(including business interruption costs), and estimates of injuries and deaths. Example outputs are summarized in Table 5.1 for the two most common loss estimation model applications—for insurance (based on proprietary commercial models), response planning, and mitigation (based on publicly available models).


Loss estimation models are used by insurers and reinsurers, government agencies, private businesses, the engineering community, and others. Different groups often use the same models and input data but run their analyses for different purposes. Government agencies use loss estimation models during the period immediately after a disaster to help prioritize the allocation of limited resources. Immediately after an earthquake occurs, emergency managers often run a loss model to gauge the scope of the disaster; identify potentially hard-hit areas and localities that may require specialized response (e.g., search and rescue); select locations for staging of emergency resources, shelters, and aid centers (e.g., undamaged areas in close proximity to damaged areas); and accelerate mutual aid requests (see Chapter 7). In non-emergency circumstances, these same loss estimation models are used by emergency managers for exercises to enhance their response plans, by urban and regional planners to identify high-risk areas and to design land-use policies to help mitigate potential losses, and by utilities and public works departments to assess potential infrastructure damage for consideration in their capital improvement plans.

TABLE 5.1 Example Outputs from Loss Estimation Models

Loss Estimation Models for Insurance

Loss Estimation Models for Response Planning and Mitigation (e.g., HAZUS)

  • Maximum expected claim cost for a portfolio of insured risks

  • Expected annual losses (average annual loss) of a specific insured portfolio

  • Impact of mitigation factors (insurance policy deductibles, improved building features, and other loss avoidance and loss reduction efforts) on expected annual losses and maximum expected claims

  • Probable maximum loss of a specific insured property (for mortgage securitization)

  • Dollar losses associated with damage to buildings (structural, nonstructural, contents, and inventory damage)

  • Distribution of building damage (damage state) by occupancy and building type

  • Losses to and post-earthquake functionality of transportation and utility lifelines and essential facilities (e.g., hospitals, schools, police and fire stations)

  • Regional economic impacts (e.g., direct and indirect business interruption)

  • Injuries, deaths, and shelter requirements

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