By MATTHEW BRODSKY, senior editor/Web editor of Risk & Insurance®
The magnitude 8.8 earthquake that struck Chile on Saturday morning could hold incredibly valuable lessons for North American commercial property owners and the carriers that insure them, according to one pre-eminent earthquake expert.
"What we see there is going to happen to us," Peter Yanev, director with property-catastrophe consulting group Global Risk Miyamoto, told Risk & Insurance®, while awaiting news of how and when he'd be traveling to Chile with four other experts to investigate the aftermath.
The difference is that Chile is better prepared than the United States.
"One positive outcome of Chile's history of powerful earthquakes is that building standards are some of the most stringent globally and are generally much higher than in the rest of South America," said Claire Souch, vice president at Risk Management Solutions Inc. (RMS) in a statement.
Chileans, for instance, do not allow tall buildings to be constructed out of concrete without shear-wall bracing, which is particularly good for adding strength to the vertical superstructure, said Yanev. In the West in the United States, he added, developers are getting away from shear walls because they're too expensive.
In Vancouver and Seattle, what's worse, according to Yanev, is that the design criteria are really to "keep it simple"--because the probability of a Chile-like earthquake is considered too low.
But if it were to happen up there along the Cascadia Subduction Zone, as it did last in 1700?
"We would have high rises all over the ground," said Yanev.
A closer look at the Chile aftermath, said Yanev, who also co-authored the recent book "Peace of Mind in Earthquake Country," will reveal that property insurance companies--which would have to pay for all those toppled high rises--don't really grasp the situation either and might not properly calculate just how much they have to lose.
"It's much worse than we think," he said.
Insurance industry experts could also learn a lesson about tsunami generation. The waves produced by Chile's event across the Pacific were not as large as expected, possibly because the fault slip that triggered it was centered at about 40 km below the surface, reported Mary Lou Zoback, vice president of earthquake risk applications for RMS. (In comparison, the devastating tsunami of Dec. 26, 2004, resulted from a quake centered at 15 km depth. From Chile, scientists could learn more about what determines how deep a slip is on a subduction fault line.
$2 BILLION TOTAL INSURED?
Still, we cannot minimize the damage and suffering in Chile. Up to 700 people have been killed and as many as 1.5 million homes are thought to be damaged, according to RMS.
The towns closest to the epicenter, Talca and Curico, contain many older buildings that didn't fare nearly as well as the newer construction in Santiago, reported another catastrophe modeler, AIR Worldwide Corp. The quake has reportedly leveled Curico. Plus, infrastructure has been impacted.
AIR is estimating insured losses greater than $2 billion for the quake. The third major catastrophe modeler, Eqecat Inc., foresees total insured losses of $3 billion to $8 billion, total economic damage from $15 billion to $30 billion.
Yanev has heard reports that as many as 15 semi-high rise, apartment-type buildings collapsed in Concepcion, Chile's second largest city, about 70 miles from the epicenter.
That could lead to even more troubling questions as to whether construction and design failed to meet codes, or if codes just aren't as good against ground-shaking as thought.
"We don't know yet," he said.
Yanev also commented that the Chilean temblor and the magnitude 7.0 Haitian event of Jan. 12 were not connected. They are related in that they both occurred in the earth's tectonic system, much like weather in Miami is related to weather over Afghanistan because it's all part of the same atmospheric system. But there was no cause and effect between one and the other.
Where there might be, however, is if Saturday's event has rattled the local geology enough to cause another big quake nearby. That is "nearby" as in as close as Peru. Nothing as far away as California or the Pacific Northwest.
March 1, 2010
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