Probable Maximum Loss
The Probable Maximum Loss, the PML, is the premier tool used by real estate investors and lenders to evaluate how buildings will behave during a seismic event. Partner's clients can trust that the PML report will accurately identify assets with high seismic risk.
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 zone 3 and 4. Obviously, the areas more prone to earthquakes are a higher risk of loss to the lending institutions. To assist in the underwriting transaction, Partner performs Seismic Damageability Assessment/Probable Maximum Loss reports.
In preparing a PML, Partner evaluates the likely costs incurred from seismic damage to structures on a given site. Partner's licensed engineers inspect and discuss building types, critical connections, local soil conditions, and local seismic activity to use in calculating the PML for 50 years and/or 500 years. The PML is intended to suggest how the property will be affected by a probable seismic event, not guarantee how the property will perform in a seismic occurrence.
Partner prepares PMLs to meet the requirements of the scope of work defined by ASTM E2026-07 Standard Guide for Seismic Risk Assessment of Buildings (the Standard), as well as adhering to Scenario Upper Loss (SUL) as identified in the Standard. Partner also utilizes the Modified Mercalli Intensity Scale to evaluate the type of damage likely to occur at properties. The scale was developed based on interviews and observations following earthquakes, and ranges from ground shaking which isn’t noticeable to humans (MMI-I) through extreme shaking resulting in catastrophic destruction (MMI-X).
Partner's engineers derive calculations for potential damage from widely used and accepted formulas based upon statistical data on observed damage to unreinforced buildings. These observations are used to derive the theoretical model formula. The adoption of this model to other types of construction is based mainly on expert opinions contained in a report published by the Applied Technology Council (ATC). The resultant formula and calculations of probable maximum loss (damage) represent the current state of the art in forecasting for such damage.
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- Jay Kumar, PE