An earthquake will inevitably hit one of Australia’s major cities, according to a new report from global reinsurer Munich Re. The question is: how big will it be, and when will it hit?
According to the report, while earthquakes in Australia have been less frequent and less extreme than the most exposed regions in the world, they still posed insured losses in the same order of magnitude, due to high penetration of earthquake insurance, risks covered on a full-value basis with very small deductibles, and poor building codes.
The report said Australia’s major cities could be hit by earthquakes of more than a magnitude of 6, and that it would be an “unpleasant wake-up call” for the insurance industry, with the potential for multi-billion-dollar payouts.
“Earthquakes like those in Christchurch should not come as a surprise and are very realistic scenarios,” the report said.
It pointed to Australia’s poor building standards in relation to earthquakes.
“Given the moderate earthquake hazard in Australia, buildings are not constructed to resist very strong ground motions.
“The moderate Newcastle event in 1989 provided a good illustration of the very poor behaviour of structures such as unreinforced masonry buildings. Should a severe earthquake occur underneath one of the major cities, the ground motions will significantly exceed the design ground motion in the building codes. This will inevitably lead to very high loss levels close to the earthquake epicentre.”
Increased climate threat
The report also warned that catastrophic climate events, including storms, floods and fires, were increasing in frequency.
“Over the past 10 years, we have observed an increased frequency of medium and large natural catastrophe events,” Munich Re’s general manager non-life in Australasia, Scott Hawkins, said.
Mr Hawkins said Australia may witness more powerful cyclones, increased drought and more bushfires.
It said the Australian economy was already facing annual costs of $6.3 billion due to natural disasters and this could raise to $23 billion a year by 2050 unless appropriate resilience measures were taken.
The report was welcomed by the City of Sydney, whose Lord Mayor Clover Moore said it backed the council’s actions on adaptation.
“Munich Re’s report shows the conditions for thunderstorms in Sydney will rise by nearly a third by the end of the century and the frequency of extreme droughts in Australia could increase by more than one and a half times,” Ms Moore said.
“We’re already witnessing threats such as the fierce storms in April when heavy rainfall flooded parts of Sydney and NSW. As our climate changes, the hottest days will become hotter, more frequent and last longer, putting enormous strains on vital infrastructure, community health and air quality.”
Sydney recently appointed Beck Dawson as chief resilience officer to work on a citywide strategy for improving preparedness for disaster.