February 24th, 2011

Update: Earthquake in New Zealand

Posted at 12:34 PM ET

nz-eq-3-smallThe official death toll from the earthquake that hit New Zealand’s South Island at 23:51 UTC on February 21 (12:51 on February 22 local time) has now reached 102, according to reports from New Zealand’s civil defence authority. 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 of 2010 and its shallow depth, and location close to the main population centre 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-3-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.

Officials said there was “incredible carnage” throughout the city, with the central business district being particularly badly damaged due to the phenomenon of liquefaction. Collapsed buildings included the 6-story Canterbury TV building, which was reduced to a ruin and the multi-story Pyne Gould Guinness building, where reports said that the last survivor was recovered on the afternoon of February 24. The landmark of Christchurch cathedral also suffered major damage including the collapse of its 207 foot (63 meter) spire. Elsewhere, the damaged 246 foot (75 meter) Hotel Grand Chancellor had an exclusion zone formed around it, due to fears that it may collapse. There is also major damage to transport infrastructure, with many roads and bridges badly damaged by cracks, the accumulation of sandy mud, and surface flooding. Christchurch airport reportedly reopened for domestic flights on Wednesday morning (February 24), with international flights expected to open in the afternoon. All schools in Christchurch have been closed until further notice, as expert teams assess the damage to buildings.

According to latest figures, the power supply has now been restored to 75 percent of the city and 40 percent of the city now has running water. However, the city’s sewerage system has been badly damaged and health officials are warning people to boil water used for cooking and to avoid showering or flushing toilets where possible.

In addition to the 102 confirmed fatalities, police officials have said that there are over 200 people still missing, with up to 120 of these thought to be trapped in the rubble of the Canterbury TV (CTV) building. As the search and rescue operation continues, Prime Minister John Key said that the death toll was “certain to rise”. However, it was insisted that search and rescue team specialists were still hunting for signs of life, even though they were operating in perilous conditions, with the frequent aftershocks threatening the collapse of damaged buildings.

Reports said that 164 casualties have been admitted to hospital with injuries caused by falling rocks, bricks and other debris, with reports stating that the total number of injured was around 2,500. According to official sources, the Christchurch hospital was still operational, despite sustaining some damage. Official sources also confirmed the arrival of a 75-bed Australian Army Field hospital on the afternoon of the February 24, to reinforce the provision of medical care for casualties. 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 epicentre, 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 of 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. A statement issued by Standard & Poor’s Rating Services said that although it was too early to assess the cost of the Christchurch earthquake to insurers, reinsurers and the EQC, they believed it was likely to be one of the world’s costliest insurance events in recent times and follows significant losses from the September of 2010 earthquake.

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

On February 23, AIR Worldwide 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 of 2010 quake.

Sources: Agence France Presse, Associated Press, Australian Broadcasting Corporation, BBC News, Bloomsburg Businessweek, Business Insurance, Canturbury District Health Board, Fairfax Media (www.stuff.co.nz),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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