University of Illinois models a Big One along the New Madrid fault, which runs from Southern Illinois to northeastern Arkansas. The numbers are beyond staggering:
- 86,000 casualties
- 7.2 million homeless
- 2 million in temporary shelters
- 2.6 million homes without electricity
- 425,000 ruptured pipelines
- 3,500 damaged bridges, with 15 major bridges unusable (remember, this is along the confluence of the Missouri, Mississippi, Ohio and Cumberland rivers).
- $300 billion of direct economic losses.
Insured losses are usually less than economic losses because public infrastructure like roads and bridges aren’t insured. However the $300 billion estimate doesn’t include business interruption losses. The study estimates indirect losses, of which BI would be a part, would be around $600 billion. So I don’t think it’s a stretch to call this a $100 billion insurance event.
By contrast, Katrina, the worst U.S. catastrophe, generated about $45 billion in insured losses, adjusted for inflation. The 1994 Northridge earthquake came in at $18 billion.
Missouri and Tennessee absorb most of the wallop, since St. Louis and Memphis are the biggest nearby cities.
The entire study – all 350 megs of it – can be downloaded here.
Those who take the whistle-past-the-graveyard approach to ERM will prefer the Purdue and Northwestern experts. They believe the New Madrid fault is shutting down.