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.

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