February 23rd, 2011

Update: Earthquake in New Zealand

Posted at 11:24 AM ET

nz-eq-2-smallThe death toll from the earthquake that hit New Zealand’s South Island at 23:51 UTC on February 21(12:51 on February 23 local time) has now reached 75, according to the latest reports. The epicenter of the earthquake, of magnitude 6.3, was located only 3 miles (5 km) from the city of Christchurch on New Zealand’s South Island, at a shallow depth of 2.5 miles (4 km), according to the U.S. Geological Survey (USGS).

The USGS said that this latest earthquake occurred as part of the aftershock sequence of the magnitude 7.1 earthquake that hit the town of Darfield on New Zealand’s South Island on September 3 2010. Since this quake, there have been approximately six aftershocks greater than or equal to a magnitude of 5.0 in the Christchurch region. The latest quake is the largest aftershock since September 2010 and its shallow depth, and location close to the main population center of Christchurch, has made this quake significantly more destructive than the 2010 main shock. Since the recent quake, there have been numerous aftershocks, the most powerful at 5.6 M.

nz-eq-2-big

Hazard data illustrated in the CAT-i map was taken from i-aXs®, Guy Carpenter’s web-based risk management platform. i-aXs users can view impacted areas on any map as well as see how their portfolios were affected. Please contact your broker or GC Analytics (SM)  representative for assistance or go to www.i-axs.info for further information.

According to the USGS, an estimated 526,000 people live in areas impacted by a Modified Mercalli intensity (MMI) of V or higher (Table 1) and the majority of those affected live in Christchurch (population of c. 364,000). In addition, 310,000 people live in areas affected by MMI VIII and IX, equivalent to severe to violent shaking.

Reports said that the quake was the most deadly to hit New Zealand in 80 years, when a 7.8 Mw tremor killed 256 people in the Hawke’s Bay region in 1931. Unlike the earthquake of September 4, 2010, the present quake occurred during the lunchtime break of Christchurch’s workforce, when many people were out and about.

According to the police, there is “incredible carnage” throughout the city with bodies littering the streets. Of the 75 confirmed fatalities, the Mayor and Prime Minister said that 55 were identified, while a further 20 remained unidentified. The Mayor, Bob Parker also stated that 300 people were still listed as missing. Reports said that 48 people had been pulled out from collapsed buildings alive overnight. A member of the urban search and rescue team said that the focus was to extract those people still alive and they were forced to work around fatalities. He added that rescue teams -including army units and overseas teams - were operating in perilous conditions, with the frequent aftershocks further destabilising buildings.

Reports say that Christchurch’s central business district has been placed under curfew overnight, both for safety reasons due to the risk of damaged buildings crumbling in the numerous aftershocks, but also to counteract looting - police have reportedly made a total of six arrests for theft and burglary.

Many sections of Christchurch are in ruins, with the central business district being very badly damaged due to the phenomenon of liquefaction, where soil mixes with groundwater causing it to behave as a liquid. Collapsed buildings included the 6-storey Canterbury TV building, which was reduced to a ruin and the multi-storey Pyne Gould Guinness building, where according to recent reports, 14 staff remain unaccounted for. The landmark of Christchurch cathedral also suffered major damage including the collapse of its 526 foot (63 meter) spire.

Christchurch airport reportedly reopened for domestic flights on Wednesday morning, with international flights expected to open in the afternoon. The city’s infrastructure remains severely compromised with half of the city without power or drinking water and with many roads and bridges badly damaged. All schools in Christchurch have been closed until further notice, as expert teams assess the damage to buildings.

The Prime Minister John Key said that the death toll was likely to rise as the search and rescue operation continues. On Tuesday February 22 he declared a national state of emergency to allow coordination of national and international rescue and recovery efforts. Hospitals around the South Island have been cleared to take earthquake patients, although reports said they were struggling to keep up with the numbers of injured. In Christchurch, emergency shelters were set up in the city’s Hagley Park, a race course, schools and community halls. The Red Cross was trying to find accommodation for people sheltering outside in tents or under plastic sheeting.

The suburbs of Lyttelton, located at the earthquake’s epicenter, where some of the worst damage is reported to have been suffered and New Brighton, are reported as being “unliveable”.

Elsewhere, the quake caused around 30 million tons of ice to shear away from New Zealand’s biggest glacier in the Aoraki/Mount Cook National Park. The ice from the glacier sheared into the Tasman Lake immediately after the quake, causing the formation of 11 foot (3.5 meter) waves, according to reports.

The Prime Minister, John Key, said that the Earthquake Commission (EQC) would treat the February 22 quake as separate from the event in September 2010, adding that he expected the Commission to receive a further 100,000 claims. The EQC is expected to cover the first NZD1.5 billion (USD1 billion) to cover the cost of claims to residential properties with the next NZD2.5 billion (USD1.8 billion) being covered by reinsurance. The outstanding amounts would be covered by private insurance companies or the Government. Mr Key admitted that the quake would have a significant impact on both the resources of the EQC and on reinsurers.

AIR Worldwide has recently released the first industry insured loss estimates for this event of between NZD5 billion - NZD11.5 billion (USD3.5 billion - USD8 billion). AIR said that these estimates account for insured physical damage to property (residential, commercial, industrial) for structures and contents and direct business interruption losses.

The economic impact is expected to be far greater than that of the September magnitude 7.1 quake, although a Bank of New Zealand representative said that trying to put a figure to the losses at the present time was foolish. The Prime Minister John Key said that he would not rule out estimates as high as NZD16 billion (USD12 billion) for the total economic loss, a figure of more than twice that of the September 2010 quake.

Table 1: Estimated Population Exposure to Earthquake Shaking (Source: USGS)

 

Estimated MMI

Estimated Population Exposure

Perceived Shaking

IX

65,000

Violent

VIII

245,000

Severe

VII

68,000

Very Strong

VI

54,000

Strong

V

94,000

Moderate

Sources: Agence France Presse, Associated Press, BBC News, Bloomsburg Businessweek, New Zealand Herald, New Zealand Press Association, Reuters News, USGS, WSI, Xinhua News Agency.

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Guy Carpenter publishes CAT-i reports for major natural catastrophes worldwide. These reports cover catastrophes including worldwide tropical cyclones, earthquakes, major UK and European floods and any other natural event that is likely to incur a significant loss to the (re)insurance industry. Please email CAT.i@guycarp.com if you wish to be added to the free email distribution list.

Guy Carpenter compiles RISK-i reports for major technological or man-made events worldwide. These reports cover risks to property, transport and life including explosions, fires, crashes, engineering disasters and terrorist attacks that are likely to incur a significant loss to the (re)insurance industry. Please email RISK.i@guycarp.com if you wish to be added to the free email distribution list.

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