This is a significant human tragedy. Unfortunately, there will be a notable protection gap highlighting the continuing need to bring more insurance capital into emerging markets. In comparison to primary perils such as typhoons and floods, earthquake risk in Thailand is considered comparatively low, although earthquake models for the region indicate that they are not unlikely said Andy Souter, Head of Asia Pacific, Howden Re
London: The insurance industry is not expecting any large claims out the damage caused by powerful earthquake that rocked Myanmar and neighbouring Thailand on Friday, destroying buildings, a bridge a dam and killing at least 144 people in Myanmar.
Andy Souter, Head of Asia Pacific, Howden Re, commented: “This is a significant human tragedy. Unfortunately, there will be a notable protection gap highlighting the continuing need to bring more insurance capital into emerging markets. In comparison to primary perils such as typhoons and floods, earthquake risk in Thailand is considered comparatively low, although earthquake models for the region indicate that they are not unlikely.”
In areas like Bangkok with highly concentrated, high value properties, it does not take long for losses to accumulate. Typically, the rating for earthquake in Thailand is included within the overall rate for property with deductibles relatively low and similar to those for the main fire peril. Despite low seismic activity in Thailand and other countries in the region like Singapore, their vulnerability to earthquake risks from large, distant events should not be underestimated, said Souter.
The tragic events of today occurred along the Sagaing Fault in Myanmar, one of the region’s most active fault systems, stretching for more than 1200km. This fault line has historically experienced significant earthquakes, with other notable M7.3+ events in 1931 and 1946 and six M7+ events since 1930, said Howden Re.
Research studies have identified a seismic gap along the Sagaing Fault, indicating the potential for a ca. M7.9 earthquake near today’s rupture area.
“With the earthquake epicentre in Myanmar, there is little visibility; the extent of the damage in country is not yet known, though we anticipate that it will be extensive, with very low insurance penetration,” said Howde Re.
Large portions of the population in this region reside in structures vulnerable to earthquake shaking, with relatively few quake resistant structures, said Howden Re.
Dr. Myrto Papaspiliou, Head of International Catastrophe Model Research at Howden Re, commented: “Of Thailand’s 76 provinces, only 10, primarily in the northwest, are classified as earthquake risk zones. ”
However, Bangkok’s deep, soft alluvial soil amplifies shaking, making larger earthquakes from southern China and Myanmar felt in the city and potentially damaging. This was evident during the 2014 Chiang Rai Earthquake and, most notably, the 2004 Sumatra Earthquake, although the tsunami was a key driver in the latter case, said Papaspiliou.