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The March 2011 earthquake off the coast of Japan has rocked international markets as the world tries to gauge the reality of the human and economic devastation in the country.
Japan's 9.0 magnitude earthquake is a rare event, according to the US Geological Survey (USGS). Globally we experience an average of only one earthquake above an 8.0 magnitude each year. This, of course, varies from year to year, with the most recent examples being four 8.0+ magnitude earthquakes in 2007 and zero in 2008.
Although human and economic costs can vary greatly, even for the most forceful earthquakes. The most destructive occur in close proximity to highly populated areas and can be greatly exacerbated when people are not properly warned about secondary events, such as tsunamis, aftershocks or landslides. However, much destruction and loss of life is unavoidable, since even the most advanced warning systems may only give people minutes to find safety.
It is far too early to even estimate the losses resulting from the disaster in Japan, but it will likely be one of the costliest of all time. After the quake, the Insurance Information Institutereleased a list of the most costly earthquakes of all time, by total losses paid by insurance companies.
"The insurance industry will fulfill its traditional role as an economic first-responder, helping Japan recover from today's devastating quake, just as it has done in New Zealand and Chile," said Dr. Robert Hartwig, an economist and president of the III, in a statement.
So, what were the most costly earthquakes of all time, and how did they affect the global economy? Click ahead for the list.
By Paul Toscano
Posted 15 Mar 2011
Insured losses: $670 million
Overall losses: $1.2 billion
Described by the Australian Government as "one of Australia's most serious natural disasters," the Newcastle earthquake of 1989 shook the area around Sydney with 5.6 magnitude tremors that left 13 people dead and 160 injured. The government notes that insured losses were estimated to be approximately $1 billion, although the Insurance Information Institute places the number at $670 million.
It was estimated that the effects could be felt in over 77,000 square miles of territory, with damage to buildings occurring within nearly 3,500 square miles. An estimated 35,000 homes, 147 schools and 3,000 commercial buildings were damaged, while as m any as 400 people required temporary housing.
Although the earthquake was relatively weak on the Richter scale, it occurred in a populated area with many of the buildings dating back to the 1860s, without proper reinforcements for stress caused by ground movement. The Australian government also says that the weakness of the area's buildings was exacerbated by their proximity to the sea, which corroded steel and the adhesive material in brick walls.
Insured losses: $750 million
Overall losses: $14 billion
In Taiwan's second-deadliest earthquake of all time, the Nantou quake in September 1999 killed approximately 2,400 people and did about $14 billion in total damage. Local media dubbed the event the "Quake of the Century," after it had a significant effect on the local economy, leaving 100,000 homeless, over 50,000 buildings destroyed and caused the shutdown of the island's three nuclear plants.
The Taiwan Stock Exchange closed for five days following the event, causing the price of electronics to skyrocket globally since Taiwan was a major producer of computer RAM. Although there was significant international response, this help was delayed due to Taiwan's political standing with China - other countries and international bodies such as the UN could not provide aid without Beijing's approval.
Private donations were given to the government's disaster relief fund, with estimates eclipsing $30 billion. A major economic fear was that the country would not be able to weather the disaster, since Taiwan was still suffering the after effects of the Asian Financial Crisis of 1997.
Insured losses: $760 million
Overall losses: $28 billion
The October 2004 earthquake near Japan's west coast was responsible for at least 33 deaths, 2,900 injuries and registered a 6.6 on the Richter scale. A second earthquake with a 5.9 magnitude occurred 16 minutes later, and numerous smaller aftershocks followed in the wake.
As a result of the earthquake, a high speed train was derailed while in service, although no injuries were reported from the 155 passengers on board. Highways were also closed in the Niigata prefecture, while landslides forced the closure of two other highways in the area. Landslides were common since the region had been hit with a typhoon that waterlogged the soil and increased the chances of ground movement.
In some areas, the earthquakes forced the evacuations of families, some of whom were not able to return to their homes until 2007 after lingering safety issues.
Insured losses: $960 million
Overall losses: $10 billion
With an epicenter about 10 miles northeast of Santa Cruz, the 1989 earthquake registered with a 6.9 magnitude, affecting San Francisco and Oakland the most severely. Concrete viaducts collapsed on several interstate highways, while liquefaction of ground occurred in areas almost 70 miles from the epicenter, according to the USGS.
The earthquake was also known as the "World Series Earthquake", since it occurred on October 17 during the warm-up practice of the Oakland Athletics and San Francisco Giants, who were set to play game 3 of the World Series. The earthquake was captured on live television, although the live feed was lost within seconds. At the time of the quake, nearly 62,000 fans had already reached their seats in San Francisco's Candlestick Park.
San Francisco's Oakland Bay Bridge experienced a collapse of an upper roadway, which fell onto the lower span of the bridge. Buildings collapsed and caught fire in the city's Marina District, while numerous buildings in surrounding counties experienced a similar fate. Power and water services were limited or halted in most areas, while in San Francisco about 12,000 homes and 2,600 businesses were damaged, according to the USGS. Much of the worst damage in the city was in areas where unstable soil exists, which is much more susceptible to significant ground movement. Approximately one week after the earthquake, President George H.W. Bush signed a $3.45 billion relief package for the affected areas in California.
Insured losses: $1 billion
Overall losses: $10 billion
The largest earthquake in the last 50 years was listed at a magnitude of 9.1, and killed 227,898 people from the earthquake and resulting tsunami, the deadliest tsunami in recorded history. 1.7 million people were displaced in 14 countries in Asia and East Africa with waves that reached up to 100 feet high.
The energy released during the earthquake was equal to approximately 1,500 Hiroshima atomic bombs, and although there was several hours of warning prior to the tsunami's arrival, there was no tsunami warning system or communication in place at the time. As a result the United Nations began creating the Indian Ocean Tsunami Warning System.
Although this was easily one of the most significant disasters in human history, the economic cost did not reflect the human toll, mostly because the affected areas were not highly developed. Insured losses accounted for only about $1 billion in losses, while governments from around the world provided an estimated $14 billion to affected regions, including military and monetary assistance. In addition, the public donated considerably to the relief effort, with some countries contributing hundreds of millions from donations alone. However, there remained criticismthat an estimated $4 billion of pledged donations and aid never got to the area.
Insured losses: $3 billion
Overall losses: $100 billion
Although Japan has experienced numerous major earthquakes, none ha s been more economically destructive than 1995's 6.9 magnitude quake in Kobe. With overall economic losses totaling $100 billion, this disaster dwarfs any other earthquake on this list, although the insured losses were reportedly only $3 billion. The total damage was approximately 2.5% of the country's GDP at the time.
In Kobe, there was a significant lack of earthquake insurance, with only 3% of property insured in the city, compared to 16% in Tokyo. Immediately after the quake, the Nikkei fell 8% in the following 5 days. Although it rebounded by 6% in the following week, the rebound coincided with numerous other downward pressures in the economy. For an interesting analysis of the similarities and differences between the two events, click here.
Prior to the earthquake, Kobe was Japan's principal port city and one of the busiest ports in the world, but despite rebuilding, the city never regained its status.
Insured losses: $5 billion
Overall losses: $6.5 billion
Just like California and Japan, New Zealand sits on the edge of the Pacific Plate, in what is know as the "Ring of Fire," known for its high seismic and volcanic activity. The 2010 earthquake occurred about 25 miles west of the country's second largest city, Christchurch , on New Zealand's South Island . But the 7.0 magnitude quake was felt as far as the North Island.
The Insurance Information Institute lists insured losses at $5 billion, although the payouts are split between public and private funds. The New Zealand Earthquake Commission (EQC) covers domestic residences with private insurance, but does not cover businesses. However, for private residences, the EQC only covers up to $100,000 and the rest is covered by private insurance companies.
In Christchurch, fires broke out around the city and sewers were damaged, which raised fears that the residential water supply became contaminated. In most rural areas, electricity was taken out for several days, although there were no deaths directly attributed to the quake, due to the early morning timing of the quake and the relatively well-reinforced homes in the region. Aftershocks from this earthquake have continued ever since 2010, one of which was the devastating 2011 Christchurch earthquake, which was technically an aftershock.
Insured losses: $8 billion
Overall losses: $30 billion
At least 521 people were killed, 56 missing, 12,000 injured and 800,000 were displaced during the February 2010 earthquake that hit 8.8 on the Richter scale, according to the USGS. The earthquake damaged or destroyed an estimated 370,000 houses, 4,013 schools, 79 hospitals and 4,200 boats and affected an estimated 1.8 million people, with an estimated $30 billion in total losses, although only $8 billion were covered by insurance.
A resulting tsunami affected numerous coastal regions all around the pacific region, as far away as Canada, Alaska, New Zealand, Papua New Guinea and Hawaii. In Chile, President Michelle Bachelet declared a "state of catastrophe" and sent military troops to take control of the most heavily affected areas, nearly half the country. There was widespread looting and vandalism in Chile, which prompted the government to impose a curfew and even disperse rioters with tear gas and water cannons.
Insured losses: $10 billion*
Overall losses: $20 billion*
Technically an aftershock of the 2010 Canterbury earthquake, the earthquake on February 22, 2011 was more destructive than its predecessor, in large part because it was centered only 6 miles from heavily-populated city of Christchurch. The number of fatalities is listed at 166, although estimates expect the number to surpass 200 by the final count.
Although the Insurance Information Institute lists insurance losses at $10 billion, JPMorgan estimated losses to insurers will eclipse $12 billion, with the New Zealand Earthquake Commission and private reinsurers taking responsibility for various portions of the earthquake repayments.
Buildings collapsed in and around the main portion of the city, including the iconic ChristChurch Cathederal, which lost its spire. Even two weeks after the earthquake, thousands of buildings were still deemed unsafe by authorities and were only approved for restricted access. In more rural areas, landslides were reported and large portions of small towns reported significant damage in their downtown areas.
*Losses are currently still being calculated; these numbers are preliminary.
Insured losses: $15.3 billion
Overall losses: $44 billion
On January 17, 1994 a 6.7 magnitude earthquake occurred in the San Fernando Valley just north of Los Angeles. Damage from the earthquake occurred up to 85 miles away, killing 60 people, injuring more than 7,000, damaging 40,000 buildings and leaving 20,000 people homeless. T he Insurance Information Institute lists insured losses at $15.3 billion, although total losses were much higher.
As a result, several legislative changes were enacted, including the California Earthquake Authority, a publicly managed organization that offers minimal coverage for earthquake insurance. This was in response to private insurance companies halting offers for or severely restricting earthquake insurance in California.
Damage was sustained to Anaheim Stadium, while collapsed overpasses closed sections of the Santa Monica Freeway, the Antelope Valley Freeway, the Simi Valley Freeway and the Golden State Freeway. Fires caused additional damage in the San Fernando Valley and at Malibu and Venice. According to the USGS, a maximum uplift of about 15 cm occurred in the Santa Susana Mountains and many rockslides occurred in mountain areas, blocking some roads.
California's entertainment industry was affected, with numerous television shows — including Seinfeld, The Simpsons, General Hospital and Star Trek: Deep Space Nine — dealing with damaged sets or filming at the time of the quake. Michael Jackson, who was recording an album at the time, moved production to New York City as a result of the quake.