Average annual damage
Expected annual loss, also Average Annual Loss (AAL)
What the damage from a natural event costs a building on average each year: the sum of every possible damage, each weighted by how likely it is.
In almost every year a flood or an earthquake does not touch the home; now and then one comes and does a lot of damage. The average annual damage puts the two together: if a flood that ruins a quarter of the home comes on average once every 30 years, it is worth a quarter divided by 30, just under 1% of the value a year. All possible events are added up this way, from the most frequent and mild to the rarest and most severe.
It is given in euros a year or in per thousand of the rebuilding cost. Insurers and the European risk models (such as ESRM20 for earthquakes) use the same measure: it is the basis of the premium of a natural disaster policy, to which costs and margins are then added.
It is not a forecast: it does not say whether damage will come, or when. In the report it is worked out for a 100 square metre home at the address, as a range, because open data do not say how a single home is built. The method is in What floods and earthquakes cost.
Official source: doi.org
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