Canada Earthquake Model
Canada Quake is part of RQE (Risk Quantification & Engineering)™, EQECAT's global multi-peril catastrophe modeling platform. EQECAT released an update to its Canada earthquake risk model in July 2011. Canada Quake will incorporate the latest, fourth-generation hazard model from the Geological Survey of Canada while also ensuring consistent results across the US border.
Earthquake Risk Model for Canada
Canada Seismicity Map - USGS
All Canadian provinces have some degree of earthquake risk. Areas of highest risk are within British Columbia, but the June 23, 2010 earthquake in Ontario served as a reminder of the non-trivial risk that also exists in eastern Canada. EQECAT integrates updated building codes and construction practices with the latest science and engineering to produce its state-of-the-art earthquake risk model for Canadian provinces.
Both the hazard and vulnerability components of the model offer unique modeling innovations, including multi-parameter vulnerability for residential structures and soil-based ground motion functions that appropriately capture physical phenomena while eliminating bias.
Canada Quake Features
Key aspects of the Canada earthquake risk model includes the following features:
Consistent Results Across The US Border
EQECAT's Canada and US earthquake models use identical event definitions for events affecting both countries to expedite analysis of international portfolios, while retaining efficient run-time and number of events for each model individually.
In addition to calculating losses from ground shaking, the earthquake risk model covers associated perils, which can be included or excluded from analysis. Results for each peril are reported separately.
Conflagration - widespread, uncontrollable fire that is initiated by an earthquake - can be the primary agent of damage. The model incorporates a ground-up methodology to model the physical mechanism of conflagration, ignition, spread, and suppression.
Water damage to contents from sprinkler leakage can exceed shaking contents damage. The model explicitly accounts for the resulting sprinkler leakage losses.
Consistency of results with EQECAT's US earthquake model does not mean, however, that US science is applied exclusively to the model for Canada. Maintaining with EQECAT's principle of incorporating specialized local knowledge when available, the Canada hazard module integrates the latest fourth-generation hazard model update from the Geological Survey of Canada (GSC). Additionally, Canada Quake captures recent insights, including use of the globally-developed and globally-applicable "next-generation" attenuation (NGA) functions.
Soil-Based Attenuation Functions
EQECAT goes one step beyond NGA and anticipates future scientific development by using soil-based attenuation (SBA) - a subset of NGA equations that assumes the seismic waves propagate through soil. EQECAT's SBA approach more closely represents the vast majority of insured exposure located on soil sites and reduces modeling uncertainty introduced by applying soil amplification factors to the more conventional rock-based equations. By requiring far less adjustment for site conditions, EQECAT's use of SBA retains the improved confidence of the NGAs.
Time-Dependent Recurrence Rates
Time dependence, incorporated in the EQECAT model for the Cascadia subduction zone, represents the definitive scientific consensus while portraying risk within the foreseeable future, not just the theoretical "long-term" risk. EQECAT has used time-dependent recurrence frequencies since 1997, because they reflect the scientifically-accepted physical mechanism of frictional stress build-up at the tectonic plate interface (the fault plane).
Deep within the earth, where rock is molten, faults glide smoothly relative to each other, but at the surface, rocks are solid, thus "locking" the fault. An earthquake occurs when strain from continuous plate motion at depth overcomes frictional resistance of the interlocked surface. An earthquake is more likely to occur on a fault that is "late in its seismic cycle," relative to the average time between large quakes, and less likely in a fault where an earthquake has occurred "recently" (in geologic time).
The model incorporates vulnerability curves that are well-honed from thousands of seismic studies conducted by EQECAT and ABS Consulting over the last 30 years, which are additionally founded on first-hand observations of 90 earthquakes worldwide. For residential structures, EQECAT represents vulnerability using a three-dimensional surface that accounts for the long duration of earthquake shaking, which is characteristic of the Cascadia subduction zone. Three-dimensional vulnerability captures the phenomenon of "damage acceleration" - the more damage that occurs during a given quake, the more damageable a building becomes - and reduces uncertainty by more closely reflecting the reality evidenced by data from thousands of claims.
EQECAT applies a rational approach to demand surge, based on the demand and supply for construction materials and labor in the affected region. Since economic factors undergo constant change, EQECAT updates the supply-side database for demand surge with each release.
Canada Quake model specifications are delineated below:
Exposure data is accepted at resolutions of latitude/longitude, street address, and 3-and 6-digit postal codes levels. When input data is provided at aggregate levels, the model adds refinement to loss results by disaggregating exposure to a resolution consistent with the hazard generation. The disaggregation scheme is weighted by population distribution.
Model Validation/Expert Review
The hazard and vulnerability modules have undergone stringent peer-review by internationally-recognized scientific experts. The residential vulnerability module has been reviewed and consented to by the Pacific Earthquake Engineering Research Center (PEER).
Hazard Analysis and Soil Data Resolution
Variable resolutions of hazard generation are based on population density and range between 0.01 and 0.1 degrees. Soil condition mapping, one of the most sensitive components of earthquake modeling, uses eight layers of soil map data, each with increasingly fine resolution. Soil maps in high hazard regions with dense population are mapped with a tolerance of 40 feet.
The Canada Quake model covers all 13 Canadian provinces.
Lines of Business
Lines of business (LOB) modeled in the Canada earthquake model include:
Structure Types and Occupancies
With a full suite of structure types representative of Canadian construction, and dozens of occupancy categories for each line of business, the model differentiates risk across hundreds of combinations, and allows only realistic pairings of occupancy and construction. A common set of structure types and occupancies is available worldwide. Our technical documentation provides guidance on structure type selection.
Risk metrics include OEP and AEP loss exceedance curves, AAL, TVAR, and simulations of historical events. In addition, RQE’s Year Loss Table (YLT) uniquely features three-dimensional output: simulation year, events, and sample outcomes. Instead of reporting mean losses with standard deviations, each loss in the YLT represents one possible outcome for the associated event. This allows users to retain the full distribution of uncertainty when using model output in dynamic financial analysis and capital modeling. Conventional event loss results and other risk metrics can be derived from the YLT with arithmetic or simple database queries. YLT and event loss results are supported at the portfolio level. Other risk metrics are supported at multiple levels of refinement: from total aggregate portfolio results, to detailed output by policy and site.
The model calculates damage to structures (building damage), contents, and time element (business interruption and additional living expenses). Separate, independent vulnerability functions are used for calculating building and contents damage. Time-element vulnerability is a function of both building and contents damage.
All major insurance policy structures and reinsurance treaty types are modeled, based on RQE platform functionality.
RQE streamlines earthquake reporting requirements as specified by the Office of Superintendent for Financial Institutions (OSFI). Custom reports have been pre-defined for reporting probabilistic results to meet guideline B-9, and technical guidance is provided on event selection to meet guideline E-18.
Request Canada Quake model information from EQECAT.