Building loss estimation for earthquake insurance pricing

The paper describes an earthquake loss assessment methodology that can be used for insurance pricing and portfolio loss estimation in Turkey. The basic ingredients are probabilistic and deterministic regional site dependent earthquake hazard, regional building inventory (and/or portfolio), building vulnerabilities associated with typical construction systems in Turkey and estimations of building replacement costs for different damage levels. Probable maximum and average annualized losses are estimated as the result of analysis. The effect of the two-level earthquake insurance system in Turkey (the national compulsory earthquake insurance scheme and the private earthquake insurance system) is incorporated in the methodology. As a demonstration of the methodology we look at the case of Istanbul and use its building inventory data instead of a portfolio. A state-of-the-art time dependent earthquake hazard model that portrays the increased earthquake expectancies in Istanbul is used. Intensity and spectral displacement based vulnerability relationships are incorporated in the analysis. In particular we look at the uncertainty in the loss estimations that arise from the vulnerability relationships, and at the effect of the implemented repair cost ratios.