By Robert L. Andrews
More than 100 earthquakes once shook a portion of the continental United States over a three-month period. Among them, a cluster of very large events: an earthquake with a magnitude of 7.2 in December, another the following month with a magnitude of 7.1, and the largest with a magnitude of 7.7 in February. The quakes uprooted forests and caused massive landslides, sand volcanoes, and fissures covering an area of about 232,000 square miles. Tremors resonated throughout much of the United States and 1,300 miles away in Quebec — an expanse more than five times larger than the area affected by the 1906 San Francisco earthquake. The earthquakes generated huge waves along the Mississippi River, throwing boats onto its banks. Elsewhere along the river, whole islands disappeared.
Most people would assume events of this magnitude occur only in and around California. They would be wrong.
New Madrid, Missouri, was the epicenter of the earthquake sequence, and it all took place between December 16, 1811, and March 15, 1812. At the time, the town of New Madrid was home to fewer than 500 inhabitants. A mere handful of deaths were reported.
The event would be just an interesting piece of history were it not for the fact that a New Madrid earthquake today would have a far greater effect. It would likely be the single-costliest quake in U.S. history.
A recurrence of a magnitude-7.7 earthquake in the Midwest could cause insured damages in excess of $110 billion. To put that in perspective, San Francisco's famous magnitude-7.8 quake of 1906, in today's dollars, would cause an estimated $93 billion in insured property losses.
Heavily populated areas of seven states — Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee — with approximately 9 million people, are now within the 5,000-square-mile New Madrid Seismic Zone. That's equivalent to an area roughly the size of Connecticut, with nearly three times the population. Indianapolis, Little Rock, Louisville, Memphis, Nashville, and St. Louis are all less than 100 miles from the core areas of the New Madrid and the adjacent Wabash Valley Seismic Zones.
The BCEGS evaluation is far-reaching and covers the quality of a jurisdiction's adopted building code. That includes its appropriateness for the perils facing that locality, certifications of the code officials, and staffing levels and workloads for residential and commercial construction plan review and inspection. Verisk analyzes the data and grades each community. The premise is simple: Communities with well-enforced, up-to-date codes should demonstrate better loss experience.
Similarly, on August 31, 1886, a magnitude-7.3 earthquake struck Charleston, South Carolina — one of the largest shocks on record for eastern North America. The quake damaged or destroyed most of the buildings in the city of Charleston and killed 60 people. Structural damage occurred as far away as Alabama, Kentucky, Ohio, Virginia, and West Virginia. Shaking was reported as far away as Boston and Chicago.
If that earthquake struck Charleston today, losses could exceed $44 billion, likely ranking it the third-largest quake for property damage in U.S. history.
Clearly, California is not alone when it comes to earthquake potential. Many states are on the U.S. Seismic Zone map. In fact, only four states do not have an identified seismic exposure: Florida, Minnesota, North Dakota, and Wisconsin.
Although California adopted building codes with strict earthquake standards for building construction, unfortunately, the codes for much of the New Madrid zone do not similarly acknowledge the potential seismic exposure. The Federal Emergency Management Agency (FEMA) notes that the New Madrid zone "has long been recognized to be vulnerable if hit again by a great earthquake of similar magnitude."
Nearly 20,000 communities across the nation have building codes. The codes all share a similar goal: the safety of structures and the people who live and work in them. The Building Code Effectiveness Grading Schedule (BCEGS®), based on analysis of community building codes by Verisk Analytics, provides criteria for municipalities and insurance analysts when adopting codes. (See the "BCEGS Evaluation" sidebar.) An analysis indicates that 82 of the 97 jurisdictions at high or very high risk in Missouri have seismic-resistant provisions for commercial properties, but only four offer provisions for residential. Just half of Indiana's 26 high- or very-high-risk jurisdictions have codes for commercial, none for residential. Illinois, Arkansas, Kentucky, and Tennessee have similar situations.
In fact, of the 312 jurisdictions at high or very high risk in all seven New Madrid states, 60 percent have seismic-resistant provisions in their building codes for commercial, 11 percent for residential, and 10 percent for both. Curiously, codes within the New Madrid zone are actually lagging behind the rest of the nation, which has adopted seismic provisions for commercial properties in 83 percent of jurisdictions, 64 percent for residential, and 43 percent for both commercial and residential. Part of the reason may be that Illinois, Mississippi, and Missouri do not have statewide building code requirements, leaving authority to local communities with varying levels of expertise.
The chart shows estimates of modeled combined losses to property, contents, and business interruption and additional living expenses for residential, mobile home, commercial, and auto exposures as of December 31, 2011. Losses include demand surge and fire following earthquake. Policy conditions and earthquake insurance take-up rates are based on estimates by state insurance departments and client claims data from AIR Worldwide's detailed industry exposure database. (AIR Worldwide is a member of the Verisk Insurance Solutions group at Verisk Analytics.)
New Madrid is the most active earthquake zone east of the Rocky Mountains. That area (roughly 125 miles long by 40 miles wide) averages 200 quakes a year. Most of the quakes are small and go unnoticed. However, the Missouri Department of Natural Resources indicates that, based on historical data, the New Madrid zone appears to be about 30 years overdue for a magnitude-6.3 quake.
The earthquake threat to large, heavily populated areas of the Midwest and Southeast is real and could be catastrophic. The potential crisis beneath the surface can be mitigated by adopting and enforcing advanced state and local building codes.
Robert L. Andrews is vice president of ISO Community Hazard Mitigation.