February 28th, 2011

Update: Earthquake in New Zealand

Posted at 2:26 PM ET

nz-eq-3-small1The 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 148, 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 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-4-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 the city center was at its busiest.

Officials said there was “incredible carnage” throughout the city, with the central business district being particularly badly damaged due to the phenomenon of liquefaction. According to the latest reports, the earthquake has left one third of the city centere facing demolition. Collapsed buildings included the 6-story Canterbury TV building, which was reduced to a ruin and the multi-storey 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 most of the city but there are still fears of contamination to the water supply due to damage to the city’s sewerage system. Health officials are warning people to boil water used for drinking and cooking, and to avoid showering or flushing toilets where possible.

In addition to the 148 confirmed fatalities, police officials have said that there are more than 50 people listed as “unaccounted for” in the rubble. Officials estimate that the final death toll will exceed 200 people. Rescuers commented that it was now “highly unlikely” that survivors would be found as the search enters its sixth day.

Reports said that 164 casualties had been admitted to hospital with serious 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 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 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 of 2010. The EQC said that it expects the 182,000 claims from the September earthquake to be reassessed and also expects a further 130,000 claims from the current quake event. The EQC said that 9,300 claims from the February 22 quake had already been received. 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.

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. As of February 28, the Prime Minister John Key said that the cost of the quake is expected to reach NZD20 billion (USD15 billion). In a recent statement, the Earthquake Recovery Minister Gerry Brownlee said that he expects the cost of re-building Christchurch alone will be more than NZD10 billion (USD7.5 billion). Mr Key has also announced a government package to help workers and businesses hardest hit by the quake that will cost around NZD120 million (USD90 million).

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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