West Coast Tsunami Could Cost Trillions

By Michael Ha

NU Online News Service, Dec. 29, 1:21 p.m.EST?As the casualty count continues to grow from Asia'sdeadly tsunami, experts said the U.S. West Coast is vulnerable tosuch a catastrophe and the insurance costs could run into thetrillions.[@@]

"The coast of California, Oregon, Washington, and also Alaskaand Hawaii?they are all vulnerable to tsunamis," said Carolyn Bell,spokesperson for the Reston, Va.-based U.S. Geological Survey, thesole science agency for the U.S. Department of the Interior.

According to Ms. Bell, an earthquake that occurs in the Pacificcould create giant tidal waves reaching the U.S. West Coastalregion. "Scientifically there is a possibility. It's probably fairto say there may be around 5 percent chance in the next 30 or 40years," she told NU.

Such an event in the U.S. could mean "trillions of dollars" inproperty exposure in the worst-case scenario, according to theInsurance Information Network of California in Los Angeles.

"It would have to be in the trillions of dollars because youhave to look at all the potential policies you could be factoringin: earthquake insurance, flood insurance, homeowners, commercial,auto, medical, life," said the group's spokesperson CandyMiller.

"Beyond homeowners, you have to look at what the impact would beon business, tourism, the closing and interruption of business,workers' compensation, and some of the priciest real estates in theworld."

Meanwhile, Fitch Ratings in New York predicted that the insuredlosses from deadly Asian tsunamis will mostly affect the Asianprimary insurance market and the worldwide reinsurance market,including markets in Singapore, London and Bermuda.

The rating agency noted U.S. primary insurers are not likely toincur material losses as the result of this event. Some U.S.primary insurers may have "modest exposure," however, on propertyowned by multi-national companies insured through policies issuedby U.S. carriers.

Fitch also forecast that the event occurred too late to affectJan. 1 reinsurance renewal pricing. Nonetheless, the pricing ofretrocessional reinsurance?reinsurance purchased by reinsurers?could be affected since many retrocessional policies renew on March1.