Earthquake loss analysis of the Italian building stock investigating the feasibility of an earthquake insurance system

The present study aims to calculate the expected insurance premium for Italian building stock subjected to seismic hazard in its service lifetime based on probabilistic loss estimation. A methodology is presented that takes into account the uncertainty in the occurrence of future events due to seismic hazard. The expected insurance premium can then be evaluated based on the probabilities that the structure exceeds a set of discrete limit state thresholds. Finally, the methodology is implemented in an illustrative numerical example which considers the Italian residential building stock discretized in 5 structural typologies and in 8088 areas, corresponding to the Italian municipalities. An insurance model assuming monopoly market is built, assuming risk aversion of the property owners and risk neutrality of the insurance companies. Hence, the insurance premium is evaluated for each structural typology in each Italian municipality, also considering maximum coverage and insurance excess systems. Results are aggregated to compute the total expected loss per year of the whole Italian building stock, the total income and profit of the insurance company, assuming an insurance contract for all the property owners.