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Quantifying Incremental Damage and Losses from the June 13 Christchurch Quake
17-Jun-11
Quantifying the incremental damage and losses from the June 13, 2011 M6 Christchurch earthquake presents a unique challenge. The region has been impacted by two earlier earthquakes in the last nine months- a M7.1 earthquake in the Canterbury Plains 40 miles west of Christchurch on September 4 and a M6.3 earthquake 10 km south of the Christchurch Central Business District (CBD) on February 22, 2011.
EQECAT estimates that the incremental losses from this event could be $3 billion (USD) and potentially up to $5 billion (USD). The total incremental losses imply an expectation of a 10% to 20% increase in the damages from the February event. EQECAT derived this number by breaking the estimate into three components and using its model to estimate some of these marginal effects.
Estimating Incremental Damage from Sequential Earthquake Events
A key component of earthquake catastrophe risk models is the vulnerability model that associates ground motions with repair costs for insured property. The vulnerability model accounts for structural materials, building codes, and other key characteristics that influence building behavior, and are validated with comparisons of building performance in actual earthquakes. All of the validation data that is used is composed of data for buildings that were undamaged before the earthquake.
The recent Christchurch earthquake affected a building population that was already significantly damaged from the prior events. To account for this, EQECAT decomposed the incremental damage from this event into elements from which model usage and experience could help us derive an answer.
Decomposing the Estimation of Incremental Damage from the June 13 Event
EQECAT's loss estimate was derived by decomposing the incremental losses into three pieces - two that we could evaluate from a rational basis of understanding how our models are built and what happened, and a third component addressing a challenge that usually accompanies great regional tragedies. The decomposition focuses on three questions:
- What would the losses be if the February and June earthquakes had occurred as one earthquake? The difference between this "Big" event and the February event would be the incremental damage and loss.
- What is the effect of shaking partially restored properties?
- Are there any response effects associated with a regional catastrophe such as this that could influence insurance payouts?
Incremental damage due to extended duration of the earthquake
Earthquake magnitudes are roughly associated with the energy released within the event, often referred to as the "seismic moment". The formulas relating earthquake to seismic moment are logarithmic relationships. The combined energy from the M6.1 earthquake (February) and M6.0 earthquake (June) is approximately the equivalent energy release of a single M6.3 earthquake.
The duration of strong ground motions is another key parameter to estimating building damage from earthquake shaking; the more cycles of strong motion a building is subject to, the more energy is absorbed into the building and consequently more damage is expected. The duration of "strong" ground motions in the February event was about 15 seconds, and the duration of "strong" motions from the June event was about 10 seconds. A M6.3 earthquake would not be expected to have a duration of 25 seconds, re-affirming the reasonableness of selecting this proxy for an earthquake.
For an earthquake epicenter in an urban area, a M6.3 earthquake would be expected to cause about 10% more damage than a M6.1 earthquake. Using a reference of $15 billion USD in damage from the February event, the damage from a M6.3 event would be approximately $16.5 billion USD. EQECAT estimates that the difference in damage from these two scenarios ($1.5 billion USD) is a reasonable estimate for the incremental damage that would have occurred if the second earthquake had occurred promptly after the first. The uncertainty range on this estimate is from $1 to $2 billion USD.
Damage to repaired and partially repaired buildings
It has been almost four months since the February earthquake. In the interim, assets that were not destroyed are in varying states of repair; some properties have been partially dismantled in preparation for repairs, some are partially repaired, and many are repaired. The general concept in repairs is to bring the property back to the standard at which it was before the event; if it got damaged before, it will likely get damaged again. Partially dismantled buildings imply some buildings that had structural elements damaged in the earthquake that were removed. Without these structural elements such as shear walls, the buildings are more vulnerable than they were before the event.
Not all assets have been repaired, but critical components of infrastructure such as water and electric utilities, and properties that only required modest amounts of repairs to restore functionality, have been effected.
A significant driver of the damage in February was the amplification of soft soils in the Christchurch area. Reports from the event note more ground failures (landslides, liquefaction) from the recent event, and several collapses. Especially notable was the renewed damage to utilities (water, electricity), which were promptly repaired after the past event.
From this review, we expect about an additional $1 - $2 billion USD in damages (about a 10% increase)which is likely due to damaged buildings that were previously damaged and partially restored.
Accounting for uncertainty in loss adjustment and response
The severity of damage in the Christchurch area can be compared to other very severe catastrophes such as Hurricane Katrina and the recent Tohoku earthquake in Japan. A sequence of events of this severity falls outside of the planning scenarios for insurance adjusters, regulators, and contractors that are working to restore properties. Areas of uncertainty include the treatment of deductibles (one event or two), limits, and the interaction of policies that have renewed in the interval between the February and June events. These issues have arisen in prior catastrophes around the world and are expected here too, although the impact of this cannot be accurately gauged at this time.
EQECAT estimates that the total surge (and any other loss amplification effects from the barrage of earthquakes in New Zealand) will add an additional $1 - $2 billion USD to the losses.
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