The catastrophe models upon which insurers depend themselves depend on a great deal of basic science and research.

Accordingly, to compile its Hazard & Risk Science Review 2009, researchers at London-based Aon Benfield UCL Hazard Research Centre sifted through more than 70 scientific papers published during the past 12 months.

The review, which is co-sponsored by Aon Benfield and Bermuda-based PartnerRe, focuses on four main areas of hazard–atmospheric, geological, hydrological, and climate change related. Yet, some of the most compelling, and urgent research is centered on earthquake prediction and modeling.

Indeed, this urgency was underscored in April 2009, when a magnitude 6.3 earthquake struck the Abruzzo region of Central Italy, killing close to 300 people and damaging an estimated 11,000 buildings. While the quake pales next to the devastation wrought a year earlier in Sichuan province in China, the estimated $16 billion in reconstruction costs are a costly and lethal reminder for insurers.

While the underlying seismology continues to improve, Aon points out that the gulf between scientific understanding and actionable intelligence remains large, noting that Italians researchers singled out the eventual epicenter as an area of concern in a paper released just days prior to the quake. "One area that they identified as having particularly high levels of near-future seismic hazard was the city of L’Aquila, which by coincidence was severely damaged in an earthquake within days of publication of the paper," Aon states. "Without doubt, the L’Aquila event has served to keep the risks from earthquakes in urban areas at the forefront of catastrophe science."

Addressing this disconnect between knowledge and action, several of the research papers focus on the problems of the automated data networks required to efficiently distribute the warnings and the algorithms needed to reliably analyze the warning signals, Aon notes.

"Whilst a number of research groups have continued to pursue the elusive goal of specific prediction of earthquakes, days or even months in advance, another and perhaps more profitable area of research and development, has focused on the seconds to tens of seconds that elapse between initial detection of an earthquake rupture on seismometers near the source and the peak intensity of shaking in nearby urban areas," the review states. "The concept behind these studies is that of providing near-instantaneous automatic alarms to critical or hazardous facilities that can then be shut down in order to minimize damage from the earthquake."

Such early warning systems are not just theoretical. Aon cites a current network of seismic stations specifically designed to monitor sections of the North Anatolian Fault in Turkey and alert critical facilties in nearby Istanbul, as a working example that should be replicated elsewhere. "A similar concept to these seismometer-based warning systems, but on a global scale and on a longer timescale, can provide initial quantitative estimates of damage within an hour of an earthquake occurring."

Despite this call for global monitoring, Aon adds that earthquake modeling also needs to get more granular by focusing on simulations of ever-smaller geographic areas.

"The picture to be gained from recent research into attenuation relationships is that significant levels of uncertainty exist even in the best-studied regions, and that in reducing these uncertainties the models become ever more region-specific," they write, noting that new earthquake simulations highlight potential for stronger shaking in southern California and the Seattle area. "Although earthquake simulations have, as yet, only been carried out in a small number of areas and for a small number of earthquake sources, they underline the limitations of more generalized earthquake damage models – particularly global earthquake risk models used for example in reinsurance applications–and the need to recognize and allow for the significant uncertainties contained in these more general models."

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