Beyond Shake Intensity: The Science of Structural and Financial Resilience in Mexico

October 14, 2025 / 5 min read

Mexico's seismic landscape is as complex as it is consequential. With approximately 12,000 earthquakes of magnitude 3 or higher annually—including nearly 2,000 exceeding magnitude 4 and more than 30 topping magnitude 5—Mexico is one of the world's most earthquake-prone countries^[1]. Yet for insurers, reinsurers, and brokers navigating this risk, the shaking of the ground is only part of the story. The true measure of risk exposure and resilience lies not just in how strongly the earth shakes, but in how structures respond, how portfolios perform, and how capital flows to support recovery.

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Why model updates matter more than ever

Earthquake modeling has continuously evolved, but the pace of change in Mexico's risk landscape now demands models that keep pace with new science, expanded data, and emerging perils. More than 15 years of additional seismic data, updated fault geometries, and refined understanding of subduction zone behavior have fundamentally enhanced our ability to estimate hazard. Yet hazard is only the starting point. Today's challenge is translating our enhanced and evolving understanding of the hazard into credible loss estimates across a building stock that varies dramatically by region, construction era, and code compliance—while accounting for perils such as liquefaction, landslide, and tsunami that older model versions didn't explicitly capture.

The stakes are substantial. According to Verisk's Global Modeled Catastrophe Losses Report, global modeled losses now exceed $150 billion annually, a benchmark reflecting both heightened hazard intensity and expanding exposure in fast-growing urban regions. Mexico exemplifies this convergence: dense urbanization, evolving construction practices, and regional hazard complexity create risk profiles that older models struggle to capture with precision.

Engineering-based precision: The Verisk approach

Verisk's updated Earthquake Model for Mexico builds on enhanced hazard science—incorporating updated fault databases, geodetic data, and the latest ground motion prediction equations—while advancing how that hazard translates into loss. The model now explicitly accounts for site-specific basin effects critical to Mexico City, where soft soil amplification can dramatically alter building performance. It models additional perils, including liquefaction and landslide, expanding the view of how earthquakes actually damage structures.

Construction variability drives differentiation in loss outcomes. A concrete frame building in Mexico City built under 2017 code requirements performs fundamentally differently from unreinforced masonry construction in Oaxaca. The model captures these distinctions across residential, commercial, and industrial sectors, grounded by a new, peer-reviewed, municipality-based building codes study that anchors damage functions in the reality of Mexican construction.

Enhanced damage functions now more precisely model the progression from minor damage to total loss, delivering loss estimates aligned with observed performance in pivotal events such as the 1985 and 2017 earthquakes. This matters because while hazard remains the largest source of uncertainty when assessing earthquake risk, more accurate vulnerability assessments for each unique building significantly narrow the total uncertainty. Verisk's regionally calibrated vulnerability curves translate physical damage into financial outcomes with accuracy that reflects both the latest engineering science and many years of additional seismic and damage data.

From structural response to financial insight

For insurance and reinsurance professionals, the value proposition is clear: Better models enable better decisions. Verisk's Mexico Earthquake Model integrates engineering-based vulnerability functions with financial terms and conditions, producing realistic ground-up and insured loss estimates. Enhanced occupancy-specific loss estimation allows for precise portfolio differentiation, which is critical when underwriting accumulations in Mexico City, Guadalajara, or Puebla.

The portfolio-level benefits can be transformative:

Pricing and treaty calibration: More accurate loss estimates support defensible pricing and optimized reinsurance structures, reducing basis risk between modeled expectations and actual outcomes.

Accumulation management: High-resolution exposure analysis identifies concentration hotspots, enabling proactive portfolio management before accumulations become unmanageable.

Capital efficiency: By aligning model outputs with regulatory and rating agency expectations, insurers can find the sweet spot between excessive reserves and underestimated tail risk in their capital allocations.

These capabilities matter acutely in Mexico. Only 16.5% of properties in Mexico City carry earthquake insurance, a protection gap that amplifies both opportunity and responsibility for the industry^[2]. Better modeling doesn't just improve underwriting economics; it provides the analytical foundation for expanding coverage and strengthening financial resilience across underinsured regions.

Building tomorrow's resilience today

The evolution of catastrophe modeling reflects a broader truth: resilience is no longer a theoretical ambition but a market imperative. With global modeled losses rising nearly 30% over the past decade, the industry must build financial systems capable of withstanding tomorrow's seismic and economic shocks.

For insurers and reinsurers, advanced models such as Verisk's Earthquake Model for Mexico provide clearer visibility into correlated risks and resilience pathways. This clarity enables more confident capital deployment, more sophisticated risk selection, and more sustainable portfolio construction. For brokers, it means delivering clients differentiated insights that drive competitive advantage, whether identifying underpriced opportunities or flagging over-concentrations before they materialize.

For the Mexican market more broadly, the implications extend beyond insurance economics. Robust, transparent loss estimation supports disaster risk financing, informs resilience planning, and provides regulators with the analytical tools to bridge protection gaps strategically. When underwriting is informed by engineering reality rather than statistical approximation, it can help drive faster recovery, fairer pricing, and improved safety.

The path forward

Mexico's earthquake risk demands modeling that matches its complexity—regionally calibrated, engineering-grounded, and financially precise. Verisk's commitment to continuous scientific advancement ensures the Mexico Earthquake Model reflects real-world performance, incorporating the latest claims data, construction practices, and exposure dynamics. In a market where other Mexico earthquake models may be overdue for updates, this commitment to currency matters profoundly.

The future of earthquake risk management in Mexico includes models that transcend shake intensity by integrating local building code evolution, capturing urban growth patterns, and translating structural response into portfolio implications. For insurers, reinsurers, and brokers committed to resilience, both financial and structural, the capabilities exist. The question is no longer whether Mexico's earthquake risk can be modeled precisely, but how quickly the industry will adopt the tools to do so.

In an era of rising losses and expanding exposure, that adoption cannot come soon enough.

Learn more about Verisk’s updated Earthquake Model for Mexico.

^{[1] https://www.volcanodiscovery.com/earthquakes/mexico.html}

^{[2] https://www.sciencedirect.com/science/article/abs/pii/S2212420922003971}