This week’s Christchurch earthquake will make the list of very significant (or even the highest level, super catastrophic) insurance events for 2011.
Last September’s quake was one of the top 10 most financial damaging in the world for the world’s insurance industry in 2010.
This latest one looks like having a gross damage bill (and an insured loss) of double the $US6.5 billion (insured loss $US5 billion) of the September 4 event.
Taken with the impact of Cyclone Yasi, the Brisbane and other floods in Queensland, the floods in northern Victoria and the fires around Perth, it has been a tragic summer.
A Brisbane fireman said in Christchurch yesterday that it had been a ‘Summer of sadness" in this part of the world and he’s right.
The loss of life is terrible, the injuries appalling, the damage to people’s lives heart-breaking.
The financial cost is devastating for many concerned, even if there is insurance. Some things just can’t be restored with all the money in the world.
But the quake last September (and the one in Chile earlier in the year which was a $US30 billion loss all up) are seen as important developments in the insurance industry.
This week’s second quake in Christchurch will only add to the new realisation that there is the potential for more risks in the southern hemisphere and especially Australasia.
It will mean higher rates and premiums for all classes and levels of insurance. That will be another rising cost we will have to add to rising power bills, oil and petrol prices, and food.
Every year Munich Re, one of the world’s largest reinsurers issues an annual report on natural catastrophes and their impact on insurance.
The 2010 report was released earlier this week.
Read it with the impact of the Brisbane floods and especially the two NZ quakes in mind.
"All in all, 2010 was the year with the second-highest number of loss-related natural catastrophes, 2007 being the highest, since we began keeping global statistics in 1980.
With 960 loss events due to natural hazards, the number of catastrophes documented in 2010 far exceeded the average for the last ten years (785 events).
The overall economic loss amounted to some US$ 150bn, with the year’s four major earthquakes (Haiti, Chile, China and New Zealand) accounting for no less than one-third of this sum.
All together, the insurance industry had to shoulder losses in the order of US$ 37bn for natural catastrophes worldwide in 2010.
Australia’s east coast was hit by severe floods from the end of 2010 to mid- January 2011, primarily affecting coal mining areas in Central Queensland around the turn of the year, and the city of Brisbane from the beginning of January 2011.
Overall losses amount to several billion US dollars and the insured losses are also significant.
The amounts are subject to considerable uncertainties due to the complexity of the event and unresolved coverage issues relating to the insured losses.
The earthquake which struck New Zealand’s South Island on 3 September attracted greater publicity.
This was due not so much to its magnitude of 7.0, which was similar to that of the quakes in China and Haiti.
What made this quake different was that, unlike the case in Haiti and Chile, an earthquake had not been expected here, 40 kilometres west of Christchurch.
Experts had focused more on the Alpine Fault to the northwest, which marks the boundary between the Indo-Australian plate in the west and the Pacific plate in the east.
The Darfield earthquake (named after the town closest to the epicentre), however, occurred along a previously unknown fault system under the sediments of the Canterbury Plains.
Unlike Port-au-Prince, (The Haiti quake in early 2010) the rupture proceeded away from the city in this case, but the energy emitted was unusually high for a quake of this magnitude.
In Christchurch, New Zealand, many residential buildings were damaged above all by collapsing chimneys.
They frequently crashed through the roofs of homes, most of which were lightweight constructions.
Many historical buildings of unreinforced masonry in the city centre also suffered significant damage.
As in Chile, non-structural damage played a major part here, too.
Unusually widespread soil liquefaction was one particular characteristic of the New Zealand quake.
Near-surface sediment layers on the Canterbury Plains are particularly prone to this phenomenon, which causes extensive damage that is also difficult to repair, as the substrate settles to varying degrees during the liquefaction process, causing buildings to tilt. (That is what has happened with the latest quake as well).
The Maule quake in Chile was the first earthquake of high magnitude and correspondingly long duration (over 120 seconds) to test modern high-rise buildings.
The high overall loss of US$ 30bn was not caused by instability.
Both the quality of Chile’s earthquake building code and its implementation are very good on a global scale.
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