Earthquake is inevitable but insurance lags behind
January 08, 2009
JEFFERSON CITY - Gov. Matt Blunt and the Missouri Department of Insurance, Financial Institutions and Professional Registration (DIFP) last month released the findings of a task force report which studied the potential effects of an earthquake in the state of Missouri.

"I created the Missouri Earthquake Insurance Task Force to take a close look at the availability and affordability of insurance, especially near the New Madrid fault," Gov. Blunt said. "Missouri is not immune from earthquakes and this report will help us better prepare for the impact of a catastrophic disaster such as an earthquake on the New Madrid fault."

Blunt signed an executive order in 2007 that formed the Missouri Earthquake Insurance Task Force. The group was tasked with providing 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 task force was led by former Insurance Department director Doug Ommen and included a wide range of representatives from industries which hold a stake in earthquake preparedness or earthquake recovery. These industries represented included insurance, engineering, geology, consumer advocacy, building inspection, and home builders. The group also included four members of the Missouri Legislature: Senators Maida Coleman and Rob Mayer, and Representatives Billy Pat Wright and Terry Swinger. The task force held multiple meetings before formulating their findings and conclusions in a report presented to the governor.

The key task force conclusions are:

Missourians should be well-aware that the Missouri Bootheel is the location of one of the largest series of earthquakes to ever strike the United States. The New Madrid fault, part of the larger New Madrid Seismic Zone, is the location where three major earthquakes occurred during the winter of 1811-1812. Based upon scientific analyses, each of these quakes were likely of a magnitude of around 7.0 to 7.5 on the Richter scale. The news reports and diaries of the period have been studied to gauge the power of these tremors. The three main quakes were felt through much of the land east of the Mississippi to as far away as Quebec and Maine. The vibrations rang church bells in Boston, 1000 miles away. Huge waves in the Mississippi River overwhelmed some boats and washed others ashore. The small town of Little Prairie had to be abandoned and New Madrid was largely destroyed. Damage to man-made structures was limited due to the sparse population in the area at that time; nevertheless, according to the United States Geological Survey (USGS), many houses in St. Louis were severely damaged or had their chimneys toppled.

Based on what is known today, the USGS and the Center for Earthquake Research and Information of the University of Memphis now estimate the probability of an earthquake of magnitude 6.0 or greater (i.e., large enough to cause serious damage near its epicenter) occurring in the next 50 years to be anywhere from 25 to 40 percent, while a repeat of the larger 1811-1812 earthquakes (magnitude between 7.0 to 7.5) occurring during the next 50 years to be a less-probable 7 to 10 percent. A quake of these magnitudes would assuredly be responsible for mass destruction of property and losses totaling in the billions of dollars.

Sobering as those statistics may be, it is estimated that only 35 percent of Missouri homes have earthquake insurance., down from almost 45 percent 10 years ago. The highest concentration of this coverage is in the New Madrid area of the state.

Seventeen insurance companies have ceased writing earthquake coverage in Missouri since 2000; these companies insured over 83,000 homes in Missouri. In that same time period, eight new insurance companies have begun writing earthquake coverage here.

This report seeks to present possible solutions to the impending problem of paying for damages caused by a possible earthquake in Missouri, as well as identify ways to mitigate, or lessen, the damage caused by a quake. The report identifies possible incentives for individuals obtaining insurance coverage against earthquakes, as well as adopting enhanced building codes which new structures must meet in an attempt to lessen the damage caused by an earthquake. Also researched were a number of different mechanisms being tried in other states to address the financial impact of natural disasters.

The task force was not charged with the responsibility of identifying and directing interested parties to immediately adopt any one particular solution to the threat of damage caused by earthquakes in Missouri, but instead to provide them with information as to the level of that threat, the level of the state's current preparedness for dealing with that threat of damages and the various alternatives available for improving that level of preparedness.

The report is available in its entirety here.

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