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Damaging earthquakes in Colombia highlight the seismically active nature

of the region. These significant events, coupled with the rapid growth and
transformation of the insurance market and new requirements from Colombian
regulatory agencies, accentuate the need to incorporate catastrophe models
into risk management best practices. The RMS Colombia Earthquake Model
helps companies make informed risk management decisions for improved
accumulation management, price setting, and reporting solvency margins.

Colombia Ear thquake


Along the western border of Colombia, the Nazca and Caribbean plates collide against and plunge beneath
the South American Plate, generating the majority of Colombias seismic activity. Colombia, located on the
northwestern corner of the South American Plate, experiences earthquakes from two primary sources: the
subduction zone and shallow crustal faults. Uncertainty around the recurrence of earthquakes in this seismically
active region, combined with Colombias growing exposure and the potentially high losses that could result
from catastrophic events has led to increasing concerns over earthquake risk in Colombia. The RMS Colombia
Earthquake Model addresses these concerns by providing a standardized probabilistic framework for assessing
seismic risk in Colombia. Based on a technical foundation of proprietary RMS earthquake hazard methodology,
the model incorporates recent seismic activity in Colombia, advances in earthquake hazard research, and
regulatory requirements specific to the Colombia market.

E a rt h qu a k e M od e l A p p l i c at i on s
The insurance industry in Colombia is undergoing a period of rapid transformationpremium volumes are
experiencing rapid growth, and new regulations are motivating greater sophistication in the market by
requiring the collection of higher quality exposure data. Additionally, the use of detailed financial catastrophe
risk modeling for solvency margins and investments is motivating greater competition and attracting foreign
players into the market. In this dynamic setting,
the Colombia Earthquake Model facilitates insurance
companies in managing earthquake risk accumulations,
setting pricing, and reporting solvency margins to the
rating and regulatory bodies.

70 W

N I
Barranquilla

C R
PA

Cucuta

V E

Bucaramanga

L o c a l S e i s m i c i t y E x p e rt i s e

Residential Lo s s C o st

Medellin

High

Bogota

To ensure robust modeling of earthquake risk in Colombia,

C O

Cali

Low

RMS has partnered with the nations leading experts in the


field of earthquake hazard research. Scientists from the
Colombian Institute of Mining and Geology (INGEOMINAS)
as well as the experts involved in the development of the
comprehensive seismic study sponsored by the Colombian
Insurance Federation (FASECOLDA) worked with RMS to

B R

E C
P E

Residential loss cost due to earthquakes in Colombia

incorporate a wide breadth of expertise relating to seismic hazard, soil data, inventory information, and local
building standards into the model.

M od e l i n g C ol om b i a s E a rt h qu a k e H a z a r d
The Colombia Earthquake Model benefits from highly sophisticated earthquake risk modeling, simulating over
20,000 possible earthquake events, and utilizing a seismic source model that captures the unique characteristics
of Colombias tectonic setting. For a given event on a specific earthquake source, the model analyzes the
attenuation, or decay, of seismic energy with distance to determine the level of ground shaking at a particular
site. Ground motion calculations capture the effects of local site conditions, such as soil type and susceptibility
to liquefaction, by using a proprietary RMS geographic indexing system known as the variable resolution grid
(VRG), with up to 0.5 km resolution to store detailed hazard data. To optimize the trade-off between model
resolution and run time, grid cell size varies depending on exposure density and hazard gradient.

B u i l d i n g Vu l n e r a b i l i t y a n d
I n v e n t o ry M o d e l i n g

PP A

V E

C u c u tt a
B uu c aa r a m aa n gg aa

B o gg o tt a

To more accurately model the vulnerability of exposure to


earthquake hazard, the vulnerability data included in the
Colombia Earthquake Model captures seismic behavior

Risaralda

CC O

Cali

Caldas

4.8

M
M e d e l l ii nn

Choco
E C

B R
P E

specific to Colombias building stock. The model calculates


losses by linking seismic ground motion to building

Quindio

5.4

damage and reconstruction cost, and validates calculations

Valle del Cauca

using loss data from events such as the 1999 Armenia

8.2

7.4
Tolima

6.6
High

Earthquake and 1983 Popayn Earthquake. Users have the


option to enter building attributes on a risk-by-risk basis;
or, in cases where building information is not available or
aggregate data is entered, can retrieve building inventory

Low

Armenia earthquake reconstructionmodeled versus


observed intensities

distributions from inventory databases for Colombia.

Model Specs
H i s t o ry

Geographic Scope

Originally released in 1996 and upgraded in 2009

All of Colombia

G e o c od i n g R e s ol u t i on

M od e l i n g P l at f or m s

Coordinate, block, street, city, urban area (district),


region (county), departmento (state), CRESTA Zone

L i n e s o f B u s i n e s s a n d C ov e r ag e s
Modeled
Residential,

commercial,

and

industrial

line

occupancies; building structure, contents, and time


element coverages are included

RiskLink Detailed Loss Model (DLM): supports


detailed levels of exposure data resolution
RiskLink Aggregate Loss Model (ALM): enables
aggregate exposure loss modeling when detailed
information is unavailable
RMS Industrial Facilities Model: incorporates
the physical and operational characteristics of
industrial facility vulnerability

Risk Management Solutions, Inc.

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7015 Gateway Blvd., Newark, CA 94560, USA

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http://www.rms.com

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