With recent earthquake activity in the Pacific and new reports on major risks of loss in North America, insurers are taking note of an exposure that could have devastating consequences.
According to Dr. Robert Muir-Wood, RMS Chief Research Officer, the November 22 earthquake off the coast of Sendai, Japan is probably another aftershock triggered by the Tohoku quake in March of 2011. Some experts believe another giant earthquake off the Pacific coast – east of Tokyo is still imminent.
In addition, New Zealand was also hit by a major earthquake, the largest since 2009. In early estimates, AIR Worldwide reports potential insured losses between $762 million and US$3.5 billion.
While Canada has not seen a major earthquake since 1700, Natural Resources Canada says the probability of a significant quake in the Western part of the country is 30 percent over the next 50 years, with probability in Eastern Canada between 5 and 15 percent.
Even with insured Cat losses from natural disasters increasing in recent years, The Conference Board of Canada says the country is simply not prepared to deal with the economic consequences of a massive earthquake. In a report called “Canada’s Earthquake Risk: Macroeconomic Impacts and Systemic Financial Risk”, report says a massive quake off the coast of British Columbia could cause widespread failure among insurance companies, and trigger a financial contagion that would result in longer-term economic loss.
And recently in Southern California, a series of small seismic events prompted a major earthquake alert. After which Chris Nance, Chief Communications Officer at the California Earthquake Authority (CEA) said “our phones have been ringing off the hook.” He then added that “there is a 99% chance of a magnitude 6.7 earthquake or greater in the next 30 years.”
During an Earthquake Preparedness Forum organized by New America Media, a panel of disaster management leaders from the CEA, the American Red Cross, the Los Angeles Emergency Management Department, and the California Institute of Technology advised Southern Californians to insure their property…and take other steps to prepare for a seismic event comparable to Northridge in 1994, the last time a major earthquake hit the region.