Investigating the sensitivity of losses to time-dependent components of seismic risk modeling

Abstract

Conventional earthquake risk modeling involves several notable simplifications, which neglect: (1) the effects on seismicity of interactions between adjacent faults and the long-term elastic rebound behavior of faults; (2) short-term hazard increases associated with aftershocks; and (3) the accumulation of damage in assets due to the occurrence of multiple earthquakes in a short time window, without repairs. Several recent earthquake events (e.g. 2010–2011 Canterbury earthquakes, New Zealand; 2019 Ridgecrest earthquakes, USA; and 2023 Turkey–Syria earthquakes) have emphasized the need for risk models to account for the aforementioned short- and long-term time-dependent characteristics of earthquake risk. This study specifically investigates the sensitivity of monetary loss (i.e. a possible earthquake-risk-model output) to these time dependencies, for a case-study portfolio in Central Italy. The investigation is intended to provide important insights for the catastrophe risk insurance and reinsurance industry. In addition to salient catastrophe risk insurance features, the end-to-end approach for time-dependent earthquake risk modeling used in this study incorporates recent updates in long-term time-dependent fault modeling, aftershock forecasting, and vulnerability modeling that accounts for damage accumulation. The sensitivity analysis approach presented may provide valuable guidance on the importance and appropriate treatment of time dependencies in regional (i.e. portfolio) earthquake risk models. We find that the long-term fault and aftershock occurrence models are the most crucial features of a time-dependent seismic risk model to constrain, at least for the monetary loss metrics examined in this study. Accounting for damage accumulation is also found to be important, if there is a high insurance deductible associated with portfolio assets.