by Dishni Payagalage-Don

The simulated earthquake was described as having of magnitude 7.8 that ruptured 300 km (200 miles) of the southern San Andreas Fault, between the Salton Sea and Lake Hughes, 80 km (50 miles) NNW of Los Angeles.

This scenario earthquake was not selected as a worst-case scenario, but rather as a plausible event on the fault system considered the most likely to produce a major earthquake in southern California (Jones et. al., 2008, USGS Open-File Report).

The southern San Andreas Fault is believed to have generated earthquakes of ShakeOut size on average every 150 years, and on the selected portion of the southern San Andreas – the last earthquake occurred more than 300 years ago indicating an earthquake is a possible future event.

In contrast, there are many faults within the highly populated regions of southern California that could produce damaging earthquakes as well; however, their average repeat times (recurrence intervals) are thousands of years.

Creating scenarios and testing how the market copes with possible extreme earthquake events are a familiar process to Lloyd’s.

The Exposure Management team have developed the RDS framework that outlines a number of well defined disaster scenarios, including earthquake events that cause an aggregation of risks that may have a material impact upon individual syndicates, and the market as a whole.

The team analyse the financial impacts of such events to ensure the market is capable of surviving damaging events.

The Great Southern California Shakeout Drill aims to ensure businesses and the general public are aware of the social and economic ramifications of an earthquake occurring.

The Shakeout scenario impacts were developed and described by the US Geological Survey, the California Geological Survey, and numerous other public and private organisations. The descriptive narrative of the event began at 10:00am local time with the two minutes needed for the rupture to travel the length of the fault and then proceeds through subsequent hours, days and weeks.

The total impacts estimated for the ShakeOut scenario include over 1,800 deaths and economic losses on the order of $213 billion. Its primary physical effects would be felt in eight counties (Imperial, Kern, Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura) but indirect economic impacts on shipping and transportation would likely be felt throughout the country.

Assuming a 12-14% take-up rate for earthquake insurance, the implied insurance loss is $25-30 billion. This does not include the potential insurance physical and liability associated with the loss of utility services and infrastructure.

Recent focus has been concentrated on the impacts of hurricanes, such as Ike and Gustav, but earthquakes have equally destructive capabilities and require careful preparation so as to reduce the impacts to society. It’s worth remembering that, unlike for hurricanes, every day is earthquake season!

Links:

What Would a Great Earthquake do to the Buildings in Downtown Los Angeles? USGS Release, 6 November 2008
Media Advisory: USGS Animations Show Intense Ground Shaking From 7.8 Great ShakeOut Scenario Quake, 10 November 2008