Willis Report Preparing for a New View of Us Eq Risk

8/6/2019 Willis Report Preparing for a New View of Us Eq Risk

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BRIEFING

CatastRophE MaNaGEMENt sERvICEs

September 2008

pREpaRINGFoR a NEwvIEw oF U.s.EaRthqUakERIsk

Together, the 2008 National Seismic Hazard Maps and the

2007 Uniform California Earthquake Rupture Forecast

describe the current scientic view of seismic hazard in the

United States. These studies are the product of a massive amount

of research and scientic debate that has transpired over the past several years.

This academic work will form the foundation of the catastrophe model updates

that will be introduced by vendor modelers in 2009 and, ultimately, will have a

signicant impact on the risk modeled for property and workers compensation

portfolios.

Over the coming months, Willis will be providing additional details about how

the vendor earthquake models are changing to proactively prepare you for how

model changes may affect your company’s underwriting guidelines, capital

requirements, and portfolio management strategies. This report is a rst step

in this process, and has been designed to be a point of reference you can refer to over this period, as more information becomes

available from AIR, EQECAT and RMS about the changes they are implementing. We encourage you to contact your Willis

representative if you would like to have a more in-depth discussion on what this new research could mean for your business.

The Uniform California Earthquake Rupture

Forecast, Version 2 (UCERF 2)

By 2007 Working Group on California Earthquake Probabilities*

USGS Open File Report 2007-1437CGS Special Report 203SCEC Contribution #1138Version 1.0

2008

*Edward H. Field, Timothy E. Dawson, Karen R. Felzer, Arthur D. Frankel, Vipin Gupta,Thomas H. Jordan, Tom Parsons, Mark D. Petersen, Ross S. Stein, Ray J. Weldon II, and Chris J. Wills

U.S. Department of the Interior U.S. Geological Survey

California Department of ConservationCalifornia Geological Survey

% g16-32

32-48

48-64

64+

8-16

4-8

0-4

Highest hazard

Lowest hazard

U.S.Departmentof theInteriorU.S.GeologicalSurvey

FactSheet2008–3018April2008Printed on recycled paper

2008 United States National Seismic Hazard Maps

T he U.S. Geological Survey’s

National Seismic Hazard

Maps are the basis for seismic design provisions of building

codes, insurance rate structures,

earthquake loss studies, retrofit

priorities, and land-use plan-

ning. Incorporating these hazard maps into designs of buildings,

bridges, highways, and criti-cal infrastructure allows these

structures to withstand earth-

quake shaking without collapse.Properly engineered designs not

only save lives, but also reduce

disruption to critical activities

following a damaging event. By estimating the likely shaking

for a given area, the maps also

help engineers avoid costs from over-design for unlikely levels of

ground motion.

The Update Process

The U.S. Geological Survey recently updated the

National Seismic Hazard Maps by incorporating new seismic,

geologic, and geodetic information on earthquake rates and

associated ground shaking. These 2008 maps supersede ver-

sions released in 1996 and 2002. Updating the maps involved

interactions with hundreds of scientists and engineers at

regional and topical workshops. USGS also solicited advice

from working groups, expert panels, State geological surveys,

Federal agencies, and hazard experts from industry and aca-

demia. The Pacific Earthquake Engineering Research Center

developed new crustal ground-motion models; the Working

Group on California Earthquake Probabilities revised the

California earthquake rate model; the Western States Seismic

Policy Council submitted recommendations for the Intermoun-

tain West; and three expert panels were assembled to provide

advice on best available science.

Changes to the Maps

The most significant changes to the 2008 maps fall into

two categories, as follows:

Changes to earthquake source and occurrence rate models:1.

In California, the source model was updated to account

for new scientific information on faults. For example,

models for the southern San Andreas Fault System

were modified to incorporate new geologic data. The

source model was also modified to better match the

historical rate of magnitude 6.5 to 7 earthquakes.

The Cascadia Subduction Zone lying offshore of

northern California, Oregon, and Washington was mod-

eled using a distribution of large earthquakes between

magnitude 8 and 9. Additional weight was given to the

possibility for a catastrophic magnitude 9 earthquake

that ruptures, on average, every 500 years from north-

ern California to Washington, compared to a model that

allows for smaller ruptures.

Colorson this map show the levelsof horizontal shaking thathave a 2-in-100chance of being exceeded in a 50-yearperiod. Shaking is expressed asa percentage of g ( g isthe acceleration ofa falling objectdue to gravity).

© Copyright 2008 Willis Re Inc. All rights reserved: No part of this publication may be reproduced, disseminated, distributed, stored in a retrieval system, transmitted or otherwise transferred in any form or by anymeans, whether electronic, mechanical, photocopying, recording, or otherwise, without the written permission of Willis Re Inc. Some information contained in this report may be compiled from third party sourceand we do not guarantee and are not responsible for the accuracy of such information and expressly disclaim any liability based upon, arrising from or in connection with, any such information or the use or application of any such information or the results obtained from the use or application of any such information. This report is for general guidance only and is not intended to be relied upon. Any action based on or iconnection with anything contained herein should be taken only after obtaining specic advice from independent professional advisors of your choice. The views expressed in this report are not necessarily thoseof Willis Re Inc., its parent companies, sister companies, subsidiaries or afliates (hereinafter “Willis”). Willis is not responsible for the accuracy or completeness of the contents herein and expressly disclaims an

responsibility or liability for the reader’s application of any of the contents herein to any analysis or other matter, or for any results or conclusions based upon, arising from or in connection with the contents herein, nodo the contents herein guarantee, and should not be construed to guarantee, any particular result or outcome. Willis accepts no responsibility for the content or quality of any third party websites to which we refe

Three ke themes hae emerged rom Willis’ research eort:

1. The greatest magnitude changes in seismic risk have occurred in California, with signicant but lesser changes in

the Pacic Northwest.

2. Measurements from recent large earthquakes around the world indicate that tall buildings in California may

experience less shaking in a large earthquake than was previously assumed.

3. The vendor models will be fully recalibrated and therefore the seismic hazard changes presented in this report

may be offset or amplied by changes to other modeling components.



September 200Willis Re Inc.

taBlE oF CoNtENts

Table of Contents.............................................................................................................................i

How to Get the Most From this Report ..................................................................................... iii - iv

Introduction .......................................................................................................................... page 1

The Next Generation Attenuation (NGA) Equations ............................................................ page 4

Signicant Changes on the Horizon for California............................................................... page 7

Earthquake Potential in Northern vs. Southern California ................................................... page 11

Cascadia Advancements Change the Risk Prole in the Pacic Northwest........................ page 14

Small and Varied Changes in the New Madrid Region ........................................................page 20

How Will the AIR, EQECAT and RMS Models Change? .....................................................page 23

Glossary ..............................................................................................................................page 25

References ..........................................................................................................................page 26

ii




how to GEt thE Most FRoM thIs REpoRt

This report provides Insurance Executives and Risk Managers with a summary of the 2008 National

Seismic Hazard Maps, the 2007 Uniform California Earthquake Rupture Forecast, and other scientic

documentation. This section is designed to help you efciently navigate this report and to help you ac-

curately interpret the maps that are presented throughout this document.

There are three levels of depth within this report, identiable by the color in the margin of each page:

1. Executive summary (GOLD)

2. Selected details targeted at the Risk Manager (BLUE)

3. In-depth content for technical staff (GREEN)

The details targeted at the Risk Manager are organized by geographic region, to allow you to efciently

focus on the areas of greatest interest to you. Each regional section has been organized in the same

manner to allow you to focus on a specic area in a region or contrast between different regions. You

will also nd symbols in the margins of the regional sections to distinguish these areas.

Two descriptors of hazard, peak ground acceleration (PGA) and spectral acceleration (SA) are used

throughout this report. Peak ground acceleration describes how abrupt the ground motion is. PGA is

commonly measured in units of gravity (g; 9.8 ms-2). For example, when you push on the gas pedal in

your car, you experience the increase in velocity as a force pushing you back into your seat. Accelera-

tion is the rate of increase in velocity. That is, how much the velocity changes in a unit of time. So,

consider a car increasing in speed from a stop to 60 miles an hour (88 feet per second) in 8 seconds.

If the acceleration is uniform (constant) while the car increases speed, the velocity will have changed

by 11 feet per second every second: the acceleration of the car is 11 feet per second, i.e., about 0.34 g. If

the acceleration were not uniform, but started off small, achieved a maximum, and then decreased as

the car approached 60 miles an hour, the maximum acceleration would equal the “peak” acceleration.

Peak Ground Acceleration, as the name states, refers to the movement of the ground, not the move-

ment felt by buildings. PGA is most relevant to property located at ground level, such as in-ground or

surface pipelines and railroad tracks.

The shaking experienced by a building is dependent on its height (which relates to its resonant

frequency). Spectral Acceleration (SA) is used to distinguish the hazard experienced by buildings of

differing heights. SA is expressed in units of “g” at different periods, such as 0.2 sec or 1.0 sec; how-

ever, it is more intuitive to translate these periods into building heights. As a rule of thumb, you can

approximate the building height by multiplying the time period by 10 – 0.2 sec period ≈ 2 stories and

1.0 sec period ≈ 10 stories.

The vendor models calculate the earthquake hazard in terms of spectral acceleration at different time

periods, to determine the building loss ratio. Therefore, most of the maps in this report are for 0.2 sec

(2 story) and 1.0 sec (10 story) spectral accelerations. We provide these two points of reference to show

the variation in the changes in modeled seismic hazard for different building types. The schematic

below illustrates that the maps shown in this report are for a hypothetical, uniform distribution of

buildings. In reality, high-rise buildings will be concentrated in city centers, business parks, and other

commercial areas. Therefore, the actual changes in seismic hazard experienced by the industry will

be a blend of the 0.2 sec and 1.0 sec maps, as well as other frequencies that are not presented in this

report.

Eecutie = GOLD Margin

isk Manager = BLUE margin

Technical = GREEN margin

iii




GUIdE (CoNtINUEd)

The National Seismic Hazard Maps form the basis of building code provisions. When applying the

code, the design engineer evaluates the site conditions to assess the potential amplifying effect of the

local soils, as these maps assume uniform soil conditions. The vendor models also include the local soi

conditions when estimating the hazard at a given site; therefore, the changes that occur in the vendor

models may not directly follow these maps.

Two hazard return periods are consistently presented in this report, 475 years and 2,475 years. These

two years are unique points calculated by the USGS in the development of the National Seismic Haz-

ard Maps. The 475-year return period is more commonly expressed as a 10% exceeding probability in

50 years and the 2,475-year return period is more commonly expressed as a 2% exceeding probability

in 50 years. The 475-year return period maps can be used to gain insight into changes that might occur

to modeled return periods in the 250 to 500 year range. The 2,475-year return period maps can be

used to gain insight into changes that might occur to metrics that are heavily weighted on the tail of

the curve. The 2,475-year return period is also commonly referenced in the building code.

iv




INtRodUCtIoN

The United States Geological Survey (USGS) released the latest version of its National Seismic Haz-

ard Maps in April 2008. The maps, which were last updated in 2002, incorporate the best available

science on fault slip rates, paleoseismic data, earthquake catalogs, and strong motion recordings from

global earthquakes. These maps dene the latest scientic view of earthquake hazard at varying prob-

ability levels across the United States and will be the impetus for the 2009 model updates from AIR,

EQECAT and RMS.

PGA at the 2,475-r Return Period

(2% eceeding probabilit in 50 ears)

PGA at the 475-r Return Period

(10% eceeding probabilit in 50 ears)

The maps above show the national pattern of earthquake risk in terms of peak ground acceleration

(PGA). These PGA values have also been related to the Modied Mercalli Intensity (MMI) scale in the

legend to provide a physical un-

derstanding of the PGA values.

Building damage is negligible

below MMI V (green and white

colors on the maps). A full

description of the MMI scale is

provided in the glossary at the

end of this report.

The areas of greatest earth-

quake risk remain along the

West Coast, (particularly Cali-

fornia) and in the New Madrid

region (at the intersection of

Missouri, Illinois, Kentucky,

Tennessee, and Arkansas).

Other areas with notable hazard

include Salt Lake City, Utah;

Charleston, South Carolina; and

portions of New England.

Changes in Seismic Haard Between the 2008 and 2002 Maps

b Region and Building Tpe

SA o 0.2 sec (2-Stor Building) SA o 1.0 sec (10-Stor Building)

475-year Return Period

2,475-year Return Period



CaliforniaModerate to small

decreases-15% to 0%

Moderatechanges

-20% to +15%

Large to moderatedecreases

-35% to -15%


-35% to -15%

Pacic Northwest

Moderate to smallchanges

-15% to +5%

Moderatechanges

-15% to +20%

Moderate to smalldecreases

-25% to 0%

Moderate changes-15% to +20%

IntermountainWest


Moderatechanges

-20% to +15%


-35% to -15%


-35% to -15%

New MadridModerate to small

decreases-25% to -5%


-25% to +5%


-15% to 0%


NortheastModerate to small



-25% to -10%


-15% to -5%


-15% to -5%

SouthCarolina


-20% to -5%

Moderate to smalldecreases-15% to 0%


-15% to -5%

Smalldecreases

-10% to -5%



2 September 200Willis Re Inc.

C h a n g e i n H a z a r

d f o r 0 . 2 s e c S A a t t h e

4 7 5 - y r R e t u r n P e r

i o d

( 1 0 % e

x c e e d i n g p r o b a b i l i t y i n 5 0 y e a r s )

C h a n g e i n

H a z a r d f o r 0 . 2 s e c S A a t t h e

2 , 4 7 5 - y r R e

t u r n P e r i o d

( 2 % e x c e e d i n g p r o b a b i l i t y i n 5 0 y e a r s )

INtRodUCtIoN (CoNtINUEd)

The maps below show the ratio of the 2008 and 2002 USGS hazard maps for the 0.2sec spectral

accelerations. Warm colors refer to increases in hazard and cool colors reference decreases in hazard.

As described in the previous section, 0.2sec SA is a measure of the shaking that would be experienced

by a 2-story building.

Shaking experienced by a 2-story building has decreased by approximately 10% in much of Central

and Eastern United States at both the 475 and the 2,475-year return periods. In the Western U.S.,

shaking experienced by a 2-story building has decreased by 10% in many areas at the 475-year return

period, with greater variation and complexity to the pattern of change at the 2,475-year return period.

% Change in Ha

Between the 2

and 2008 Haza

(+) increase

(-) decreaseSources of Change in the Central and Eastern U.S.

- Updated attenuation equations- Updated fault parameters and f ault geometry

Focus on theWest Coast

-

---

Sources of Change in the Western U.S.

- Introduction of Next Generation Attenuation (NGA)Equations

- Updated fault parameters- Addition of multi-segment fault rupture scenarios- Reduction in occurrence rates in California for M6.0-7.0

events for gridded seismicity- Addition of a new deep seismic zone near Portland

-

-- -

-

--

Focus on the

West Coast

Sources of Change in the Central and Eastern U.S.

- Change in recurrence interval for north arm of theNew Madrid fault

- Modifications to New Madrid fault geometry- Revised geometry of Charleston seismic zone- Updates to attenuation equations

-

-- -- -

-


- Introduction of Next Generation Attenuation (NGA)

Equations- Updated fault parameters and fault geometry- Updates to magnitude-frequency distribution on the

Cascadia Subduction Zone (affects Pacific Northwest)- Addition of a new deep seismic zone near Portland




C h a n g e i n H a z a r d

f o r 1 . 0 s e c S A a t t h e

4 7 5 - y r R e t u r n P e r i o d

( 1 0 % e x c e e d i n g p r o b a b i l i t y i n 5 0 y e a r s )

C h a n g e i n H a z a r d f o r 1 . 0 s e c S A a t t h e

2 , 4 7 5 - y r R e t u r n P e r i o d


INtRodUCtIoN (CoNtINUEd)

The maps below show the ratio of the 2008 and 2002 hazard maps for the 1.0sec spectral acceleration

As on the previous page, warm colors refer to increases in hazard and cool colors reference decreases

in hazard. A 1.0sec SA is a measure of the shaking that would be experienced by a 10-story building.

Shaking experienced by a 10-story building has decreased by approximately 35% in most of the

Western U.S. at the 475-year and the 2,475-year return periods, with the exception of Oregon and

southern Washington. The major changes in the hazard for this building type in the Western U.S.

are mainly due to the introduction of the Next Generation Attenuation (NGA) equations for crustal

sources and revised attenuation equations for the Cascadia Subduction Zone. Seismic hazard in

Central and Eastern U.S. for a 10-story building has decreased by about 10%.

% Change in Ha

Between the 2

and 2008 Haza

(+) increase

(-) decrease

--

Focus on the

West Coast


- Introduction of Next Generation Attenuation (NGA)Equations

- Updated fault parameters and fault geometry- Updates to magnitude-frequency distribution on the

Cascadia Subduction Zone (affects Pacific Northwest)- Addition of a new deep seismic zone near Portland


- Change in recurrence interval for north arm of theNew Madrid fault

- Modifications to New Madrid fault geometry- Updates to attenuation equations

--


- Updated fault parameters and fault geometry- Updated attenuation equations

Focus on the

West Coast

-

-

- -

-

-

--


- Updated fault parameters and fault geometry- Updated attenuation equations




thE NExt GENERatIoN attENUatIoN (NGa) EqUatIoNs

0.2sec Spectral Acceleration

(Strike slip aulting, uniorm sot rock site)

1.0sec Spectral Acceleration


Campbell & Bozorgnia 2006, Next Generation Attenuation Equation

KEy CHANGES TO THEATTENUATION EqUATIONS USEDIN THE 2008 NATIONAL SEISMICHAzARD MAPS

1. Implementation of Next Generation

Attenuation (NGA) equations for crustal

faults (e.g., California) and modeling

of additional ground-motion epistemic

uncertainty in the NGA equations

2. Revisions to the subduction zone

attenuation equations (the Cascadia

subduction zone in the Pacic Northwest)

. Updates for the Central U.S. attenuation

equations by adding new published

attenuation equations

Attenuation equations predict how ground motion decays with increasing distance from an

earthquake’s epicenter. Attenuation equations are used to determine the size of the earthquake

footprint. Earthquake models utilize a suite of different attenuation equations. For example, separate

equations are used to describe how the energy that affects 2-story buildings (0.2sec SA) decays ascompared to the energy that affects 10-story buildings (1.0sec SA). Some buildings will experience

damage at far distances from the epicenter, while other buildings may not experience any damage.

The graphs below illustrate how attenuation equations can differ by earthquake magnitude and time

period (i.e., building height). In this example, which is representative of what might happen in a

California earthquake, the energy decays rapidly in the rst 20 km (12.4 miles) from the epicenter.

Attenuation equations also vary based on the

fault type, the fault rupture characteristics,

and the ground-motion modications that

occur along the path between the source and

the site (e.g., soil type). For example, different

equations are used to dene the relatively

small earthquake footprints from the San

Andreas Fault, compared to the relatively

large earthquake footprints from the New

Madrid Seismic Zone.

0 .0

0 .2

0 .4

0 .6

0 .8

1 .0

1 .2

0 20 40 60 80 100Distance to Si te (km)

S p e c i a l A c c e l e r a t i o n ( g )

Mw=6.5

Mw=7.5

0.0

0 .2

0 .4

0 .6

0 20 40 60 80 100Distance to Si te (km)

S p e c i a l A c c e l e r a t i o n ( g )

Mw=6.5

Mw=7.5

S p e c t r a l A c c e l e r a t i o n ( g )

S p e c t r a l A c c e l e r a t i o n ( g )

INTRODUCTION Of ATTENUATION EqUATIONS




NExT GENERATION ATTENUATION (NGA) EqUATIONS

attENUatIoN (CoNtINUEd)

The implementation of the Next Generation Attenuation (NGA) equations is the most signicant

change that has occurred to the seismic hazard maps. The NGA research project was initiated by the

Pacic Earthquake Engineering Research (PEER) center. The project had two phases: the develop-

ment of a global strong motion database, followed by the development of crustal ground motion

prediction equations based on this database.

A global database was required to understand the behavior of strong earthquakes because there is

insufcient data of strong earthquakes in the U.S. (due to their low frequency). In total, the database

includes records of 173 earthquakes containing 3,500 multi-component strong-motion recordings with

over 100 parameters describing earthquake source, path, site

conditions and other parameters.

In the second phase of the project, ve different modelers/

research groups were identied to interpret the global strong

motion database and develop independent sets of attenua-

tion equations. The NGA modelers applied their own selec-

tion criteria for using earthquake ground motion recordsfrom the global strong-motion database. The modelers were

not completely isolated; they interacted extensively with

the each other and with the broader research community in

developing the models. Despite this interaction, the model-

ers developed several different ground motion attenuation

models, which is reective of the (epistemic) uncertainty

associated with this modeling parameter. Each researcher

published their work to document the judgements they made

in the development of their attenuation equations.

Based on the recommendation by an expert panel, the USGS

used three of the ve NGA attenuation equations to calculate

the ground motion from crustal earthquake sources in the

western United States: Boore & Atkinson (2006), Campbell

& Bozorgnia (2006), and Chiou & Youngs (2006). Ground

motions were calculated for each of the three attenuation re-

lations separately, and then combined using a weighted logic

tree approach. The USGS assigned equal weights to each of

the three sets of NGA equations in the logic tree as recom-

mended by the expert panel.

The new NGA equations are signicantly different from

previous equations (especially for tall buildings). One

of the three sets of equations used in the USGS seismic

hazard maps is used in the charts on the left to illustrate

the difference between the new NGA equations and the old

attenuation equations. Negative values indicate a decrease

in the shaking felt by buildings at the distance from the

earthquake epicenter shown on the horizontal axis. These

charts show that there have been large decreases in the

shaking experienced by 10-story buildings for M6.5 and M7.5 events at all distances away from the

earthquake epicenter. This is the reason for signicant decreases in the seismic hazard experienced

by tall buildings. The new NGA equations have caused a 20-30% decrease in the shaking experienced

by 2-story buildings at distances greater than 10 km (6 miles) for M7.5 event.

Change in Attenuation o 0.2sec SA

Similar to Shaking or a 2-Stor Building


Change in Attenuation o 1.0sec SA

Similar to Shaking or a 10-Stor Building(Strike slip aulting, uniorm sot rock site)

-40%

0%

40 %

0 20 40 60 80 100

Distance to Si te (km)

Mw=6.5 (NGA/ O ld)

Mw=7.5 (NGA/ O ld)

-80%

-40%

0%

40 %

0 20 40 60 80 100

Distance to Site (km)

Mw=6.5 (NGA/Old)

Mw=7.5 (NGA/Old)

Comparison of one of the three NGA equations used in predicting the ground shaking in

the new maps with the older version of the attenuation equation. (Campbell & Bozorgnia

2003 vs. Campbell & Bozorgnia 2006)




attENUatIoN (CoNtINUEd)

To further illustrate the changes associated with the NGA equations, the following maps contrast a

M7.0 earthquake scenario on the southern San Andreas Fault as predicted by the new and old attenu-

ation equations. The southern San Andreas Fault is the most likely fault to generate a strong earth-

quake in California in the next 30 years. This M7.0 scenario is representative of an earthquake that is

in-between the two magnitudes shown in the charts on the preceding page.

ATTENUATION EqUATIONS fOR OTHER REGIONSUSGS use three ground motion equations to predict the shaking from Cascadia Subduction Zone

earthquakes, using a logic tree approach. In the 2008 National Seismic Hazard Maps, a new equation

(Zhao et al.,2006) has replaced one of the three equations used previously (Sadigh et al., 1997). In

addition, the weight on each branch of the logic tree has changed.

Attenuation equations for intermediate depth earthquakes (depth >40 km) and intraslab earthquakes

have been updated by replacing or adding one or more equations. The new maps also include several

new simulation-based attenuation relations that were not available in 2002 to predict ground shaking

from earthquakes in the central U.S.

1.0sec Spectral Acceleration(10-stor building)

0.2sec Spectral Acceleration(2-stor building)

Old euation Old euation

New NGA euationNew NGA euation

Comparison of Campbell & Bozorgnia 2003 attenuation equation with Campbell & Bozorgnia 2006, NGA. M7.0, strike slip faulting, soft rock site conditions.




KEy IMPLICATIONS fOR CATASTROPHE RISK MANAGERS

• The amount of USGS modeled shaking experienced by high-rise (>8 story) buildings in large

earthquakes has decreased at all distances from an earthquake’s epicenter.

• If the vendor modelers fully adopt the NGA equations, there could be signicant reductions (-20% or more) in modeled risk associated with high-rise properties.

• The modeled risk from large earthquakes to low-rise properties in the immediate vicinity of a

fault (i.e., within 5 miles) may increase by 5 to 10%.

• Business rules that are based on the distance to a fault, such as exposure aggregate thresholds,

underwriting guidelines or insurance rates, will need to be reviewed.

SA o 0.2 sec (2-Stor Building) SA o 1.0 sec (10-Stor Building)





California(Statewide)


Moderate changes- 20% to +15%


-35% to -15%


-35% to -15%

San FranciscoBay Area


Small changes- 5% to +5%


-35% to -15%


-35% to -15%

Los AngelesArea


-20% to -0%



-35% to -15%


-35% to -15%

SUMMARy Of CHANGES IN THE USGS SHAKE HAzARD ExPERIENCEDBy LOW AND HIGH RISE BUILDINGS

The primary reason for the large decreases in the modeled hazard is the implementation of the Next

Generation Attenuation (NGA) equations. The change to the attenuation methodology overshadows

the smaller effects from changes to earthquake source parameters and their magnitude-frequency

relationships.

GAINING INSIGHT INTO POTENTIAL MODELED LOSS CHANGES

Based on the shape of a building damage function for earthquakes, the amount of damage a building

incurs rapidly decreases as the ground motion attenuates from the fault (all other components remain

ing constant). Therefore, as an example, a 20% decrease in hazard can equal a 30-50% decrease in

expected damage. This means that modeled damage for 2-story and 10-story buildings may decrease

by a much larger amount than the change in modeled hazard shown in the maps on the following two

pages. The exception to this rule is the immediate vicinity of faults (which have been shaded in gray),

where marginal changes in hazard have little effect on modeled damages. At this point, we can not

predict how the commercial model losses will change. However, USGS modeled hazard decreases for

high-rise buildings is so substantial, signicant decreases in modeled losses are likely to occur if the

vendors fully adopt the NGA equations.

The change in the amount of shaking experienced by low-rise (e.g., 2-story) and high-rise (e.g., 10-

story) buildings at the 475-year and 2,475-year return periods are shown in the following pages. Cool

colors indicate decreases in hazard, while warm colors indicate increases in hazard. Only those areas

where hazard is signicant enough to result in damage at these return periods are shown.

sIGNIFICaNt ChaNGEs oN thE hoRIzoN FoR CalIFoRNIa tIME-INdEpENdENt vIE




CHANGE IN USGS HAzARD fOR 2-STORy BUILDINGS

4 7 5 - y r H a z a r d R e t u r n P e r i o d


2 , 4 7

5 - y r H a z a r d R e t u r n P e r i o d

( 2 % e x c

e e d i n g p r o b a b i l i t y i n 5 0 y e a r s )

tIME-INdEpENdENt

vIEw

CalIFoRNIa REGIoN (CoNtINUEd

The gray shaded areas along many of the fault traces designate areas where changes in modeled dam-

age could be lower than the changes in modeled hazard presented in these maps. The shading is based

on a representative 2-story wood frame building damage function. Outside the shaded areas, it is pos-

sible for the change in modeled damage to exceed the changes in modeled hazard.

% Change in Hazard Betwthe 2002 and 2008 Haz

(+) increase / (-) decre




4 7


( 1 0 % e x

c e e d i n g p r o b a b i l i t y i n 5 0 y e a r s )

2 , 4

7 5 - y r H a z a r d R e t u r n P e r i o d

( 2 % e x




The gray shaded areas along many of the fault traces designate areas where changes in modeled

damage could be lower than the changes in modeled hazard presented in these maps. The shading is

based on a representative 10-story steel frame building damage function. Outside the shaded areas, it

is possible for the change in modeled damage to exceed the changes in modeled hazard.

% Change in Hazard Betwe

the 2002 and 2008 Hazard(+) increase / (-) decrease

tIME-INdEpENdENt

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LIST Of SCIENTIfIC ADvANCEMENTS DRIvING THE USGSCHANGES IN CALIfORNIA

The USGS incorporated many new methods in its 2008 National Seismic Hazard Maps, in addition to

the Next Generation Attenuation (NGA) equations. The key technical updates are listed below.

1. Reduced the moment rate on faults by 10% to account for aftershocks, foreshocks, after slip, and

smaller earthquakes (inuences the results for all locations in California).

2. Implemented four new recurrence models for Type-A faults (well understood active faults, e.g.,

San Andreas, San Jacinto, Elsinore etc.) in Southern California, based on work by the Working

Group on California Earthquake Probabilities (inuences the results for all locations in Southern

California).

3. Revised slip rates for sections of the San Andreas fault, San Jacinto fault, and nine other Type-B

faults (i.e., faults with observed slip rates and with known other characteristics of faulting, e.g.,

Owens valley, Imperial valley, Northridge fault etc.) (inuences the results for all locations in

California).

4. Developed new multi-segment ruptures for several California Type-B faults (inuences the

results for all locations in California).

5. Implemented the Southern California Earthquake Center (SCEC) Community Fault Model

(CFM) for the geometry of faults in Southern California (inuences the results for all locations in

Southern California).

6. Reduced the rate of M6.5 and larger earthquakes by 1/3rd in smoothed gridded seismicity, since

this seismicity is now accounted directly on faults (inuences the results for all locations in

California).


tIME-INdEpENdENt

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ous s


The 2007 Uniform California Earthquake Rupture Forecast (UCERF) is the rst study to apply a uni-

form methodology to the entire state, allowing meaningful comparisons between the probability of an

earthquake occurring in Northern and Southern California. According to this study:

• New probabilities for the Elsinore and San Jacinto Faults in Southern California are about half

of the previous predictions.

• UCERF study indicates a near certainty (99.7% probability) that there will be a M≥ 6.7 earth-quake in California in the next 30 years. There is a 46% probability of a M≥ 7.5 earthquake in

California in next 30 years.

• The chance of a M≥7.5 earthquake in Southern California (37% chance in 30 years) is more than

double the chance in Northern California (15% chance in 30 years).

• Time-dependent probabilities for M≥ 6.7 earthquake to occur on the southern San Andreas

Fault (near Los Angeles) and Hayward-Rodgers Creek (near Oakland) are 23% and 34% higher

than the time-independent probabilities, respectively.

• The time-dependent probability for a M≥ 6.7 earthquake to occur on the northern San Andreas

Fault (near San Francisco) is about 13% lower than time-independent view.

EaRthqUakE potENtIal IN NoRthERN vs. soUthERN CalIFoRNIa

The California section of National Seismic

Hazard Maps, which were described in the prior

section, is based on a time-independent forecast.In time-independent forecast, the probability of

each earthquake rupture is completely indepen-

dent of the timing of all others. It is generally

accepted, however, that a time dependent model

provides a more accurate representation of the

risk in California, where most faults have been

well studied. Time-dependent models are based

on the concept of stress renewal; the probability

of a fault rupture decreases immediately after a

large earthquake releases tectonic stress on the

fault and rises again as the stress is regenerated

by continuous tectonic loading. In a time-depen-dent earthquake forecast, the probabilities of a

future event is conditioned on known previous

earthquakes having occurred.

The Working Group on California Earthquake

Probabilities (WGCEP) is the name for the multi-

disciplinary team of scientists and engineers that

develops the time dependent earthquake fore-

casts for California. The latest time-dependent

model, the 2007 Uniform California Earthquake

Rupture Forecast (UCERF), was released in early

WORKING GROUP ON CALIfORNIA EARTHqUAKEPROBABILITIES (WGCEP)

2008. This new study updates the work done by

the previous two working groups in 1995 and

2003. The 2007 Working Group revised earlier

forecasts for Southern California (WGCEP 1995)

and the San Francisco Bay Area (WGCEP 2003)

by incorporating new data on active faults and an

improved scientic understanding of how faults

rupture to produce large earthquakes. In the new

2007 WGCEP study, the earthquake forecast

is extended to the entire state using a uniform

methodology, allowing for the rst time, mean-

ingful comparisons of earthquake probabilities

in major metropolitan areas like Los Angeles and

San Francisco Bay Area, as well as comparisons

among the large faults in different parts of the

state for the rst time.

The UCERF study is distinct from the NSHM; it

describes the probability of an earthquake of vari-

ous magnitudes occurring across California. The

UCERF study does not describe the likelihood of

amount of shaking caused by these quakes (“seis-

mic hazard”). This is an important distinction

between NSHM and UCERF, because even areas

with a low probability of a local fault rupture

can experience strong shaking and damage from

distant, powerful earthquakes.

tIME-dEpENdENt

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new probabilities

calculated or the Elsinore

and San Jacinto faults in

southern Caliornia are

about hal o the preious

predictions.

tIME-dEpENdENt

vIEw

CalIFoRNIa REGIoN (CoNtINUEd)

THE 2007 UCERf EARTHqUAKE TIME DEPENDENT PROBABILITIES

The UCERF framework comprises a sequence of four

model types: 1) a fault model that gives the physical geom-

etry of the larger, known faults; 2) a deformation model

that gives slip rates and aseismicity factors to each faultsection; 3) an earthquake rate model that gives the long-

term rate of all earthquakes of magnitude ve or greater

(M ≥ 5) throughout the region and; 4) a probability model

that gives a probability of occurrence for each earthquake

during a specied (future) time interval. The latest ver-

sions of these models are used in developing the time-in-

dependent earthquake rate model in the revisions of 2008

NSHM and UCERF time-dependant model for California.

The probability of a M≥ 6.7 earthquake occurring in the

next 30 years is shown in the table below relative to the

time independent probability. In addition, the resultsfrom the last two working group studies are also present-

ed in the below table for comparisons. Earthquake prob-

abilities for many parts of California are similar to those

in previous studies; however, the new probabilities calcu-

lated for the Elsinore and San Jacinto Faults in southern

California are about half of the previous predictions.

Statewide earthquake probabilities are almost the

same between the time-dependent and the time-independent (Poisson) models (time-dependent

probabilities are 2% to 3% higher at M7.5). At a state level, these differences are insignicant relative

to the overall modeling uncertainties. For portfolios with concentrations in specic regions or near

specic faults, the difference between time-dependent and time-independent probabilities can be

very signicant. The difference between the time-dependent probabilities and the time-independent

probabilities for M ≥ 6.7 earthquakes is greatest for the southern San Andreas and the Hayward-

Rodgers Creek faults.

fault NameTime-Independent

(Poisson1) Probabilit

Time-Dependent(UCERf ’07) Aerage

Probabilit(Min - Ma)

Increase (+),Decrease (-) oer Time-Independent

Probabilities

Prior StudTime-Dependent

Probabilities

% Change romPrior Stud

San Andreas – South(near LA)

48.3%59.2%

(22% - 94%)+23% 53% -9%

San Jacinto(near San Bernadino)

30.6%31.3%

(14% - 54%)+2% 61% -50%

Elsinore(near Lake Elsinore)

12.7%11.4%

(5% - 25%)-10% 24% -47%

Garlock(near Mojave)

5.7%6.1%

(3% - 12%)+7% n/a n/a

Hayward-RodgersCreek (near Oakland)

23.3%31.1%

(12% - 67%)+33%

27%(10% - 58%)

-14%

San Andreas – North(near San Francisco)

23.6%20.6%

(6% - 39%)-13%

23%(3% - 52%)

+3%

Calaveras(near San Jose)

7.6%7.4%

(1% - 22%)-3%

11%(3% - 27%)

-31%

S o u t h e r n

C a l i f o r n i a

( p r e v i o u s S

t u d y i n 1 9 9 5 )

N o r t h e r n C a l i f o r n i a

( p r e v i o u s S t u d y i n 2 0 0 3 )

1 90% segmented +10% un-segmented Poisson probabilities

Ref: The Uniform California Earthquake Rupture Forecast, Version 2 (UCERF 2): U.S.

Geological Survey Open-File Report 2007-1437




tIME-dEpENdENt

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The new forecast shows that California has a 99.7% chance to experience M≥ 6.7 earthquake in the

next 30 years and the likelihood of M≥ 7.5 earthquake in the next 30 years is 46%. The occurrence

probability of a M≥6.7 earthquake in the next 30 years striking the greater Los Angeles area is 67%

and in the San Francisco Bay Area is 63%. The chance of an M≥7.5 earthquake occurring in South-

ern California (37% chance in 30 years) is more than double the chance in Northern California (15%

chance in 30 years).

The southern San Andreas Fault has the highest probability (59%) in California of generating at least

one M≥6.7 earthquake in the next 30 years. In Northern California, the Hayward-Rodgers Creek Fault

has the highest probability (31%) of generating at least one M≥6.7 earthquake in the next 30 years.

Events of this size can be major loss causing events for the insurance industry, such as the 1989 Loma

Prieta earthquake (M=6.9) which occurred on the northern San Andreas fault and the 1994 Northridge

earthquake (M=6.7)

The Cascadia Subduction Zone (CSZ) extends about 150 miles into northwest California, and is a

major source of earthquakes in this region. There is 10% chance in the next 30 years the Cascadia

Subduction Zone will generate a M= 8-9 event along the subduction zone somewhere between

Northern California and Washington state.

Ref: The Uniform California Earthquake Rupture Forecast, Version 2 (UCERF 2): U.S. Geological Survey

Open-File Report 2007-1437




CasCadIa advaNCEMENts ChaNGE thE RIsk pRoFIlE IN thEpaCIFIC NoRthwEst


• The tail risk in the Pacic Northwest region may change considerably.

• The amount of shaking experienced by low, mid-rise and high-rise buildings around Salem may

increase at all return periods.

• The modications made by the USGS may cause moderate reductions (15% or more) in key

return period losses for high-rise buildings located in the Seattle metropolitan area.

SA o 0.2 sec (2 Stor Building) SA o 1.0 sec (10 Stor Building)





Pacic Northwest(Region wide)


-15% to +5%




SeattleModerate to small



-15% to -5%

Moderate decreases-25% to -15%


-15% to -5%

PortlandSmall decreases

-5% to 0%Small changes

-5% to +5%Small decreases

-5% to 0%

Moderate to smallincreases

+5% to 15%

SalemSmall increases

0% to +5%Moderate increases

+15% to +20%Small increases

0% to +5%

Moderate to smallincreases

+10% to +20%


The primary reason for large decreases to the modeled hazard is the implementation of the Next

Generation Attenuation (NGA) equations. In addition, the increasing view of risk along the coast of

the Pacic Northwest at > 500-year return period is due to the changes to the magnitude-frequency

relationship of the Cascadia Subduction Zone. Changes to the attenuation equations overshadow

the smaller effects from changes to the other earthquake source parameters and their magnitude-

frequency relationships.


Based on the shape of a building damage function for earthquakes, the amount of damage a build-

ing incurs rapidly decreases as the ground motion decreases (all other components remaining un-

changed). Therefore, a 20% decrease in hazard can equal a 30-50% decrease in expected damage. This

means that modeled damage for 2-story and 10-story buildings may decrease by a much larger amount

than the change in modeled hazard that is shown in the maps on the following two pages.

The change in the amount of shaking experienced by low-rise (e.g., 2-story) and high-rise (e.g., 10-

story) buildings at 475-year and 2,475-year return periods are shown below. Cool colors refer de-

creases in hazard, while warm colors reference increases in hazard. Only those areas where hazard is

signicant enough to result in damage are shown.




2 , 4 7 5 - y r H a z a r d R e t u r n P e r i o d

( 2 % e x c e e d i n g p r o b a b i l i t y i n 5 0 y e a r

s )

4 7 5 - y r H a z a r d R e t u r n P e r i o d

( 1 0 %

e x c e e d i n g p r o b a b i l i t y i n 5 0 y e a

r s )


paCIFIC NoRthwEst REGIoN (CoNtINUEd

The gray shaded area along the West Coast at the 2,475-year return period designates the region

where changes in modeled damage could be lower than the changes in modeled hazard presented in

these maps. The shading is based on a representative 2-story wood frame building damage function.

Outside this shaded area, it is possible for the change in modeled damage to exceed the changes in

modeled hazard.

% Change in Hazard Betw

the 2002 and 2008 Hazar

(+) increase / (-) decreas




4 7 5

- y r H a z a r d R e t u r n P e r i o d

( 1 0 % e x c

e e d i n g p r o b a b i l i t y i n 5 0 y e a r s )


( 2 % e x c e e

d i n g p r o b a b i l i t y i n 5 0 y e a r s )


paCIFIC NoRthwEst REGIoN (CoNtINUEd)

No shaded areas appear on these maps; therefore, the changes in modeled damage may exceed the

changes in modeled hazard in all areas for 10-story buildings at these return periods.

% Change in Hazard Betwethe 2002 and 2008 Hazard

(+) increase / (-) decreas




LIST Of SCIENTIfIC ADvANCEMENTS DRIvING THE USGSCHANGES IN PACIfIC NORTHWEST

The USGS incorporated many new methods in its 2008 National Seismic Hazard Maps, in addition to

the Next Generation Attenuation (NGA) equations. The key technical updates are listed below.

1. Revised magnitude-frequency distribution (Magnitude 8-9) of earthquakes on the Cascadia

Subduction Zone (CSZ); size of possible maximum magnitude of an event from the CSZ was

updated to 9.2 from 9.0

2. Introduction of deep seismicity zone near Portland, Oregon

. Updates to the earthquake ground shaking attenuation equations for the Cascadia Subduction

Zone.

4. Addition of three new crustal faults:

• Lake Creek-Boundary Creek fault located near Port Angeles, Washington

• Kendall fault scrap of the Boundary Creek fault located near the Canadian border nearBellingham

• Stonewall anticline located about 30 km west-southwest of the City of Newport, Oregon

paCIFIC NoRthwEst REGIoN (CoNtINUEd




In the 1960s, the theory of plate

tectonics began to explain the

concepts of continental drift and

seaoor spreading. By the early 1980s,

geophysists had shown that the Juan

de Fuca Plate was subducting below the North American Plate at a rate of

approximately 4 meters per century.

Within this environment, scientists

knew that a zone (known as the

Cascadia Subduction Zone) where the

plates met off the Pacic Coast was

locked, and would only be freed by

large earthquakes. There was an active

debate, however, of how strong these

earthquakes could be.

Researchers looked to the past to provide evidence of what could occur in the future. In the 1980s and

1990s, many studies attempted to reconstruct prior Cascadia earthquakes. One of the clues that was

found related to the geophysics of the plates in the region. As the Juan de Fuca Plate descends below

the North American Plate, the locked section between the plates causes the Pacic Coast to “bulge”

upward in elevation by up to ve feet. When a large earthquake occurs, the Pacic Coast actually drops

back to its original level. This abrupt drop in the land triggers a westward propagating tsunami. This

process has been the key to recent research included in the new USGS view of hazard in the Pacic

Northwest.

thE oRphaN tsUNaMI–CoNFIRMatIoN oF M8.7-9.2 CasCadIa EaRthqUak

The story was unfolding during the prior two updates to the National Seismic Hazard Maps. Research-

ers saw clear evidence in the geologic record of periods of abrupt shifts in the tidal patterns along the

Pacic Coast. Ghost forests, for example, were discovered in the region’s bays and estuaries. These

forests were from spruce trees that had been overtaken by tidal waters after a drop in the coast’s eleva-

tion. These decayed stumps, buried under sediment, provided evidence of the last great earthquake.

Radiocarbon dating, however, could not pinpoint the time when the last major earthquake occurred,

providing only a range from 1695 to 1720. This uncertainty made it difcult to link the various signs to

estimate the true intensity of historic events.

Ref: The Orphan Tsunami of 1700 – Japanese Clues to a Parent Earthquake in North America

Ref: The Orphan Tsunami of 1700 – Japanese Clues to a Parent Earthquake in

North America




Independent of the work in the states, Japanese researchers had been documenting a tsunami of

unknown origin – an orphan tsunami – that occurred in January of 1700. At a time when the Pacic

Northwest was still unsettled, the Japanese had a stable bureaucracy in place, and the high level of

literacy promoted extensive record-keeping. This orphan tsunami was documented to have ooded

sites along over 500 miles of Japan’s Pacic coast. Tidal levels were recorded to have been 10 to 15 feet

above their normal levels when the tsunami arrived. Although it is not technically depicting a tsunami

wave, one of Hokusai’s “Thirty-six views of Mount Fuji” paintings has become an icon of such tsuna-

mis.

The orphan tsunami of 1700 was linked to the last great earthquake along Cascadia in the late 1990s

through tree-ring dating. Additional research since the 2002 update of the USGS’ National Seismic

Hazard Maps provided strong evidence that the 1700 earthquake was of magnitude 8.7-9.2, and most

likely was M9.0. The intensity

of the event has been explained

through computer simulations

of the orphan tsunami. A M8.0-

8.5 earthquake would only

produce 3 to 5 foot tidal surges

along Japan’s Pacic coast,

signicantly underestimating

what was observed. A Cascadia

earthquake of M9.0, however,

produces ood depths that pro-

vide a good match with history.

These simulations have played

a key role in the USGS’ decision

to place increased weight on

likelihood of M8.7-9.2 Cascadia

earthquakes.

Ref: The Orphan Tsunami of 1700 – Japanese Clues to a Parent Earthquake in

North America

Ref: The Orphan Tsunami of 1700 – Japanese Clues to a Parent Earthquake in North America




SA o 0.2 sec (2 Stor Building) SA o 1.0 sec (10 Stor Building)





New Madrid Region Moderate to smalldecreases-25% to -5%

Moderate to smallchanges-25% to +5%





• The tail risk in the New Madrid region may change.

• The amount of shaking experienced by low, mid-rise and high-rise buildings close to New Ma-

drid fault may decrease at return periods below 500 years.

• The modeled risk to low-rise properties in the immediate vicinity of the seismic zone (i.e., within

5 miles) may increase at return periods above 500 years.

The changes to modeled hazard are due to various changes, such as changes to attenuation equations

and changes to the modeling parameters of the northern arm of New Madrid fault.


Based on the shape of a building damage function for earthquakes, the amount of damage a

building incurs rapidly decreases as the ground motion decreases (all other components remaining

unchanged). Therefore, a 20% decrease in hazard can equal a 30 to 50% decrease in expected damage.

This means that modeled damage for 2-story and 10-story buildings may decrease by a much larger

amount than what is shown in the maps on the following two pages.

The change in the amount of shaking experienced by low-rise (1-3 story) and high-rise (>8 story)

buildings at 475-year and 2,475-year return periods are shown below. Cool colors indicate decreases

in hazard, while warm colors indicate increases in hazard. Only those areas where hazard is signicant

enough to result in damage are shown.

sMall aNd vaRIEd ChaNGEs IN thE NEw MadRId REGIoN

LIST Of SCIENTIfIC ADvANCEMENTS DRIvING THE USGS CHANGES INNEW MADRID REGION

The key technical updates specic to New Madrid region are listed below.

1. Implementation of an event cluster model for New Madrid earthquakes

2. Reduced magnitude in the northern New Madrid fault by 0.2 units and assigned this part of

the fault a recurrence rate of 1/750 years

3. Modied fault geometry for New Madrid to include ve hypothetical strands and an in-

creased weight of 70% on the central strand

4. Revised dip of the Reelfoot fault to 38°




4 7


( 1 0 % e x





NEw MadRId REGIoN (CoNtINUEd)

The gray shaded area along the New Madrid seismic zone at the 2,475-year return period designates

the region where changes in modeled damage could be lower than the changes in modeled hazard

presented in these maps. The shading is based on a representative 2-story wood frame building dam-

age function. Outside this shaded area, it is possible for the change in modeled damage to exceed the

changes in modeled hazard.

% Change in Hazard Betwee

the 2002 and 2008 Hazard,

(+) increase / (-) decrease




4 7 5 - y

r H a z a r d R e t u r n P e r i o d


2 , 4 7 5

- y r H a z a r d R e t u r n P e r i o d



NEw MadRId REGIoN (CoNtINUEd

No shaded areas appear on these maps, therefore it is possible for the change in modeled damage to

exceed the changes in modeled hazard in all areas for 10-story buildings

% Change in Hazard Betwee

the 2002 and 2008 Hazard,

(+) increase / (-) decrease




IMPLICATIONS Of NEW USGS’ NSHM ON vENDOR MODELS

The work coordinated by the USGS and the Working Group on California Earthquake Probabilities is

very comprehensive and, as such, they have wide scientic and catastrophe modeler adoption. These

studies are the impetus for AIR, EQECAT and RMS to make periodic updates to their U.S. Earthquake

models. For example, RMS’ RiskLink v4.3 model, which resulted in signicant changes in modeled

risk for many portfolios, was motivated by the 2002 National Seismic Hazard Maps. The vendormodeling companies, however, cannot directly implement the National Seismic Hazard Maps and

the Uniform California Earthquake Rupture Forecast into their models. This information must be

translated into an event-based catastrophe model that is suited for the insurance industry. Therefore,

although the three modeling companies may start their development activities from a similar place,

their individual implementation of these studies will result in different answers to this question.

HOW WILL THE vENDOR MODELS CHANGES DIffER fROMTHE USGS CHANGES?

There are three ways the changes in the vendor models generally will differ from USGS:

1. The vendor models are broader in scope to fulll the need of insurance portfolio risk assessmentthan the USGS. (e.g., site-specic amplication, basin effects, re following, damage model,

demand surge, time dependency etc.).

2. The vendor model developers may selectively differ in their scientic assumptions than the

USGS.

3. The vendor modelers have indicated they will recalibrate their models. It is plausible that chang-

es to the engineering components of the models will offset or amplify changes to the seismic

hazard.

The vendor models are broader in scope than the USGS’ maps, accordingly, this point has signicant

implications for how one interprets changes to the USGS hazard information presented in this report.

For example, the modeled risk to the structure coverage for 10-story buildings may decrease in the

new models, however, new methods for modeling demand surge may offset some of these changes.

In addition, some of the modeling assumptions made in the new maps might have already existed in

the current version of the vendor models. For example, the known problem in the previous version

of USGS maps related to earthquake rates in California (over estimation of M6-7 earthquake rates;

known as the “bulge” issue). That has been updated in the new maps and already exists in the current

version of the vendor models. Therefore, the changes in the USGS’ seismic hazard maps cannot be

used to precisely predict the changes that will occur in the vendor models.

It may seem counter-intuitive that the modeling companies would choose to differ from the

“consensus” of the scientic community. Academic research is constantly progressing, some of

which was not available in time to be included in the National Seismic Hazard Maps. The modelers

assumptions may also differ from the weights assumed by the USGS in logic trees at different stages of

the model. A choice of different weights at various stages of the hazard model could result in different

changes in modeled risk.

Finally, vendor modelers often take the opportunity to upgrade many of their models’ components,

in addition to seismic hazard. Ultimately, the insurance industry is most interested in the product of

all these components working together – the nancial liability calculated for a portfolio – not each

component in isolation. Therefore, the modelers will recalibrate their models to ensure that the nal

results are well validated, ensuring that each component is scientically defensible. As such, changes

in the seismic hazard component of the model may lead to renements in the engineering model.

These multiplicative changes could result in offsetting or amplifying effects.

how wIll thE aIR, EqECat aNd RMs ModEls ChaNGE?




CONTACT US

Prasad Gunturi

Director o U.S. Modeling Research

[email protected]

Phone: +1 952 841 6638

WHAT CAN WE CONCLUDE NOW ABOUT EARTHqUAKE RISK IN THEWESTERN AND CENTRAL U.S.?

At this point, we can conclude that model changes will be signicant for many portfolios, and

the patterns of change will be complex and multifaceted. These changes will affect underwriting

guidelines, capital requirements, and portfolio management strategies. Also, these changes will

affect the Workers’ Compensation portfolios. Changes to portfolio loss estimates in the Western U.S. will be highly inuenced by the new NGA equations, especially for mid-rise and high-rise buildings.

Changes to loss estimates in the Central and the Eastern U.S. will be relatively low for many portfolios

compared to changes to the Western U.S.

Willis will continue to closely follow information related to AIR, EQECAT and RMS’ 2009 U.S.

Earthquake model upgrades. We will provide regular updates as appropriate. In the communications,

we will continue to offer balanced advice, based on our range of skills from model development to the

practical implementation of portfolio management and underwriting objectives. We encourage you

to contact us to explore how we can help your company develop and execute new action plans, which

reect a deep understanding of the changing landscape of risk in the vendor models.

Kle Beatt

vice President

[email protected]

Phone: +1 952 841 6635



2007 Working Group on California Earthquake Probabilities, 2008, The Uniform California Earthquake Rupture

Forecast, Version 2 (UCERF 2): U.S. Geological Survey Open-File Report 2007-1437 and California Geological Survey

Special Report 20

Atwater, B. F., The Orphan Tsunami of 1700- —Japanese Clues to a Parent Earthquake in North America, U.S.

Geological Survey Professional Paper 1707, 133 p.

Campbell, K.W., and Bozorgnia, Y., 2008, Ground motion model for the geometric mean horizontal component of PGA,

PGV, PGD and 5% damped linear elastic response spectra for periods ranging from 0.01 to 10.0 s: Earthquake Spectra,

v. 24, no. 1.

Dewey, J.W., Dengler, L., Reagor, B.G., and Moley, K., 1995, Spatial variations of intensity in the Northridge

earthquake, in The Northridge, California, Earthquake of 17 January 1994, Calif. Div. Mines & Geology Special

Publication 116, p. 39-46.

FEMA-351, 2000, Recommended Seismic Evaluation and Upgrade Criteria for Existing Welded Steel Moment-Frame

Buildings, prepared by the SAC Joint Venture for the Federal Emergency Management Agency, Washington, DC.

FEMA-355E, 2000, State of the Art Report on Past Performance of Steel Moment-Frame Buildings in Earthquakes,

prepared by the SAC Joint Venture for the Federal Emergency Management Agency, Washington, DC.

Frankel, A., Mueller, C., Barnhard, T., Perkins, D., Leyendecker, E., Dickman, N., Hanson, S., and Hopper, M., 1996,

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REFERENCEs

The contents herein are provided for informational purposes only and do not constitute and should not be construed as professional advice. Any andall examples used herein are for illustrative purposes only are purely hypothetical in nature and offered merely to describe concepts or ideas The

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