Stochastic assessment of seismic risk using faults to address the incomplete information in historical catalogues

All disclosed earthquake models used for risk assessment in the insurance industry are commonly based on historical catalogues. These catalogues typically cover several decades or even a few hundred years; thus, they reveal only a small amount of information compared to the thousands of years that make up the typical period of occurrence for earthquakes in a specific geographic area. The current research approach progresses using fault sources, the recent trend of geophysical research proposals to address the missing information. Then, a reliable methodology is presented for the evaluation of seismic risk and consequently for the respective pricing process and the calculation of the solvency capital requirement (SCR) within the framework of Solvency II. Finally, a high-quality evaluation algorithm is provided for pricing and SCR calculation, while a case study for a model portfolio of buildings in Greece is also presented.