Earthquake Risk Transfer for Commercial Facilities

This chapter profiles the Commercial Facilities Sector’s assets, design, and operating characteristics; identifies its primary risks and interdependencies; and describes how the sector’s public-private partnership operates and how temporary commercial insurance
can short term insurance policy to transfer earthquake risks, during the high-risk time window.

Earthquake Risk Transfer for Commercial Facilities

Sector Profile

The Commercial Facilities Sector is made up of an extremely diverse range of sites and assets where large numbers of people congregate daily to conduct business, purchase retail products, and enjoy recreational events and accommodations. The majority of facilities have open public access and house the business activities and commercial transactions that dominate the economy. Commercial Facilities stakeholders must balance security priorities with their need for open access, public confidence, and economic vitality. In general, commercial facilities are privately owned and operated with minimal oversight from Federal, State, and regional government regulatory entities; however, government facilities may reside within commercial properties. Assets can range from as small as a one-room museum to stadiums that can host events large and high-profile enough to be designated as National Special Security Events (NSSEs).

Assets and Impacts

Entertainment & Media, Gaming, Lodging, Outdoor Events, Public Assembly, Real Estate, Retail, Sports Leagues, which given Commercial Facilities Sector’s significant impact on the economy, reestablishing the sector’s assets after a disaster is required to secure local and financial security.

Owners and Operators

  • The majority of the sector is privately owned and operated, but includes publicly traded companies and some publicly owned buildings (e.g., libraries, museums).
  • Owners and operators assess vulnerabilities of their specific facilities and practice prudent risk management and mitigation measures.
  • Individual owners and operators most commonly provide funding for security and resilience programs, making cost a significant challenge to implementing modern security programs.

Entertainment and Media Subsector

The subsector includes media production facilities (e.g., television and motion pictures), print media companies (e.g., newspapers, magazines, and books), and broadcast companies (e.g., television and radio stations). These outlets reach the general population on a continuous basis and have a significant effect on the economy. Newspapers boast 40 million paid daily subscribers,16 while 30,460 television and radio broadcast stations17 contribute up to 7 percent of the U.S. gross domestic product (GDP),18 and the movie industry supports 1.9 million workers and released 659 films nationwide in 2013.

Gaming Subsector

The subsector includes commercial and tribal casino operators, cyber and physical assets, suppliers, and other entities affiliated with the gaming industry. The gaming industry contributes trillions of dollars to the economy and supports millions of jobs and nearly more than $152 billion in income in 2019. It also generates tax revenues to local, State, and Federal governments. Tribal governments operate gaming facilities in and generated $28 billion in gross gaming revenue in 2013.

Lodging Subsector

The subsector includes nongaming resorts, hotels and motels, hotel-based conference centers, and bed-and-breakfast establishments. Travel and tourism is one of the largest employers and generated $2.9 trillion in economic output in 2019. Accommodations make up the largest portion of this industry—contributing nearly one-fifth of its total output and supports millions of hotel property workers.
Hotels range from stand-alone, multistory structures located in the downtown business district of a city, to structures of only a few stories spread out over many acres in a resort setting. Hotels can be found in almost all of the other Commercial Facilities subsectors.

Outdoor Events Subsector

The subsector includes amusement parks, fairs, exhibitions, parks, parades, marathons, and other outdoor venues and events. Over 3,200 fairs are held in North America and 2100 in Europe each year, including large fairs with an attendance of more than a million people in a two- or three-week period. The most visited amusement had more than 210 million attendees. Parades in large cities can draw millions of spectators, such as the Macy’s Thanksgiving Day Parade, which attracts more than 3.5 million people to the streets of New York City each year, and is watched on television.

The subsector represents those activities and gatherings of people that take place outdoors, although there are usually buildings (e.g., restaurants, snack bars, hotels, shops, barns, and exhibition halls) associated with the activity. The outdoor nature of the event may sometimes result in attendees being spread out over a larger area than they would have been if the event had taken place in an enclosed structure.

Affordable Risk Transfer

Once a loss occurs, it is too late to revise an insurance policy. Consequently, the policyholder must be extremely diligent during policy purchase and renewal. Understanding specific insurance requirements, carefully calculating the property and business interruption values, outlining contingency plans, and anticipating the potential losses at each location are all key steps in maximizing future insurance recoveries. In sum, paying close attention to the potential impact of a loss at the insurance procurement stage will help to minimize issues and maximize recovery when a loss does occur.

Proposing the best time-window(s) for maximizing insurance coverage before a catastrophe is the Earling solution to transfer earthquake risks. Instead of 365 days insurance, maximize the current coverage only for a few days in each year.

Now that revising insurance policies once a loss occurs is too late, Earling helps to know the best time to transfer risk through new policies or extending the current coverage for a limited period of time for example only for 10 days and not for 365 days of year.
Maximizing insurance coverage after a catastrophic loss is difficult for any company but Earling Earthquake Preparedness Alerts assists to do it before a catastrophe occur.

Well Known Risk Takers

Tackle your risks with our solutions to the big players. We propose enterprise companies as well as SMEs and individualizes the best time to purchase a new earthquake policy or extending the current coverage to make it inexpensive.
risk takers
Currently, Japan, New Zealand, Greece, Turkey, Caribbean, Chile, Ecuador, Taiwan, Romania, Indonesia, California are the regions, which Munich Re accepts their risks. In addition, South Africa, Oklahoma and Utah are subject to further work. Also, between the regions that Earling issues Earthquake Preparedness Alerts, Japan, New Zealand, Caribbean, Chile, Ecuador, Taiwan, Indonesia and US (California, Utah) are undercover by Swiss Re to take the risks.

How we can help?

In general, Earling has a global seismic monitoring network and specialists that are subject matter experts. Regarding the challenges mentioned above, Earling is been able to deliver support.

  • In the pressure on profitability, performance management and key performance indicator settings.
  • In the entrance of parametric insurance markets and issuing alternative products, Earling can deliver independent advice by our global resources.
  • To keep control on the impact of catastrophic events, Earling can assist in optimizing, validating on Cat and reinsurance programs modelling.