Christchurch Earthquakes Lessons for the rest of the world

New Zealand The Christchurch earthquake 2 Doug Dixon | Christchurch Earthquake | CALM 2

$22B USD in insured damages New Zealand Population 4.2M 76% on North Island GDP = $112B USD Main fault line 186 fatalities $22B USD in insured damages Approx 12 insurers NZI & State (IAG) Vero (Suncorp) Lumley Ansvar Tower Christchurch pop. 380,000 Oldest City in NZ – est 1856 99,500 houses/ 30,000 flats 38,000 business units

Earthquake or earthquakes? 1. September 4, 2010 2. February 22, 2011 3. June 13, 2011 4. December 23, 2011

Comparison to U.S. Earthquakes Location Date Richter Scale Depth (in KM) New Zealand Sept. 4, 2010 7.1 30 Feb. 22, 2011 6.3 5 June 13, 2011 6 Dec. 23, 2011 6.0 6.9 Northridge Jan. 17, 1994 6.7 17 Loma Prieta Oct. 17, 1989 18

Areas worst affected 22 February 2011

Eastern Suburbs Liquefaction and lateral spread

Suburb of Bexley Large scale liquefaction

Suburb of Bexley Large scale liquefaction

Port Hills Suburbs

Sumner - Return Servicemen's League Club

Christchurch CBD looking west

Manchester St CBD

The Press Building This is the Press Building in the CBD You can see that it had a conical hat on the tower at the front corner of the building and that it has toppled What you cant see is that one whole floor at the top is missing. This was a 4 storey building and is now only 3 Note also the cracks lower down and the apparent attempt probably after the September event to "tie" the building together with straps The Press Building

26 story Grand Chancellor Hotel 176 car parking lot

Lessons Learned What should rest of the world learn from the NZ experience? Doug Dixon | Christchurch Earthquakes| CALM

Industry Lessons Public Awareness of EQ Risk Insurance Take Up Rate In CA lower than NZ Accuracy of EQ Models Models probably do not properly estimate, BI CBI, liquefaction, and aftershocks Loss Control Measures NZ has shown zoning and construction techniques make a big difference Insurance to Value Insurance can work as a risk transfer technique for earthquake exposure if priced correctly and is accessible to consumers * Swiss Re white paper "Lessons From Recent Major Earthquakes" addresses these issues in more depth "Ring Of Fire"

Claim Lessons Surprises do happen Staffing too lean Training happened "on the job" Engineers in short supply Allocation to events can be an issue Cooperation within industry can be helpful Longer than expected BI and ALE claims Insurers became sloppy at record keeping Neighboritis Your staff may be personally impacted by the EQ Infrastructure needs for on site claims staff Set expectations, communicate with your customers

Conclusions Low frequency and short memories lead to incorrect perception that EQ risk is low. An EQ catastrophe is probably inevitable in many parts of North America. Many lessons can be learned from the NZ EQ experience that insurers in North America can use to serve our customers and mitigate future losses. Remember the past, plan for the future.

Thank you

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