildings survey in Iran. Bulletin of Earthquake Engineering, 2016, 14(11): 3195-3229

[5] Barbat AH, Carreño ML, Pujades LG, Lantada N, Cardona OD, Marulanda MC. Seismic vulnerability and risk evaluation methods for urban areas. A review with application to a pilot area. Structure and Infrastructure Engineering, 2010, 6(1–2): 17-38

[6] CEA (China Earthquake Administration). 2015. Seismic ground motion parameter zonation map of China (GB 18306-2015). Beijing: Seismological Press. https://www.gb18306.net/. Accessed 30 Jan 2023 (in Chinese).

[7] Cornell CA. Engineering seismic risk analysis. Bulletin of the Seismological Society of America, 1968, 58(5): 1583-1606

[8] Erdik M. Akkar S, Ilki A, Goksu C, Erdik M. Earthquake risk assessment from insurance perspective. Advances in assessment and modeling of earthquake loss, 2021, Cham, Switzerland: Springer International Publishing 111-154

[9] Gao XL, Ji Y, Jin FJ, Niu FQ. Seismic vulnerability of rural housing and regional anti-disaster strategies in China. Acta Geographica Sinica, 2012, 67(2): 211-220 (in Chinese)

[10] GIROJ (General Insurance Rating Organization of Japan). 2022. Earthquake insurance in Japan, 4th edn. https://www.giroj.or.jp/english/pdf/Earthquake.pdf. Accessed 3 Jul 2022.

[11] Gkimprixis A, Tubaldi E, Douglas J. Evaluating alternative approaches for the seismic design of structures. Bulletin of Earthquake Engineering, 2020, 18(9): 4331-4361

[12] Gkimprixis A, Douglas J, Tubaldi E. Seismic risk management through insurance and its sensitivity to uncertainty in the hazard model. Natural Hazards, 2021, 108(2): 1629-1657

[13] Goda K, Wenzel F, Daniell JE. Beer M, Kougioumtzoglou IA, Patelli E, Au S-K. Insurance and reinsurance models for earthquake. Encyclopedia of earthquake engineering, 2015, Berlin: Springer 1184-1206

[14] Gurenko EN. Catastrophe risk and reinsurance: A country risk management perspective, 2004, Washington, DC: Risk Books

[15] Hermosilla T, Ruiz LA, Recio JA, Estornell J. Evaluation of automatic building detection approaches combining high resolution images and LiDAR data. Remote Sensing, 2011, 3(6): 1188-1210

[16] Hu YX. Earthquake engineering, 2006, Beijing: Earthquake Press

[17] Kwon O-S, Elnashai A. The effect of material and ground motion uncertainty on the seismic vulnerability curves of RC structure. Engineering Structures, 2006, 28(2): 289-303

[18] Li LF, Wang JF, Wang CY. Typhoon insurance pricing with spatial decision support tools. International Journal of Geographical Information Science, 2005, 19(3): 363-384

[19] Li XJ, Jing BB, Liu C, Yin JM. Site classification method based on geomorphological and geological characteristics and its application in China. Bulletin of the Seismological Society of America, 2019, 109(5): 1843-1854

[20] McGuire RK. Probabilistic seismic hazard analysis: Early history. Earthquake Engineering & Structural Dynamics, 2008, 37(3): 329-338

[21] NSPRC (National Standard of the People’s Republic of China) China’s code for seismic design of buildings (GB50011-2010), 2010, Beijing: Ministry of Construction of the Peoples Republic of China (in Chinese)

[22] NSPRC (National Standard of the People’s Republic of China) Post-earthquake field works—Part 4: Assessment of direct loss (GB/T18208.4-2011), 2011, Beijing: China Standard Press (in Chinese)

[23] Silva V, Brzev S, Scawthorn C, Yepes C, Dabbeek J, Crowley H. A building classification system for multi-hazard risk assessment. International Journal of Disaster Risk Science, 2022, 13(2): 161-177

[24] Skoufias E, Strobl E, Tveit T. Constructing damage indices based on publicly available spatial data: Exemplified by earthquakes and volcanic eruptions in Indonesia. International Journal of Disaster Risk Science, 2021, 12(3): 410-427

[25] Su XK, Wang F, Zhou DM, Zhang HW. Heat health risk and adaptability assessments at the subdistrict scale in Metropolitan Beijing. International Journal of Disaster Risk Science, 2022, 13(6): 987-1003

[26] Sun BT, Zhang GX. Study on seismic disaster risk distribution of buildings in mainland China. China Civil Engineering Journal, 2017, 50(9): 1-7 (in Chinese)

[27] Tyagunov S, Grünthal G, Wahlström R, Stempniewski L, Zschau J. Seismic risk mapping for Germany. Natural Hazards and Earth System Sciences, 2006, 6(4): 573-586

[28] Wang H, Wang P. Research on China’s earthquake insurance, 2013, Beijing: China Financial Publishing House

[29] Wang JA, Shi PJ, Yi XS, Jia HC, Zhu LY. The regionalization of urban natural disasters in China. Natural Hazards, 2008, 44(2): 169-179

[30] Woessner J, Laurentiu D, Giardini D, Crowley H, Cotton F, Grünthal G, Valensise G, Arvidsson R. The 2013 European seismic hazard model: Key components and results. Bulletin of Earthquake Engineering, 2015, 13(12): 3553-3596

[31] Wu SH, Jin J, Pan T. Empirical seismic vulnerability curve for mortality: Case study of China. Natural Hazards, 2015, 77(2): 645-662

[32] Xu WJ, Gao MT, Zuo HQ. Generation of a stochastic seismic event set based on a new seismicity model in China’s earthquake catastrophe model. Seismological Research Letters, 2021, 92(4): 2308-2320

[33] Xu Z, Zhang FR, Wu YY, Yang YJ, Wu Y. Building height calculation for an urban area based on street view images and deep learning. Computer-Aided Civil and Infrastructure Engineering, 2022

[34] Yakut A, Ozcebe G, Yucemen MS. Seismic vulnerability assessment using regional empirical data. Earthquake Engineering & Structural Dynamics, 2006, 35(10): 1187-1202

[35] Yu YX, Li SY, Xiao L. Development of ground motion attenuation relations for the new seismic hazard map of China. Technology for Earthquake Disaster Prevention, 2013, 8(1): 24-33 (in Chinese)

[36] Yucemen MS. Probabilistic assessment of earthquake insurance rates for Turkey. Natural Hazards, 2005, 35(2): 291-313

[37] Yucemen MS. Tesfamariam S, Goda K. Probabilistic assessment of earthquake insurance rates for buildings. Handbook of seismic risk analysis and management of civil infrastructure systems, 2013, Amsterdam: Elsevier 787-815

[38] Zheng SS, Xiang ZH, Zheng J, Zheng H, Sun LF. Study on the earthquake insurance system and determination of insurance premium rate of buildings in China. Journal of Catastrophology, 2016, 3(31): 1-7.