Lessons from this year’s earthquakes

2010 has seen some of the most devastating earthquakes in recent times. The largest quakes in Haiti, Chile and New Zealand claimed well over 200’000 lives, almost exclusively in Haiti, and roughly 50 billion USD in damage to the economy.

Actual losses varied substantially across affected regions. In the case of Chile and New Zealand, the events showed that strict implementation of building codes does save lives by significantly reducing building damage. Cat modeling assumptions have been proved to be accurate in this regard.

From an insurance perspective, one of the key lessons learned is that so-called secondary loss agents – such as liquefaction and tsunamis – are generally undervalued in loss modeling. Business interruption is another widely underestimated risk, especially for certain industries such as pulp manufacturers, breweries and refineries.

These are the main conclusions presented by Balz Grollimund, Swiss Re’s earthquake specialist, at a recent webinar on the "New Zealand Earthquake - Loss Assessment and Implications for Cat Modelling," held Wednesday, 13 October 2010. 

Published 25 October 2010

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