Developed countries like the United States and Japan should look to the 2010 Chile and New Zealand earthquakes as an example of what could happen if a large trembler were to hit a major population center, according to a report released last week by catastrophe modeling firm Eqecat.
“2010’s Maule, Chile earthquake is the best preview we have of potential performance in many locations in the U.S. and other developed nations.,” the Eqecat report states. “New Zealand and Chile both demonstrated the effect of infrastructure impairment on damage to privately-owned property.”
In the U.S., the Pacific Northwest is particularly vulnerable to a “megathrust”-type Chile earthquake since large population centers in Oregon and Washington’s site on the Cascadia subduction zone. Eqecat adds the last large earthquake event in that zone last took place in 1700 — and given a traditional 300 to 500 year return period — a catastrophic quake could occur in the “foreseeable future.”
Also in the U.S. the report says that scientists cite “ever-increasing probabilities” of a large rupture of the southern San Andreas fault would cause economic losses over $600 billion.
In Japan, Eqecat says that a magnitude 7.3 earthquake hitting Tokyo could cause economic losses approaching $1 trillion.
Despite the argument that the U.S. and Japan would be better prepared given the availability of insurance to cover losses, the report explains that actual take-up of earthquake policies remain extremely low for year country. For example, only 12 percent of Californians insure their homes for earthquakes and take-up of earthquake insurance in Japan is estimated at less than 10 percent.
The report, titled Earthquakes in Review: A Foundation for Understanding Risk, adds that 2010 was a particularly difficult for earthquakes in populated areas. Earthquake in 2010 caused more than 225,000 deaths, over $10 billion in insured losses and approximately $40 billion in economic losses.
The magnitude 8.8 quake in Chile counted as the most costly earthquake since the 1994’s Northridge, California earthquake which caused economic losses of $40 billion, the report added.
Risk Market News Newsletter
Join the newsletter to receive the latest updates in your inbox.