PREPARING FOR A NEW VIEW OF U.S. EARTHQUAKE RISK

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1 October 2015 PREPARING FOR A NEW VIEW OF U.S. EARTHQUAKE RISK The latest scientific studies are set to change vendor earthquake catastrophe models over the next 18 months. But will these changes be significant to your catastrophe risk management process? Executive Summary The 2014 National Seismic Hazard Maps (NSHM) and the 2015 Uniform California Earthquake Rupture Forecast (UCERF3) describe the current scientific view of seismic hazard in the United States. These studies are the result of a massive amount of scientific research and debate that has occurred over the past six years. This academic work has formed the foundation of the catastrophe model updates that will be introduced by vendor modeling firms in , and ultimately will have a significant impact on the models view of risk to Property and Workers Compensation portfolios. Willis Re reviewed the results of these studies with the goal of drawing preliminary conclusions on what they mean for the insurance industry and what impact they could have on catastrophe model loss estimates. Five key conclusions from our review include: 1. The greatest magnitude changes in the modeled seismic risk can be expected in California, with significant but lesser degree changes in the Pacific Northwest 2. Overall, key return period loss estimates for portfolios concentrated in Southern California are expected to decrease and in some parts of Northern California to increase 3. Tail Value-at-Risk (TVAR) measures of loss estimates are expected to change for almost all regions: in particular, they are expected to increase in the Pacific Northwest for residential lines and to decrease in the Eastern U.S. for large commercial lines 4. Moderate to minor change in risk for portfolios concentrated in the Central and Eastern U.S., including the New Madrid region 5. Potential increase in earthquake risk in Las Vegas and a decrease in Salt Lake City The following graph shows the ranges of change in seismic hazard between 2008 and The magnitude changes in seismic hazard furnished in the chart shows wide ranges for each region and it varies by location within a region. The actual change specific to an insurance portfolio is highly dependent on where the exposure is located and the concentration of exposure within each region. Copyright 2015 Willis Limited / Willis Re Inc. All rights reserved: No part of this publication may be reproduced, disseminated, distributed, stored in a retrieval system, transmitted or otherwise transferred in any form or by any means, whether electronic, mechanical, photocopying, recording, or otherwise, without the permission of Willis Limited / Willis Re Inc. Some information contained in this document may be compiled from third party sources and we do not guarantee and are not responsible for the accuracy of such. This document is for general information only and is not intended to be relied upon. Any action based on or in connection with anything contained herein should be taken only after obtaining specific advice from independent professional advisors of your choice. The views expressed in this document are not necessarily those of Willis Limited / Willis Re Inc., its parent companies, sister companies, subsidiaries or affiliates (hereinafter Willis ). Willis is not responsible for the accuracy or completeness of the contents herein and expressly disclaims any responsibility or liability for the reader's application of any of the contents herein to any analysis or other matter, or for any results or conclusions based upon, arising from or in connection with the contents herein, nor do the contents herein guarantee, and should not be construed to guarantee, any particular result or outcome. Willis accepts no responsibility for the content or quality of any third party websites to which we refer.

2 Ranges of change in seismic hazard between 2008 and 2014 Willis Re can help you As a first step towards proactively managing the impact of potential model changes, we have developed a technique to more specifically assess the changes to your portfolio loss estimates based on the changes to the USGS NSHM. We encourage you to contact us to explore what these changes mean to your portfolios. Willis Re will continue to closely follow information related to U.S. Earthquake model upgrades in Over the next months, we will provide additional updates on how the models are changing to prepare you for how they may affect your company s underwriting guidelines, capital requirements and portfolio management strategies. In these communications, we will continue to offer balanced advice based on our range of skills, from model development to the practical implementation of portfolio management and underwriting objectives. This report is designed to be a point of reference as more information becomes available from the model vendors. Introduction The United States Geological Survey (USGS) released the latest version of its National Seismic Hazard Maps (NSHM) in October These maps, last updated in 2008, incorporate the best available science on fault slip rates, paleoseismic data, earthquake catalogs and ground motion models; they define the latest scientific view of earthquake hazard at varying probability levels across the United States. While the 2008 maps served as the basis for many public and private policies regarding earthquakes, including seismic-design regulations for buildings, bridges, highways, railroads and other structures, the new maps will drive the earthquake catastrophe risk model updates from AIR, EQECAT and RMS that the insurance industry uses for portfolio risk quantification. NSHM are based on time-independent (long-term view) estimates of location and size of future earthquakes. The seismic hazard maps show the shake hazard for buildings of different heights built on a uniform firm-rock site, at the peak horizontal ground acceleration estimated for two return period levels. Peak Ground Acceleration (PGA) describes how abrupt the ground motion is during an earthquake. As its name states, it refers to the movement of the ground itself, not the movement felt by buildings. PGA is the most relevant indicator of ground shaking intensity for a structure located at ground level, such as in-ground or surface pipelines and railways. Page 2 of 10

3 The shaking experienced by a building depends on its height, which relates to its resonant frequency. Spectral Acceleration (SA) is used to distinguish the hazard experienced by buildings of different height. SA is expressed at different periods, such as 0.2 sec or 1.0 sec. As a rule of thumb, we can approximate the building height by multiplying the time period by 10, so that 0.2 sec period 2 stories and 1.0 sec period 10 stories. PGA and SA are commonly measured in units of gravity (g = 9.8 ms -2 ). Current vendor earthquake catastrophe models calculate hazard in terms of spectral acceleration at different time periods, and relate building loss ratios to spectral acceleration corresponding to specific building types. USGS uses the following standard reference points: Spectral Acceleration SA = 0.2 sec Resonant frequency for a roughly 2-story building Provides insight about effect on low-rise (1-3 story) exposures SA = 1.0 sec Resonant frequency for a roughly 10-story building Provides insight about effect on high-rise (>8 story) exposures Return Time 10% probability of exceedance in 50 years 475 year return period Provides insight about changes that might occur to modeled loss in the year range 2% probability of exceedance in 50 years 2,475 year return period Provides indications about the further tail of the curve (e.g., TVAR) The following maps show national patterns of earthquake risk per the USGS update. Locations with negligible potential damage to buildings due to ground shaking are not highlighted in these maps. The areas of greatest earthquake risk remain along the West Coast (particularly California) and in the New Madrid region (at the intersection of Missouri, Illinois, Kentucky, Tennessee and Arkansas). Other areas with notable earthquake hazard include Salt Lake City, Charleston and portions of New England. 475 yr Hazard Return Period (10% exceeding probability in 50 years) USGS hazard for 0.2 sec SA (2-story buildings) USGS hazard for 1.0 sec SA (10-story buildings) 2,475 yr Hazard Return Period (2% exceeding probability in 50 years) Page 3 of 10

4 Although at this point we cannot precisely predict how modeled losses will change, we can anticipate potential impacts based on how vendors might implement the USGS technical updates. Given the nature of the relationship between building damage and ground shaking intensity, a 10% change in hazard can mean a 15-35% change in expected damage so modeled loss may change by a much larger amount than the USGS hazard change. Additionally, the seismic hazard changes presented in this report may be offset or amplified by changes to other modeling components, such as building damage functions. We now examine the effects for three geographic regions: California, Western U.S. (WUS) and Central and Eastern U.S. (CEUS). California Region Differences between the 2008 and 2014 NSHM maps show complex patterns across California with hazard varying locally. The change in shake hazard is primarily due to updates to earthquake source parameters, ground motion models (GMM, a.k.a. attenuation equations ) and revised smoothed seismicity of background sources. At this point, we cannot precisely predict how modeled losses will change. However, based on the technical updates implemented by the USGS, our analysis indicates decreases for exposures in Southern California and increases in some parts of Northern California. Statewide, we can expect decreases in risk estimates at lower return periods (100 to 250yr) and increases at high return periods (1000 to 5000yr). Local hotspots of large risk increases may result from the changes to gridded background seismicity and the new smoothing technique. Changes to the earthquake source parameters overshadow the smaller effects from changes to ground motion models in some cases. Risk in the northwest California is expected to increase due to the revised assumptions for higher earthquake rates and the addition of possible Mw 8.0 earthquakes on the southern portion of the Cascadia Subduction Zone (CSZ). The change in the amount of shaking experienced by low-rise (1-3 story) and high-rise (>8 story) buildings at the 475 year and 2,475 year return periods are shown below. Cool colors indicate decreases in hazard, while warm colors indicate increases in hazard. Only those areas where hazard is significant enough to result in building damage are shown. Page 4 of 10

5 Key implications for catastrophe risk managers Risk relativities between various regions, sub regions and internal rating territories may change significantly (e.g., Southern California to Northern California) Business rules that are based on the distance to a fault, such as exposure aggregate thresholds, underwriting guidelines or insurance rates, will be moderately affected by these changes Tail view of risk to change significantly Key scientific advancements driving the hazard changes The USGS incorporated many new methods in its 2014 National Seismic Hazard Maps. The key technical updates are: Revised seismic source model based on the third version of the Uniform California Earthquake Rupture Forecast (UCERF3) Revised fault parameters and earthquake recurrence rates for various faults Revised multi-segment rupture scenarios and earthquake recurrence rates; a revised smoothed seismicity model for background sources Accounts for earthquakes that rupture multiple faults yielding larger magnitudes than those in the previous model Updated ground motion prediction equation and weights for active shallow crustal earthquakes, subduction zone-related interface and intra-slab earthquakes Time-dependent view The national seismic hazard maps described in the prior section are based on a time-independent forecast, in which the probability of each earthquake rupture is independent of the timing of all others. It is generally accepted, however, that a time-dependent model provides a more accurate representation of the risk in California where most faults have been well studied. Time-dependent models are based on the concept of stress renewal where the probability of a fault rupture drops immediately after a large earthquake releases tectonic stress on the fault and rises again as the stress is regenerated by continuous tectonic loading. In a time-dependent earthquake forecast, the probabilities of a future event are conditioned on known previous earthquakes. The Working Group on California Earthquake Probabilities (WGCEP) is the multi-disciplinary team of scientists and engineers that develop time dependent earthquake forecasts for California. The time-dependent earthquake probabilities report for the third Uniform California Earthquake Rupture Forecast (UCERF3) was released in April UCERF3 is an updated version of 2008 UCERF2. The UCERF study describes the probability of an earthquake of various magnitudes occurring on various well known faults across California. However, the UCERF study does not detail the likelihood of amount of shaking caused by these quakes ( seismic hazard ). This is an important distinction between NSHM and UCERF, because even in areas with a low probability of a local fault rupture, strong shaking and damage from distant powerful earthquakes can occur. Key implications for catastrophe risk managers There is near certainty (essentially 100% probability) for an Mw 6.7 earthquake occurring in California in the next 30 years. There is a 48% and 7% probability for an Mw 7.5 and Mw 8.0 earthquake occurring in California in the next 30 years, respectively The chance of an Mw 7.5 earthquake occurring in Southern California (36% chance in 30 years) is higher than the chance for a similar earthquake in Northern California (28% chance in 30 years) Time-dependent probabilities for an Mw 7.5 and Mw 8.0 earthquake occurring in Southern California are 22% and 25% higher than the time-independent probabilities, respectively Time-dependent probabilities for an Mw 7.5 and Mw 8.0 earthquake occurring in Northern California are 1% and 14% higher than the time-independent probabilities, respectively The chance of an M 6.7 earthquake in the Los Angeles area is 60% in the next 30 years, which is 14% higher than the time-independent probability The chance of an M 6.7 earthquake in the San Francisco area is 72% in the next 30 years, which is 12% higher than the time-independent probability Page 5 of 10

6 Technical highlights of the 2015 UCERF time-dependent earthquake probabilities The UCERF framework comprises a sequence of four model types: a fault model that gives the physical geometry of the larger known faults, a deformation model that gives slip rates and aseismicity factors to each fault section, an earthquake rate model that gives the long-term rate of all earthquakes of magnitude five or greater (Mw 5) throughout the region and a probability model that gives a probability of occurrence for each earthquake during a specified future time interval. The latest versions of these models are used in developing the time-independent earthquake rate model used in the 2014 national seismic hazard maps and the UCERF time-dependent model for California. UCERF3 employs a new procedure for computing elastic-rebound based earthquake probabilities and supports magnitude-dependent aperiodicity and epistemic uncertainties with a logic tree producing 5,760 different forecasts. The probability of an Mw 6.7 earthquake occurring on various main faults in the next 30 years is shown in the table below, relative to the time-independent probability and the results from the last working group studies for comparison purposes. Timedependent probabilities for an Mw 6.7 earthquake to occur on the southern San Andreas Fault (near Los Angeles) and Hayward- Rodgers Creek (near Oakland) are 45% and 52% higher than the time-independent probabilities, respectively. The time-dependent probability for an Mw 6.7 earthquake occurring on the northern San Andreas Fault (near San Francisco) is about 4% lower than the time-independent probability. The southern San Andreas Fault has the highest probability (53%) in California of generating at least one Mw 6.7 earthquake in the next 30 years. In northern California, the Hayward-Rodgers Creek Fault and the northern San Andreas Fault has almost the same probability (33%) of generating at least one Mw 6.7 earthquake in the next 30 years. An earthquake of this size can be a significant loss event for the insurance industry, as it saw with the 1989 Loma Prieta earthquake (Mw=6.9, northern San Andreas) and the 1994 Northridge earthquake (Mw=6.7, southern San Andreas). Fault Name San Andreas South (near Los Angles) San Jacinto (near San Bernardino) Elsinore (near Lake Elsinore) Probability of an Mw 6.7 earthquake occurring on various main faults in the next 30 years Time-independent (Poisson) probability Time-dependent mean probability (min - max) % Elevated above timeindependent model 2008 UCERF 2015 UCERF 2008 UCERF 2015 UCERF 2008 UCERF 2015 UCERF 49.3% 36.2% 31.4% 10.9% 13.0% 5.4% Garlock (near Mojave) 5.9% 6.5% Hayward-Rodgers Creek (near Oakland) San Andreas North (new San Francisco) Calaveras (near San Jose) 23.9% 21.3% 24.2% 33.3% 7.8% 17.5% 60.3% (22.8% %) 32.1% (14.0% %) 11.8% (5.3% %) 6.2% (3.1% %) 31.9% (12.2% - 68%) 21.2% (6.4% %) 7.7% (1.5% %) 52.7% (17.1% %) 9.3% (0.3% %) 5.5% (1.1% %) 8.3% (0.2% %) 32.3% (13.7% %) 33.0% (0.7% - 73%) 25.5% (10.3% %) 22.3% 44.5% 2.2% (16.7%) (9.6%) 0.1% 6.0% 15.8% 33.5% 51.7% (12.5%) (4.0%) (1.9%) 45.6% Earthquake probabilities for many parts of California are similar to those in previous studies. However, the new probabilities for the San Jacinto Fault in southern California are about one third of the previous predictions, and probabilities for the Calaveras fault in northern California increased three-fold. Earthquake probabilities statewide are almost the same between time-dependent and time-independent (Poisson) models (time-independent rates are 2% to 3% higher for Mw7.5). At a state level, these differences are not significant relative to the overall modeling uncertainties. The difference between the time-dependent and the timeindependent views of risk can be significant for portfolios with exposure concentrations in specific regions and/or near specific faults. Page 6 of 10

7 Western United States The change in shake hazard in the Pacific Northwest (PNW) and Inter-Mountain West (IMW) is largely due to the updated ground motion models for crustal and Cascadia Subduction Zone (CSZ) earthquakes, revised Cascadia Subduction Zone source model, updated crustal fault models, revised source parameters and seismicity rates. Specifically, the hazard is increasing along Northwest Washington and Southwest Oregon due to the changes to ground motion models and the CSZ source model. Higher earthquake rate assumption and addition of possible Mw 8.0 earthquakes to the southern portion of the CSZ source is increasing the shake risk in Southwest Oregon and Northwest California. The revised subduction zone ground motion models attenuate faster with distance from the source. Therefore, shake hazard is decreasing for locations that are away from the PNW coast. Changes to smoothed gridded seismicity and the earthquake catalog are creating hotspots of increased risk in the IMW. Risk around Salt Lake City is changing, predominantly due to a decrease in event rates for the Great Salt Lake City fault. Hazard is decreasing near Reno, Nevada and increasing around Las Vegas, Nevada. Earthquake catalog changes for the IMW will impact hazard estimates at high return periods more than at low return periods. Changes to ground motion models and source parameters are causing complex pattern of changes for many locations. The maps below show the change in the amount of shaking experienced by low-rise (1-3 story) and high-rise (>8 story) buildings at the 475 year and 2,475 year return periods. Only those areas where hazard is significant enough to result in damage are shown. Key implications for catastrophe risk managers TVAR measures for low-rise residential and small commercial portfolios is expected to increase in PNW Moderate reductions (-10% or more) to key return period loss estimates can be expected for large commercial portfolios concentrated in the Pacific Northwest Earthquake risk around Tacoma, WA is expected to increase for all return periods Risk to portfolios concentrated in Las Vegas, NV is expected to increase and in Salt Lake City, UT to decrease at key return periods Page 7 of 10

8 Key scientific advancements driving the hazard changes The USGS incorporated many new methods in its 2014 National Seismic Hazard Maps. The key technical updates are: 1. Revised fault parameters such as magnitude-frequency distributions, maximum magnitude, slip rate and dip uncertainties 2. Updated earthquake catalog and treatment of magnitude uncertainty in rate calculations 3. New models for Cascadia earthquake-rupture geometries and rates based on onshore and offshore studies 4. Updated model for deep (intra-slab) earthquakes along the coasts of Oregon and Washington, including a new depth distribution for intra-slab earthquakes 5. A new Tacoma fault source and revised South Whidbey Island fault source in Washington 6. An updated Wasatch fault zone under Salt Lake City and reduced event rates for the Great Salt Lake fault 7. New and revised ground motion models for active crustal earthquakes and Cascadia Subduction Zone (interface and intraslab) earthquakes Central and Eastern United States The change in shake hazard in the Central and Eastern United States (CEUS) is primarily due to the updated ground motion models, earthquake catalog updates and revised sources parameters for fault and grid based earthquake sources. In particular, new ground motion models decay more quickly with distance than the previous versions. Updates to the New Madrid Seismic Zone (NMSZ) decrease shake hazard at higher return periods and increase hazard at low return periods. Updates specific to the northern segment of NMSZ are decreasing hazard for locations closer to the northern segment. Increases to shake hazard near Oklahoma City and Charleston are primarily due to the changes to the source parameters of Meers Fault and Charleston seismic region respectively. Changes to gridded seismicity and the earthquake catalog are creating hot and cold spots of hazard changes in the CEUS as well. Along the east coast, large commercial exposures may experience relatively large decreases compared to small residential due to the revised ground motion models. Page 8 of 10

9 Key implications for catastrophe risk managers The tail risk view of the New Madrid region is expected to change Potential increase to loss estimates under 500 year return periods for exposures close to the New Madrid fault Risk relativities between various territories / sub-regions within the CEUS may change Business rules such as exposure aggregate thresholds, underwriting guidelines and insurance rates that are based on the distance to a fault may need to be revised due to the potential changes to shake hazard Key scientific advancements driving the hazard changes 1. A new earthquake catalog based on moment magnitude (Mw) replacing the body wave magnitude (mb)-based catalog used in earlier versions of NSHM 2. Revised catalog completeness and magnitude uncertainty estimates 3. Revised maximum magnitude (Mmax) distribution and seismicity smoothing algorithms for background earthquake sources 4. A new four-zone model based on the Central and Eastern United States seismic source characterization for nuclear facilities project (CEUS SSCn, 2012) delineating the craton, Paleozoic margin, Mesozoic margin and Gulf Coast 5. Revised New Madrid source model for fault geometry, large earthquake recurrence rates, and alternative magnitudes range from Mw6.6 to 8.0 (average weighted magnitude Mw=7.5 is same between new and old versions) 6. Revised Charleston (South Carolina), Wabash (Indiana and Illinois), Charlevoix (Eastern Canada), Commerce lineament (Arkansas Indiana), East Rift Margin (western Tennessee) and Marianna (east and central Arkansas) seismic sources 7. New and revised ground motion models, and revised model weights, supported by preliminary Electric Power Research Institute (EPRI) ground motion study How might vendor model changes and USGS differ? The 2014 USGS NSHM and UCERF3 are comprehensive scientific studies and as such, have wide scientific and catastrophe modeler adoption. They will drive updates to AIR, EQECAT and RMS U.S. Earthquake catastrophe risk models. However, the modeling companies cannot directly take the end product of the NSHM and UCERF and simply implement it into their models. These NSHM and UCERF studies must first be translated into an event-based catastrophe model that the insurance industry uses for probabilistic loss estimation. Although all modeling firms may start their model development activities from a similar place, their implementation of these studies will result in different answers to the same question. The USGS maps form the basis of building code provisions. As such, the maps assume uniform soil conditions. When applying the code, the design engineer evaluates the site-specific soil conditions to assess the potential amplifying effect of the local soils on ground shaking intensity. Similarly, vendor models include local soil conditions in estimating the hazard at a given site. The changes to vendor models will also likely be broader in scope including factors such as site-specific soil amplification, basin effects, fire following, loss amplification, time dependency, engineering refinements, etc. Specifically, modeling companies can incorporate lessons learned from the recent 2010 Tohoku, Japan, 2011 Christchurch, New Zealand and 2012 Maule, Chile earthquakes. Vendors will also selectively differ from the USGS and from each other in their scientific assumptions. As the vendors recalibrate their models, changes to damage functions may offset or amplify changes to the seismic hazard. Lastly, vendors may choose to incorporate some new studies not released in time to be included in the USGS maps. For all these reasons, changes to the USGS seismic hazard maps cannot exactly predict the changes in vendor model loss results. Conclusions Model changes will be significant for many portfolios, and the patterns of change will be complex and multifaceted. These changes are expected to impact underwriting guidelines, capital requirements and portfolio management strategies. In addition, these changes will affect the Workers Compensation and Fire Following Earthquake (FFEQ) model loss estimates as well as shake loss estimates. Changes to portfolio loss estimates will be highly influenced by the updates to fault parameters, earthquake catalogs, ground motion models, soil amplification updates and potential updates to damage functions. Page 9 of 10

10 References 2007 Working Group on California Earthquake Probabilities, 2008, The Uniform California Earthquake Rupture Forecast, Version 2 (UCERF 2): U.S. Geological Survey Open-File Report and California Geological Survey Special Report 203 Field, E. H., G. P. Biasi, P. Bird, T. E. Dawson, K. R. Felzer, D. D. Jackson, K. M. Johnson, T. H. Jordan, C. Madden, A. J. Michael, K. R. Milner, M. T. Page, T. Parsons, P. M. Powers, B. E. Shaw, W. R. Thatcher, R. J. Weldon, and Y. Zeng (2013). Uniform California Earthquake Rupture Forecast, version 3 (UCERF3): The time-independent model, U.S. Geological Survey Open-File Report and California Geological Survey. Special Report 228 Field, E. H., G. P. Biasi, P. Bird, T. E. Dawson, K. R. Felzer, D. D. Jackson, K. M. Johnson, T. H. Jordan, C. Madden, A. J. Michael, K. R. Milner, M. T. Page, T. Parsons, P. M. Powers, B. E. Shaw, W. R. Thatcher, R. J. Weldon, and Y. Zeng (2015). Long-Term Time-Dependent Probabilities for the Third Uniform California Earthquake Rupture Forecast (UCERF3), Bulletin of the Seismological Society of America, Vol. 105, No. 2A, pp., April 2015, doi: / Petersen, Mark D., Frankel, Arthur D., Harmsen, Stephen C., Mueller, Charles S., Haller, Kathleen M.,Wheeler, Russell L., Wesson, Robert L., Zeng, Yuehua, Boyd, Oliver S., Perkins, David M., Luco, Nicolas,Field, Edward H., Wills, Chris J., and Rukstales, Kenneth S., 2008, Documentation for the 2008 Update of the United States National Seismic Hazard Maps: U.S. Geological Survey Open-File Report , 61 p. Petersen, M.D., Moschetti, M.P., Powers, P.M., Mueller, C.S., Haller, K.M., Frankel, A.D., Zeng, Yuehua, Rezaeian, Sanaz, Harmsen, S.C., Boyd, O.S., Field, Ned, Chen, Rui, Rukstales, K.S., Luco, Nico, Wheeler, R.L., Williams, R.A., and Olsen, A.H., 2014, Documentation for the 2014 update of the United States national seismic hazard maps: U.S. Geological Survey Open-File Report , 243 p., Glossary Attenuation: decrease in size, or amplitude, of seismic waves as they move away from the earthquake source. Earthquake: a term used to describe both sudden slip on a fault, and the resulting ground shaking and radiated seismic energy caused by the slip, or by volcanic or magmatic activity, or other sudden stress changes in the earth. Epicenter: the point on the earth s surface vertically above the hypocenter (or focus), point in the earth crust where a seismic rupture begins. Fault: a fracture along which the blocks of crust on either side have moved relative to one another parallel to the fracture. Ground motion: the movement of the earth's surface from earthquakes or explosions. Ground motion is produced by waves that are generated by sudden slip on a fault or sudden pressure at the explosive source and travel through the earth and along its surface. Intensity: a number (written as a Roman numeral) describing the severity of an earthquake in terms of its effects on the earth s surface and the built environment. Several scales exist, but Modified Mercalli (MMI) scale is most commonly used in the United States. There are many intensities for an earthquake, depending on where you are unlike the magnitude, which is one number for each earthquake. Interplate: pertains to processes between the earth s crustal plates. Intraplate: pertains to processes within the plates Magnitude: depicts the relative size of an earthquake. Magnitude is based on measurement of the maximum motion recorded by a seismograph. Several scales have been defined, but the most commonly used are (a) local magnitude (ML), commonly referred to as Richter magnitude, (b) surface-wave magnitude (Ms), (c) body-wave magnitude (Mb), and (d) moment magnitude (Mw). The moment magnitude (Mw) scale, based on the concept of seismic moment, is uniformly applicable to all sizes of earthquakes but is more difficult to compute than the other types. Peak Ground Acceleration (PGA): the largest acceleration experienced by the ground at a particular point away from the epicenter. Spectral Acceleration (SA): approximately what is experienced by a building, as modeled by a particle on a massless vertical rod having the same natural period of vibration as the building. Subduction zone: the place where two plates come together, one riding over the other. Tsunami: a sea wave of local or distant origin that results from large-scale seafloor displacements associated with large earthquakes, major submarine slides, or exploding volcanic islands. Contact us Prasad Gunturi Senior Vice President Willis Re Inc France Avenue South Suite 450 Minneapolis, MN Phone: prasad.gunturi@willis.com The contents herein are provided for informational purposes only and do not constitute and should not be construed as professional advice. Any and all examples used herein are for illustrative purposes only, are purely hypothetical in nature, and offered merely to describe concepts or ideas. They are not offered as solutions to produce specific results and are not to be relied upon. The reader is cautioned to consult independent professional advisors of his/her choice and formulate independent conclusions and opinions regarding the subject matter discussed herein. Willis is not responsible for the accuracy or completeness of the contents herein and expressly disclaims any responsibility or liability for the reader's application of any of the Page contents 10 of herein 10 to any analysis or other matter, nor do the contents herein guarantee, and should not be construed to guarantee, any particular result or outcome.