AN ABSOLUTE EARTHQUAKE RISK INDEX FOR INSURANCE PURPOSES

Globally operating insurance and reinsurance companies have to make decisions on the capacity they wish to allocate to specific regions or countries and on the terms and conditions under which they offer this capacity. Numerous risk studies have been carried out for various countries, but a comprehensive, quantitative parameter which would facilitate an objective, interregional comparison of “risk” for insurance purposes does not exist so far. In the following contribution, two proposals for deriving such a risk index are presented. The first one represents a general, broad-brush approach and uses readily available information hazard and vulnerability, the second makes use of country-specific, probabilistic risk models and gives a more complete and reliable picture of the risk situation. The index used is called the “Absolute Earthquake Risk Index (AERI)”.