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A detailed analysis of how a property’s
structural characteristics affect its vulnerability to natural hazards and
how modifications to those characteristics impact potential losses can help clients plan their overall catastrophe
loss reduction program. AIR engineers have identified over 30 individual
risk characteristics that can have significant impact on a client’s loss
potential. Wind-specific characteristics include roof geometry, pitch,
covering and attachment systems, wall siding, percent of the exterior
covered by glass, type of window protection, etc. Earthquake-specific
characteristics include building shape, presence of soft story, foundation type, building-foundation
connections, presence of earthquake resistive systems, and so on.
Through an extensive analysis of engineering principles, results of damage surveys and expert knowledge, AIR engineers have developed modifiers to the damage functions used in AIR’s natural hazard models. These modifiers are a function of construction class and hazard intensity and are applied using a structured, engineering based approach that accounts for all possible combinations of and correlations between secondary risk characteristics. "What if" analyses can be performed to measure the impact on loss estimates of various scenarios, such as adding storm shutters or retrofitting with cross bracing. The results of detailed sensitivity analyses are used to provide guidance for enhancing underwriting and pricing strategies, including determining the appropriate level of credit for the presence of various loss mitigation devices.
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