Insurers with property coverage in states that border the Pacific Ocean remained alert today after a tsunami warning was issued and then canceled for the Indonesian region after two earthquakes with magnitudes of 8.7 and 8.2 struck the Indian Ocean, centered approximately 270 miles southwest of Banda Aceh, the capital of Indonesia’s Aceh province.
The 2004, 9.3-magnitude quake, which hit the same region as today’s, triggered a devastating tsunami. In all, that catastrophe resulted in roughly 220,000 deaths and $10 billion in economic damages. Insured losses were about $1 billion, according to the
“Southeast Asia is one of the most complex, and fastest deforming, seismic zones in the world,” said Dr. Bingming Shen-Tu, senior principal scientist at
In spite of the seismic ratings, the earthquakes apparently did not cause any major damage in the affected area. As a precaution, people in Banda Aceh, Sumatra, evacuated offices, hotels and residences. Thailand's National Disaster Warning Center issued an evacuation order to residents in six provinces along the country's west coast, including the popular tourist destinations of Phuket, Krabi and Phang-Nga, reports AIR.
According to the
Today’s quakes also occurred a little more than a week after the United States formally recognized “Tsunami Preparedness Week,” which is part of the National Tsunami Hazard Mitigation Program, formed by Congress in 1995 when it directed the National Oceanic and Atmospheric Administration to form and lead a Federal/State working group.
The working group may have its work cut out for it. Globally, four of the five costliest earthquakes in the past three decades have occurred in the past three years,
"Make no mistake, 2011 was a difficult year for the insurance industry," Lloyds of London chief executive Richard Ward said in a statement last month.
In the United States, 50 earthquakes have occurred in 39 states since 1900, causing damage in all events. There has not been a major quake on the U.S. mainland, however, since the 1994 Northridge, California quake. That 6.7-magnitude earthquake ranks second only to the Japan quake on the list of costliest quakes, causing $15.3 billion in insured losses at the time it occurred, or $22.5 billion in 2010 dollars, according to the IINC.
Taking into account the 1989 6.9-magnitude Loma Prieta earthquake, California holds the record for costliest earthquakes as defined by insured losses. Insurers’ exposure to the Loma Prieta quake resulted in losses of $960 million in 1989, or $1.69 billion in 2010 dollars.
Ironically, in spite of the public messaging on “Tsunami Preparedness Week” and its related earthquake safety awareness campaign, as well as the fact that earthquakes are not covered under standard U.S. homeowners or business policies, few Californians purchase earthquake insurance. The IINC reports less than 12 percent of the state’s homeowners are estimated to have purchased quake policies.
Considered a supplemental policy to standard home or business insurance, earthquake insurance can be secured in California from the California Earthquake Authority (CEA), a privately funded, publicly managed organization. According to the I.I.I., CEA holds the country’s market share (22.7 percent) as the top writer of earthquake insurance by direct premiums (as of 2010).
Further, California had the largest amount of earthquake premiums in 2010, at $1.6 billion, reports I.I.I. This figure includes the state-run CEA, the largest provider of earthquake insurance in California. The next highest ranking states were Washington, Missouri, Tennessee and Oregon.
