Willis Research Network Joins in California Earthquake Study

June 30, 2008

The Willis Research Network, part of Willis Group Holdings Ltd., the global insurance broker, has joined with the U.S. Geological Survey and the California Geological Survey to develop a scenario that shows how a magnitude 7.8 earthquake along the San Andreas Fault could cause long-lasting social and economic consequences, including critical damage to infrastructure, transportation and power.

WRN Senior Academic Keith Porter of the University of Colorado led the overall assessment of physical damages, while WRN Senior Academic Charles Scawthorn of Kyoto University performed the analysis of fire following an earthquake. The final report will be jointly published by the USGS and the CGS.

The study concluded that a massive earthquake could cause up to $200 billion in damages and more than 50,000 casualties. One-third of the economic loss would be attributable to fire following the earthquake, another third to shake-related property loss, and most of the rest to direct and indirect business losses associated with the interruption of water supply. Fatalities are approximately equally attributable to fire and shake-related damage. Full details of the report are available at: http://www.usgs.gov/newsroom/article.asp?ID=1947.

Julie Serakos, executive vice president, Willis Re Inc., said, “Reports such as this allows decision-makers and politicians to formulate effective disaster management plans to mitigate the potentially devastating effects of earthquakes. The combination of cutting-edge technology, world-class scientists and the vast risk management experience of the insurance industry allows us to further deepen our understanding of natural catastrophes and effectively assist our clients with preparations for future events.”

Rowan Douglas, Chairman of the WRN, added, “The lessons learned in this Southern California study will have important implications for earthquake risk assessment worldwide. We look forward to working with Dr. Porter and Professor Scawthorn to apply this new understanding across our international seismic research program.”

The USGS-CGS study is the most comprehensive analysis ever of what a major Southern California earthquake would mean. The scenario found that at least 10 million people will be exposed to heavy shaking, although deaths would be mitigated by California’s successful efforts thus far to protect the personal safety of residents. In spite of the large numbers of people in highly shaken areas, deaths are estimated at only 1,800 or 0.02 percent of the people affected.

Professor Scawthorn’s work concluded that fire would double the fatalities and economic losses. Even assuming the absence of Santa Ana winds, the models still indicate a further $65 billion in direct losses and $22 billion in indirect losses from the fires.

The scenario forms the scientific framework for what will be the largest earthquake preparedness drill in California history, scheduled for Nov.13, 2008. The November preparedness exercise will test the ability of emergency responders to deal with the impact of a magnitude 7.8 earthquake on the San Andreas Fault in Southern California.

The Willis Research Network (WRN) is a large partnership between academia and the insurance industry. Willis has so far teamed up with 15 institutions across a range of disciplines from atmospheric science and climate statistics, to geography, hydrology and seismology, to the impacts on the environment via engineering, exposure analysis and Geographic Information Systems. Additional information may be found at www.willis.com.

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