Press Release
BOSTON, Nov. 17, 2016 – Catastrophe modeling firm AIR Worldwide estimates that industry insured losses from the moment magnitude 7.8 earthquake that struck New Zealand’s South Island near Hanmer Springs on November 14 (November 13 UTC) will be between NZD1.15 billion (USD 762 million) and NZD 5.3 billion (USD 3.5 billion).

“More than 80,000 landslides and 2,600 aftershocks have been recorded following the massive earthquake that struck New Zealand’s South Island early this week,” said Dr. Bingming Shen-tu, assistant vice president at AIR Worldwide. “The temblor was the largest experienced by the country since the 2009 M7.8 Dusky Sound earthquake and one of the four most powerful since 1855. Recovery efforts in the region have been additionally hampered by gale-force winds, heavy rainfall, and flooded roads.”

The epicenter of the M7.8 earthquake was near the small tourist town of Kaikoura, which lies half way between Christchurch and the capital, Wellington. Kaikoura was cut off by landslides and lost its power, water supply, and sewage system. More than 134 buildings have been inspected in Kaikoura resulting in 13 red tags denoting unsafe for use as well as 39 yellow tags denoting restricted use. About 1,200 visitors and residents have been evacuated and a local state of emergency has been declared. The seabed in the area has been raised by up to two meters in places, likely impacting the local fishing industry.

Christchurch appears to have experienced far less damage than it did in the devastating earthquakes that struck the area in late 2010 and early 2011, but has not escaped unscathed. Damage in the Canterbury area may account for up to 30% of the total losses.

According to AIR, much of the region impacted by the November 14 event is rural and sparsely populated, but significant damage accounting for at least half of the losses from this event is reported in Wellington on the southern tip of North Island. Throughout the impacted region, glass has been broken in buildings, chimneys have collapsed, and some structural damage has occurred. Building contents breakage has occurred widely, and power outages, disruption of water and sewer services, and interruption of phone service are reported. Some highways and rail lines in the affected region have been damaged, and many bridges and tunnels were closed after the initial quake pending inspection.

In Wellington some multi-story buildings experienced broken windows and contents damage, and the capital initially appeared to have escaped serious loss. Inspections, however, raised concerns about 60 or so buildings in the center. While parts of the central business district have been cordoned off because of damage to buildings, there is no “Red Zone” like the 859-day exclusion zone controversially established five years ago in Christchurch.

According to AIR, much of the central business district and waterfront of New Zealand’s capital is underlain by soft sediments, which amplify ground shaking and liquefaction damage has been reported there and on the Picton foreshore. Port operations have been suspended until further notice by CentrePort because of shake and liquefaction damage to buildings and facilities.

Most residential damage will be covered by the government-owned insurer, the Earthquake Commission (EQC), which is backed by NZD 4.7 billion (USD 3.3 billion) in reinsurance.

AIR's modeled insured loss estimates include:

• Insured physical damage to property (residential, commercial/ industrial), both structures and their contents from ground shaking
• Demand surge—the increase in costs of materials, services, and labor due to increased demand following a catastrophic event—although not triggered by this event.
• Direct business interruption losses

AIR’s modeled insured loss estimates do not include:

• Losses to uninsured properties
• Losses to land
• Losses to automobiles
• Losses to infrastructure
• Indirect business interruption losses
• Loss adjustment expenses



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