Editor's Note: Amidst the earthquakes that rattled Virginiaand Colorado Aug. 22-23, 2011, which resulted in twonuclear reactors being taken offline at Virginia's NorthAnna Power Station just 13 miles from the epicenter,we revisit this report from April, which looks at risksrelated to fault zones and nuclear power plants. 

The severity of the compound problems that struck Japan inMarch—earthquake, tsunami, damage to a nuclear reactor—caughtnearly everyone in the risk modeling business by surprise. In thecase of Lamont Norman, risk data product manager for Pitney BowesBusiness Insight, the aftermath made him curious.

"What is the threat of not only nuclear [power plants], but alsochemical and biological threats to the U.S. population and howwould those threats impact the property/casualty insuranceindustry?" asks Norman.

Unlike the rest of us, Norman and Pitney Bowes BusinessInsight have the ability to examine the possibility of such adisaster by studying all the data sets that factor into such apossibility.

"We simply located all the nuclear plants in the United States,which then allows an insurer to quickly determine what the risk is,what the population is around these nuclear plants, what thepolicies are around these plants, and what the proximity is," saysNorman. "All of that information is something we allow customers todo with the various risk data sets that are available."

The map above shows the nuclear power plantsin the continental United States (yellow dots), fault lines (redlines), and fault zones (red outlined areas) as reported by theUnited States Geological Survey (USGS). Two of the bigger faultzones include the Gulf Coast zone that includeseastern Texas, southernMississippi, southeast Alabama, and all ofLouisiana, and what is known as the New Madrid zone in theMidwest, which includes parts of Missouri, Arkansas, Tennessee, andKentucky.

Fault zones are areas in which the USGS says there is a lot offault activity, but Norman points out that the USGS doesn't knowthe exact locations of the faults in those particular zones.

"They know there is a lot of activity, but they have notidentified specific fault lines," he says. "These are areas wherethere is some history of seismic activity. It's infrequent, butit's huge. That's why everyone is concerned about New Madrid.There's a good probability that [an earthquake] there will besignificant when it happens."

The map above shows there are four nuclear sites in the Texasarea that are clearly within the fault activity zones, and thereare several plants in California and in the state of Washingtonwhere nuclear reactors are located in the fault area, saysNorman.

Of major concern is the fact that of the 104 nuclear powerplants in this country, there are 13 that are within 30 miles of afault in the United States, reports Norman. In addition, 23 plantsare also within 30 miles of a recorded earthquake—including threein California, two in Louisiana, four in Pennsylvania, two in NewYork, two in New Jersey, and two in Tennessee. One of thesereactors is within the Washington, D.C. area as well.

"Overall we're seeing about 63.3 million people living within 30miles of these nuclear plants based on the latest census data,"says Norman.

Could we see a repeat of what happened in Japan with an earthquake triggering a tsunamithat threatens a nuclear power plant? Certainly it is possible inCalifornia, but Norman doesn't believe it is that far-fetched inthe Gulf states as well.

"You can get a tidal wave if there is an earthquake," saysNorman. "If it's coastal it is going to send a tidal wave. That'sthe way it is. To carry it further, the Cuba area is a subductionzone—a high earthquake threat area. If an earthquake occurs in thatarea, there are going to be tidal waves that roll to Florida andthrough the whole Gulf Coast area, as well."

An additional problem that Norman believes insurers need tostudy is biological and chemical contamination scenarios.

"It's not just nuclear power that is a threat," says Norman."There are biological and chemical threats in the UnitedStates."

This map shows there are 9,071 in this country that arelocated within 10 miles of a recorded earthquake. In addition,16,763 of these sites (the area in yellow) are locatedwithin five miles of a fault (red lines) or a fault zone (outlinedin red).

"Looking at the east and northeast [portions of the U.S.], it'soverwhelming," says Norman. "These are dioxin sites, heavy metals,and minerals. These are contaminants that will kill people slowlyor quickly. If some of these [toxins] get loose due to anearthquake or some disaster, there are going to be some majorairborne issues."

Norman points out that it is expensive to relocate thesecontaminants to less populated areas, but he points out that wherethere's population is where you are going to find thesematerials.

"You might think it should be in the less-populated areas, butit is population driven," he says. "You can only carry this stuffso far or it will cost too much money."

The insurance industry can take some comfortin the fact that the Price-Anderson Act, which was passed byCongress in 1957, offers a disaster fund. The first tier covers thefirst $375 million in damages—a figure that could easily besurpassed by what took place in Japan—with the second tier, anindustry self-insurance program, covering $12.6 billion in damages.These figures were updated when the Energy Policy Act of 2005extended the Price-Anderson Act to Dec. 31, 2025.

"I think because of the fact that we've got a nuclear insuranceact, insurers probably think they're OK in terms of being coveredfor this," says Bill Sinn, strategic industry and marketingdirector for Pitney Bowes Business Insight. "But I think insurersneed to look at not only nuclear threats but also other chemicaland biological threats. I think they'll find there is somecorrelative impact of being in close proximity to these plants.Reinsurers are looking hard at nuclear proximity for property andcasualty. In order to reduce some of the reinsurance rates,companies are taking a look at proximity to nuclear plants."

Having a governmental and a self-insurance pool for nuclearaccidents is good for insurers, but the devastation in Japan makesNorman ponder the possibilities.

"There are all these chemical storage units and factories, andyou wonder how close they are being analyzed in terms of riskfactors and loss mitigation," he says. "Reinsurers should belooking at that more closely. It's one thing to have regulationsfor nuclear sites and making sure they are adhered to, but it'sanother thing when you have some 79,000 chemical and biologicalhazard sites. What's the risk of a catastrophe coming through andaffecting those sites?"

(Maps courtesy of Pitney Bowes Business Insight.)