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NEWARK, Calif.—Even a relatively moderate earthquake occurring near an urban area along the Midwest's New Madrid seismic zone could cause as much as $50 billion in insured damage, according to an analysis catastrophe modeler Risk Management Solutions Inc. released Wednesday.
The report, to coincide with 200th anniversary of the quakes of 1811-1812 that occurred near the town of New Madrid in what is now Missouri, notes that seismicity rate estimates indicate there is a 28% to 46% likelihood of a magnitude 6 or greater quake striking the area around New Madrid in the next half century. Such a quake could affect urban areas such as St. Louis and Memphis, Tenn.
In “Risk Implications of Alternative Views of New Madrid Seismic Hazard,” Newark, Calif.-based RMS analyzed a range of possible earthquake scenarios in the New Madrid area. RMS said that, depending to the degree to which ground shaking lessens with the distance from the source of a quake, total economic damage could range from $10 billion to $100 billion, with insured damage of $5 billion to $50 billion.
Adequate preparation necessary
“Insurance payments are forecast to cover 60% to 80% of total economic losses, thus contributing significantly to recovery in the region,” said the report. “This ratio of insured to total loss is higher than the 45% to 55% ratio observed in Hurricanes Ike (2008), Katrina (2005) and Andrew (1992), and significantly larger than the anticipated ratio of 10% to 15% for major California earthquakes.”
“The 200th anniversary of the 1811-1812 New Madrid earthquake sequence is a stark reminder of the earthquake risk in the region, the potential losses that could occur and the need to adequately prepare for a possible future event,” Patricia Grossi, director of research at RMS and co-author of the study, said in a statement.
The first of the three strongest New Madrid quakes of the 19th century struck on Dec. 16, 1811. Effects of the earthquakes—which occurred off and on for nearly two months—were felt as far away as the Atlantic seaboard.