The earthquake that struck New Zealand this week could cost the insurance industry as much as NZ$5.3 billion ($3.7 billion), according to catastrophe modeler AIR Worldwide.
The insured losses will be at least NZ$1.15 billion, the unit of Verisk Analytics Inc. said in a statement on its website. Most damage to residences will be covered by the Earthquake Commission, a government-owned carrier backed by reinsurers, according to AIR.
2,600 aftershocks
New Zealand was hit early Monday with a 7.8-magnitude earthquake that caused more than 80,000 landslides and 2,600 aftershocks, according to AIR. The quake shattered glass, collapsed chimneys and left dozens of buildings either unsafe for use or facing other restrictions. It raised the seabed by as much as two meters (6.6 feet) in places, which can disrupt the fishing industry.
"Recovery efforts in the region have been additionally hampered by gale-force winds, heavy rainfall, and flooded roads," Bingming Shen-Tu, assistant vice president at AIR Worldwide, said in the statement. For New Zealand, the quake was the worst since 2009 "and one of the four most powerful since 1855."
AIR Worldwide's model covers damage to structures and their contents, the higher costs of materials, and direct business-interruption losses. It doesn't account for losses to cars or infrastructure.
Risk to public safety
Wellington City Council was under pressure Friday to explain why the central business district was reopened so quickly after a magnitude 7.8 quake shook the capital early Monday.
While most workers stayed home that day, the city returned to normal business Tuesday, only to discover days later that several major structures posed a risk to public safety.
"Not unreasonably, the general public and engineers want answers and want them quickly," said Professor John Tookey, head of the Department of Built Environment Engineering at Auckland University of Technology. "When the dust settles in Wellington and surrounds, investigations will be thorough and exhaustive."
City partially built on reclaimed land
With a population of 207,000, Wellington is a compact city of high-rise buildings nestled around a harbor at the bottom of New Zealand's North Island. Partially built on reclaimed land, it is home to the houses of parliament, government departments, the central bank, a port, supreme court and the national museum.
The government yesterday announced an investigation into the seismic response of the city's buildings to Monday's quake, which was centered more than 300 kilometers (185 miles) away on New Zealand's South Island.
Collapse risk
A multi-storey carpark in downtown Wellington was cordoned off yesterday after engineers determined it was at risk of collapse. Adjacent buildings, including a cinema complex, were evacuated, prompting criticism of the council's decision to allow people back into the inner city before full inspections had been carried out.
"The expert advice we had on the ground, which hasn't changed, was to keep the CBD open and continue to allow those not directly affected to continue to work and go about their business," Wellington Mayor Justin Lester said in a statement. "The vast majority of buildings in the central business district have fared well."
Irreparable
A 10-storey building in another part of the city has been deemed irreparable and will be demolished. Several relatively new buildings also performed badly during the quake, which is estimated to have lasted almost two minutes and has been followed by hundreds of aftershocks, 49 of them magnitude 5 or greater.
Statistics New Zealand said its headquarters, built in 2005, suffered significant structural damage and may not be able to be reoccupied for a year. It has suspended the publication of statistical releases until further notice.
In a video message to staff, Chief Statistician Liz MacPherson said she was grateful the quake happened at midnight and not during a working day, and demanded answers about the building's safety.
"How is it that a building that is as new as Stats House with the code rating that it had could suffer this sort of damage?" she said.
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