Mapping Landslides for the Insurance Industry - Lessons from Earthquakes

J.R. Keaton, MACTEC Engineering and Consulting, Inc., R.J. Roth, Jr., Consulting Insurance Actuary

ABSTRACT:

Earthquake insurers currently can quickly identify ‘risk’ for a building street address by using probabilistic models based on 1) proximity to earthquake sources, 2) likelihood of earthquake occurrence, 3) attenuation of shaking with distance, and 4) amplification effects caused by site conditions. Loss estimates are based on building type, age, and use. Earthquake insurance coverage price is based on risk of loss and value of property. Landslides currently are uninsured because risk of loss is not quantified; therefore, insurance coverage price cannot be set. The insurance industry needs probabilistic models of landslide processes that quantify the likelihood that they will occur and the extent of damage that will result. The earthquake example should provide geoscientists and engineers with valuable lessons of probabilistic models of landslide initiation and movement. Loss estimates will depend in part on the nature of buildings sitting on the landslide and in part on the amount and duration of ground movement. Earthquakes tend to be catastrophic with a single event resulting in widespread damage that ranges from slight to severe over a period of a few tens of seconds. Landslides tend to be localized with a single event resulting in damage to relatively few buildings, but may occur over a period of days to years. Landslide triggers can be regional, but landslide damage remains localized. Local governments effectively tend to become insurers by providing funds for response, recovery, and reconstruction following landslide events. The same type of geoscience regarding landslide risk management is needed for the private insurance industry as for local governments. IAEG Commission No. 1, Engineering Geological Characterisation and Visualisation, is taking a systematic approach in an attempt to apply earthquake lessons to quantifying landslide occurrence and severity.

 

INTRODUCTION

Landslides are the only major uninsurable natural hazard as of 2008. Insurance coverage for earthquakes was not widely available before the insurance industry had sufficient knowledge about the frequency and extent of earthquake damage to establish the price for insurance products. The purpose of this paper is twofold. First, we describe the process of interaction between representatives of the insurance industry and the science and engineering community which led to a common understanding of earthquake processes and actuarial needs. Second, we present the concept of landslide insurance in the context of the earthquake insurance success.

 

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