There is no precise scientific definition of a “mega-quake” but any earthquake reaching 9.0 or more on the Richter scale likely qualifies. The deadly Indian Ocean earthquake and tsunami of 2004 reached 9.1 on the Richter scale, while the Fukushima earthquake of 2011 was recorded at 9.0. The losses in lives and property damage are nearly incalculable – over 600,000 people lost in 2004 and between 15,000 and 20,000 lost in Japan, along with lasting damage to Japan’s nuclear infrastructure.
Of course, earthquakes of much lesser magnitude can cause massive damage. The 1989 Loma Prieta earthquake – which hit Northern California during the World Series – killed 63 people, injured thousands more and caused $6 billion in damage in 1989 dollars.
The subject of mega-quakes is – or should be – on insurers’ minds in both the US and Canada. The Northwestern US and Canada’s Pacific coastline are situated upon the Cascadia subduction zone. In the better known San Andreas Fault, two tectonic plates rest side by side and rub against each other; in the Cascadia subduction zone, however, the plates lie on top of each other, so movement of the plates is potentially much more catastrophic and far reaching.
Geologic evidence of a massive earthquake and tsunami which hit the Pacific Northwest in the year 1700 has the region’s residents on edge, since mega-quakes in this region seem to occur every 250 years or so and it has now been 316 years since the last “big one”. Given the population density and built-up infrastructure in the region, the potential damage to life and property is enormous.
Governmental agencies, school boards and other organizations within the region are making attempts to “earthquake proof” some properties and to protect lives by developing evacuation plans, vertical evacuation shelters and other measures. Insurers and reinsurers writing policies in the region are modeling the extent of potential damage and reviewing the way coverage is written. Since geologists can only say that a mega-quake will happen – but cannot say where or when – insurers have little choice but to conduct business as usual and hope for the best.