Earthquake insurance, who really needs it?
November 22, 2007
Gov. Matt Blunt just announced he is creating a Missouri Earthquake Insurance Task Force. So, are you asking, do we now have to add a major earthquake to all the other events to worry about?

“Missourians have experienced the effects of ice storms, flooding and tornadoes over the years, but it is almost impossible to comprehend the devastating effects an earthquake could have on the private and public infrastructure of this state,” Gov. Blunt said. “I have asked the Missouri Earthquake Insurance Task Force to take a close look at earthquake insurance throughout the state including its availability and affordability, especially near the New Madrid fault. Insurance helps secure Missouri homeowners and business owners’ financial futures, so we must be proactive to review insurance accessibility and its effect on our state’s economic growth.”

According to a report by the US Geological Survey, on the basis of the large area of damage (600,000 square kilometers or about 372,823 square miles), the widespread area of perceptibility (5,000,000 square kilometers or 3,106,856 square miles) and the complex physiographic changes that occured, the Mississippi River valley earthquakes of 1811-1812, otherwise known as the New Madrid, MO earthquakes, rank as some of the largest in US recorded history. "The area of strong shaking associated with these shocks is two to three times larger than that of the 1964 Alaska earthquake and 10 times larger than that of the 1906 San Francisco earthquake," the report noted.

The New Madrid "zone" zigzags northeasterly from Marked Tree, AR to Cairo, IL and is considered the second most active earthquake region in the US. However, seismological experts are not in agreement over whether the long lapse since the last major earthquake in the New Madrid area means that a severe earthquake is overdue, or in the case of a seven year study by researchers at Northwestern University, whether it will happen at all.

Scientific speculation suggests that hundreds of millions of years ago, the North American continent tried to rip itself apart in the area that is now southeast Missouri, creating a rift in the earth's crust, and that the resulting depression allowed the Gulf of Mexico to extend hundreds of miles northward into what is now southern Illinois. As the water receded, the Mississippi and Ohio rivers were formed.

Because faults in the Mississippi Valley are buried under sedimentary deposits up to a mile deep, seismic waves would affect not only Missouri, Illinois and Arkansas but also Tennessee, Kentucky, Mississippi and Indiana. And even though all the attention is on the New Madrid location, apparently nothing precludes an earthquake from occuring in another region. In fact, seismographic data shows that one in 1990 located near New Hamburg in Scott County, MO appeared to be outside of the New Madrid seismic zone.

Oklahoma, Missouri's neighbor to the southwest through its Geological Survey Observatory in rural Tulsa County, south of Leonard, claims to record from 30 to 167 earthquakes each year in the state with several having been reported in the northwest corner since the late 1980s. The largest earthquake, 5.5 on the Richter scale, that occured in 1952 near El Reno, Oklahoma City and Ponca City, according to the USGS, was felt in most of Oklahoma and in Arkansas, Iowa, Kansas, Missouri, Nebraska and Texas.

According to Karen Rutledge, a Joplin agent for State Farm Insurance, insurance companies have begun to worry over the distinction between what she called "the small claims they've corrected"--including the result of tornado damage--versus claims for the potential cataclysmic devastation caused by a major eruption. Insurance companies are faced with assessing a premium for this earthquake coverage without having had claim experience. State Farm, she said, was including the coverage with policies for an additional five percent of the current premium for homeowner's insurance and including with that a $15 thousand deductible. While this doesn't sound like a good deal for those homeowners who wouldn't be able to afford paying out the deductible in the event of a claim, it might not be a hardship for those in an upscale home with additional resources.

“Ever since Hurricane Katrina, insurance companies have been trying to determine the impact another catastrophic loss could have on their ability to fulfill their customers’ needs,” said Doug Ommen, director of the Department of Insurance, Financial Institutions & Professional Registration. “For both the safety and financial well-being of Missouri citizens, we must come up with the best ways to insure this potential risk and to prevent losses caused by the effects of an earthquake.”

Gov. Blunt asked Ommen to lead the new Missouri Earthquake Insurance Task Force. The group will provide a comprehensive report with recommendations on how to improve structural safety standards, insure private and public infrastructure and promote continued economic growth in areas near the New Madrid fault. The governor requested a preliminary report from Ommen by February 1, 2008.

The governor named the following members to serve on the commission:

Holly Foster from the Governor's staff contributed to this report.

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