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Evidence is mounting that earthquake losses are far from predictable.
As a consequence, experts say alternative building methods are needed and insurers should reward those who use them.
Quake experts at a "Big Cities World Conference on Natural Disaster Mitigation" in Cairo, Egypt, last month said forecasts are ineffective and called for "greater government and industry action" to promote protective measures that reduce the effect of quakes when they occur.
Less than two months after Cairo itself was hit by a quake, 400 specialists from 50 countries reported on earthquake dangers in large cities. The conference, which insurers attended, was sponsored by Egypt University and the Berlin-based International Center for Earthquake Prognosis.
Delegates called on countries to implement stricter building codes and land use that would limit the effect of natural disasters in large cities, such as greater attention to the quality and stability of soil during construction planning.
Andreas Vogel, director of the Berlin-based International Center for Earthquake Prognosis, told delegates any hope of predicting earthquakes has vanished in light of new evidence.
"Earthquake predictions remain a wishful dream and a total disregard of reality," Mr. Vogel said.
Changes in the underground water level, occurrence of many smaller quakes or escaping earth gases like radon are not necessarily the harbinger of a quake, he said.
"Many serious quakes in the last decade occurred where experts didn't expect them," Mr. Vogel said in a statement from Berlin. He cited the Jan. 17, 1995, quake in Kobe, Japan, which scientists had considered much less likely to suffer a large seismic event than Tokyo.
"They contradicted existing theory based on the tectonics of earth plates. Experts are now looking at the other causes, like the effect of waves in the earth's crust," according to Mr. Vogel.
As a result, protective building methods will grow in importance around the world. Mr. Vogel supports the use of rubber shock absorbers in the foundation of some buildings.
These changes increase construction costs by up to 10% but effectively reduce building movement should a quake occur.
Other methods include new "intelligent" buildings with sensors that register movement of the earth and activate a system of shifting weights that compensate for earth movement.
Anseln Smolke, an earthquake specialist at Munich Reinsurance Co. in Munich, Germany, says the insurance industry in general and Munich Re in particular are willing to support innovative preventive methods.
Areas like the Tokai district around Tokyo, where sophisticated seismographic measurements are taken regularly, "must live with limited effectiveness of earthquake prognosis," he said.
"It's almost self-evident that the insurance industry supports innovative efforts to limit the effect of earthquakes. We believe insurance rates should be adjusted when policyholders take steps to limit the damaging effects of earth quake."
Unfortunately, competition for earthquake business in low-risk regions has led insurers to reduce rates to the point that returns might not be enough to meet losses, Mr. Smolke said.
But, overall, he said he sees potential for underwriting policies that favor better rates for innovative building methods.
Ake Munkhammer, vp and head of underwriting control at Skandia Insurance Co. Ltd., recommended that insurers and scientists communicate more on earthquake issues. "Scientists have solutions we should be using," he said, citing as an example knowledge about soil conditions.
Insurers also should offer more varied rates to distinguish between good and poor quake risks, Mr. Munkhammer said. Such rates would be a "good economic incentive" for policyholders to adhere to building codes. He also suggested introducing a "seismic declaration of quality," based on engineers' evaluations of a building's ability to withstand a quake.