View this article online: https://www.insurancejournal.com/news/international/2011/06/15/202655.htm
Christchurch, New Zealand, still recovering from two previous earthquakes that struck in September 2010 and February 2011, was shaken by a series of strong tremors on Monday afternoon that caused significant new damage to already weakened buildings.
According to New Zealand’s Prime Minister, it is now expected that as many as 900 buildings in the city’s central business district will need to be demolished for safety reasons as a result of the last two events.
According to catastrophe modeling firm AIR Worldwide, the city of Christchurch bore the brunt of the damage on Monday. Local authorities report that more than 75 buildings were tagged for demolition.
According to the United States Geological Survey (USGS), Monday’s largest earthquake had a moment magnitude of 6.0 and occurred at a depth of just 9 kilometers. The USGS estimated that the quake’s epicenter was located 13 kilometers southeast of Christchurch at Lyttelton, the city’s port. The quakes collapsed dozens of buildings and knocked out power to thousands.
AIR has not yet put a dollar estimate on the damage from Monday’s quake. However, another catastrophe modeling company, Eqecat, estimated on Tuesday that Monday’s quake caused an additional $3 billion to $5 billion in insured losses on top of the damage from two previous quakes. Eqecat said the three events of the past nine months in total caused anywhere from $15 billion to $23 billion in insured loss.
According to AIR, the areas likely to experience the most severe damage are east and southeast of Christchurch. Given the good performance of New Zealand’s residential wood construction, further significant shake damage to these structures should be limited, AIR said.
However, AIR said it believes the severity of liquefaction damage in the city’s east and southeast will likely exceed that from the previous earthquakes, while in other areas, such as those near the city center and further north, liquefaction damage is likely to be less than that from the previous events.
There have been reports of several sinkholes opening up and several rock falls, mainly in eastern hills of Sumner, Taylors Mistake, Redcliffs, Morgan Valley.
The Earthquake Commission (EQC) confirmed that it will be classifying Monday’s 6.0 tremors as new events. AIR said this is an important distinction for insurers providing coverage for amounts above the EQC coverage; for reinsurers, the standard hours clauses used to define a loss occurrence would also treat these aftershocks as new events. At present, the EQC provides cover for damage to residential properties and contents from earthquakes up to a maximum of $100,000 and $20,000 for contents, along with defined coverage for damage to residential land. The complexity with this event derives from the many structures that are currently being repaired and that may have sustained additional damage, posing additional challenges for estimating incremental damage.