DESIGN OF A HYBRID GROUND MOTION INDEX AND CAT-IN-A-GRID PARAMETRIC EARTHQUAKE TRIGGER FOR MOROCCO

Parametric earthquake insurance has been used since the 1990s as a community resilience enhancement to transfer seismic risk fast and transparently, establishing a direct link between estimated losses and physical, measurable characteristics of the seismic event. Two types of parametric earthquake mechanisms are used in the industry today with some frequency: cat-in-a-grid approaches, which use the primary physical characteristics of a seismic event (i.e., location of hypocenter and magnitude) to trigger a payout, and ground motion indices, whose response is determined by actual or estimated ground motions parameters, such as Peak Ground Acceleration, Pseudo-Spectral Acceleration at given periods, etc. Both approaches have advantages and disadvantages that become more or less relevant depending on the specific goals of the stakeholders. In this article, we propose and design a parametric earthquake transaction for Morocco of a hybrid nature, combining both the cat-in-a-grid and the index typologies in order to take advantage of the beneficial traits of each of them. We use the cat-in-a-grid trigger to efficiently determine payouts in circumstances with moderate to little uncertainty, such as when the magnitude is very large, likely producing an exhaustion of the coverage, or very small, likely producing no loss. We also use the cat-in-a-grid trigger to resolve payouts for events that may not producing much shaking, but that may still produce significant damages, such as tsunami-genic, offshore events. The ground motion index, designed according to a fine discretization of the exposure and shaking intensity footprints available from USGS ShakeMaps, provides complementary sophistication and precision for events that require a higher accuracy, as is the case of events of moderate magnitudes affecting areas characterized by high exposure variability or complex geological settings. Results show that this hybrid approach results in heightened accuracy, and therefore in an enhanced decision-support tool for community resilience. Interestingly, as the price dynamics for cat-in-a-grid and index mechanisms are different, the combination of these tools may provide stakeholders with a device to reduce the cost of the overall transaction.