Probable Maximum Loss Reports

The United States is divided into four zones depending on seismic hazard risk. Typically, real estate investors, developers, property owners, and lending institutions are all concerned about assets in seismic zones 3 and 4. Obviously, the areas more prone to earthquakes have a higher risk of loss to lending institutions. To assist in the underwriting transaction, Partner performs Seismic Damageability Assessment/Probable Maximum Loss reports.

The Probable Maximum Loss, PML, is the tool used most by real estate investors and lenders to evaluate how buildings will react to a seismic event. A PML evaluates the likely costs incurred from seismic damage to structures on a given site, taking into consideration building types, critical connections, local soil conditions, and local seismic activity. The PML is intended to suggest how the property will be affected by a probable seismic event, not guarantee how the property will perform during seismic occurrence.

PMLS can be calculated for 50 years and/or 500 years and can be expressed as a “Scenario Loss” estimate. The Scenario Upper Loss (SUL) is the scenario loss that has a 10% probability of exceedance due to the specified earthquake scenario as identified in the ASTM E2026-07 Standard Guide for Seismic Risk Assessment of Buildings (the Standard), and the Scenario Expected Loss (SEL) is the expected loss value due to the specified earthquake scenario. Therefore, the SUL represents an upper loss estimate, and the SEL represents an average or expected estimate.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: