Earthquake Insurance and Earthquake Risk Management

The Wenchuan earthquake is the largest devastating earthquake striking China since the 1976 Tangshan earthquake. In this catastrophe, loss payments were mainly from the government and public endowment. The insurance industry is expected to take more responsibility in the future, since earthquake insurance is one of the most effective and equitable instruments to disperse earthquake losses. In this article, earthquake risk management and the development of earthquake insurance in China are reviewed. Earthquake insurance is suggested as an instrument in earthquake risk management, where the premium rate of earthquake insurance is a key factor that needs to be determined reasonably. Seismic hazard is analyzed for the Wenchuan earthquake-stricken area, and is combined with primary loss estimation to construct the exceeding probability curve. Earthquake insurance premium rates are calculated for buildings in the area, including RC (Reinforced Concrete), frame, and brick, corresponding to two kinds of insurance deductible.