Economic Losses From New Zealand’s Recent Earthquake Could Reach $5–6 Billion US

In the early morning of September 4, 2010, a 7.1 magnitude earthquake struck the South Island of New Zealand. Widespread damage resulted, primarily centered on Christchurch, the largest city on the South Island with a population of approximately 372,000. This earthquake is the worst in the country’s history.

IEM estimates total damage costs (insured losses and uninsured damages) of $5 to $6 billion US (NZ$6.8 billion to NZ$8.2 billion).

Only a few people are reported to have been injured or killed, and such limited casualties are likely the result of strict building codes and the early morning occurrence when most people were at home sleeping. The strict building codes come from a long and regular history of earthquakes, as the country lies on a fault between the Australian and Pacific continental plates. Nevertheless, widespread damage was reported.

Insurance losses have been estimated from NZ$2.1 billion to NZ$3.5 billion. The country’s Earthquake Commission projects total insured losses of NZ$4 billion. These estimates translate to losses between $1.5 billion to $2.9 billion in US currency.

 

Author: Dr. Lloyd Blanchard, IEM Consultant