RMS updates eastern Canadian/U.S. earthquake model

Risk Management Solutions (RMS), a provider of products and services for the management of natural hazard risk, has updated its U.S. and Canada earthquake models to reflect phenomena such as demand surge and claims adjustment and inflation. The earthquake model update features third-generation modeling capabilities throughout the region and incorporates perspectives on loss amplification gained from the 2004-05 hurricanes.”The hurricanes of 2004 and 2005 provided new insights into the amplification of insured losses in severe catastrophes due to economic causes beyond “simple” damage,” RMS says in a press release announcing the update. “A new loss-amplification module, consistent with the one currently being applied to other third-generation RMS models, has also been implemented throughout the U.S. and Canada to consider such factors as economic demand surge, claims adjustment and inflation, the economic impact of reconstruction, and cascading catastrophes that can occur in major metropolitan areas.”The updated earthquake model takes into account differences between quake risks in eastern and western Canada. For example, the ground motions from earthquakes in eastern Canada and eastern U.S. have greater high-frequency content than events in the west, an important characteristic in capturing the risk profile for low-rise structures in this region, RMS says. “Earthquakes east of the Rockies are less common than in the tectonically active West, but can be more severe due to the slower attenuation of ground motion and less seismically-resistant building stock,” RMS earthquake practice lead Don Windeler says. “Our revised U.S. and Canada earthquake models provide users with powerful tools for both underwriting and portfolio management in these regions.”RMS updated the source modeling for these rare events, using current national seismic hazard maps from the U.S. Geological Survey and the Geological Survey of Canada, as well as new research into the behavior of key areas driving the risk to insured portfolios. The treatment of the largest earthquakes in the New Madrid seismic zone, for example, includes stochastic events incorporating variability in geometry, ground motion, magnitude estimates, and single or multi-event occurrence.Another key advancement involves the extension of RMS’ spectral response-based vulnerability modeling from the western earthquake regions to the eastern regions, providing a consistent analytical framework for risk quantification across the U.S. and Canada. This approach captures the variations in spectral frequency content with magnitude, distance, and site conditions, and analyzes the ways that they interact with buildings of different heights and materials.