A Caribbean and Central America Seismic Hazard Model for Sovereign Parametric Insurance Coverage

Abstract

ABSTRACT A fully probabilistic seismic hazard model with a single domain and sufficiently accurate resolution level for national analyses has been developed, for the Caribbean and Central America, to support the design of parametric earthquake policies offered by the Caribbean Catastrophe Risk Financing Facility to sovereign countries. This model provides updated earthquake hazard and risk information for 34 countries in the region, allowing to obtain detailed seismic hazard results at any location within the area of analysis. Besides a detailed zonation of subduction and crustal sources, updated seismicity and tectonic data have been utilized. Different seismicity, geometric, and rupture models have been adopted using state-of-the-art methodologies and tools. The main output of this model is a stochastic event-set, which is the hazard representation utilized not only to compute a long-term overview of the seismic hazard in the region but also to probabilistically estimate earthquake modeled losses at a national level that are used as triggers for underpinning parametric earthquake insurance. Although not of direct interest for parametric insurance purposes, this model also yields hazard maps and uniform hazard spectra for different return periods. For the operational purposes of the parametric insurance coverage, a postevent tool was developed to calculate, in near-real time, the ground-motion intensities associated with any earthquake within the region under study. This is done automatically by choosing a rupture plane from the moment tensor solution based on predefined rules while maintaining full consistency with all the assumptions made in the probabilistic seismic hazard analysis. The predicted ground motions in the region and the vulnerability functions developed for the exposed assets are then used to estimate whether the economic losses for each affected country exceed the trigger value stated in the country-specific insurance policy conditions and whether a payout should be issued, which is typically disbursed within 14 days.