Public-private partnership for earthquake mitigation involving retrofit and insurance

Abstract

Public-Private Partnerships involving governments and insurers have been used worldwide for mitigation of natural-hazards. However, the implementation of such systems in developing countries presents problems for their key stakeholders. On the one hand, property owners are hesitant to purchase insurance or invest in retrofit projects due to cost considerations. On the other hand, insurers are reluctant to cover potential seismic losses, because of uncertainties about the risk. This study introduces an innovative Public-Private Partnership framework for property owners, insurers and governments to facilitate decisions related to hazard insurance and structural retrofit of vulnerable buildings. This framework can also help insurance firms reduce the level of corporate financial assets available for payment of compensation to their clients, as required by regulations aimed at reducing the risk of insurer insolvencies. Property owners are motivated to participate in the framework by extra mitigation subsidies from the government. While the government will be reimbursed for part of the cost of these retrofit projects by insurance firms, whose own savings will be achieved through reductions to legally mandated corporate capital. A case study is presented to demonstrate the feasibility of this approach for mitigating seismic risk to residential buildings in a rural area.

Keywords:

• insurance
• retrofit
• public-private partnership
• natural hazard

Additional information

Notes on contributors

Xijun Yao

Xijun YAO is a Master of Science degree candidate in Civil and Environmental Engineering/Project Management at the University of Maryland at College Park, USA. His research interests focus on infrastructure catastrophe insurance strategies and construction project management.

Hsi-Hsien Wei

Hsi-Hsien WEI is a doctoral candidate in Civil and Environmental Engineering/Project Management at the University of Maryland at College Park, USA. His research interests include optimal strategies for sustainable and resilient infrastructure and construction project management.

Igal M. Shohet

Igal M. SHOHET joined the founders of the Department of Structural Engineering at Ben-Gurion University in 2004; he is the head of the Construction Management Program since its establishment and the Deputy-Chair of the Department since 2005. He is an advisor to the Israeli Ministries of Interior and Economy. He has published more than 100 publications in peer-reviewed journals and conference proceedings. His present research is carried out in Risk Management and Extreme Events Engineering and Management of Critical Infrastructures.

Mirosław J. Skibniewski

Mirosław J. SKIBNIEWSKI is a Professor of Construction Engineering and Project Management at the University of Maryland at College Park, USA. His current research interests focus on information and automation technologies for the improvement of construction and related processes, and on the analysis of supply chains for resilient and sustainable construction. An author of over 200 research publications, he has been a recipient of numerous awards from government agencies and professional organizations in the U.S. and worldwide.