Is the South African insurance industry prepared for earthquakes?

28 September 2020 Old Mutual Insure
Christelle Colman, Insurance Expert at Old Mutual

Christelle Colman, Insurance Expert at Old Mutual

basic behavioural responses save the most lives

The seismic event registering 6.2 on the Richter scale that happened 10 km beneath the South West Indian Ocean ridge 1600 km off the South African coast on Saturday evening was, according the South African Council for Geoscience, unrelated to the level three tremors felt in Cape Town an hour later. Instead, the Cape Town tremors were associated with the local Milnerton fault line. This fault line was responsible for large earthquakes in 1620, 1809 - causing the depression that the Milnerton racecourse is built in today - and the earthquake that devastated Tulbach in 1969. Koeberg nuclear power station is built just 8 km from the Milnerton fault line.

Since South Africa, located near the centre of a tectonic plate, occupies a – comparatively – less active seismic zone, the country experiences a lower frequency of earthquakes. Seismic faults, where constantly moving tectonic plates abut, are like jigsaw puzzles. When one piece moves somewhere, pressure could be translated instantly – or only much later – to any other part of the plate or surrounding plates. So, while earthquakes in South Africa are less frequent, “it is a myth that we don’t have them. We do, and they can be as large and as devastating as anything we have seen in Japan, California or New Zealand,” says Colman.

In addition, South Africa’s unpreparedness for earthquakes means that they are likely to cause even more damage when they do happen. Without causing unnecessary alarm, the tremors on Saturday evening in Cape Town – and the aftershocks felt on Sunday morning raise the issue of, “what we should be doing to understand and manage these earthquake and tsunami risks,” says Christelle Colman, Insurance Expert at Old Mutual.

Colman, who grew up in Tulbach, remembers the devastation of the 1969 quake that hit her family home. “We grew up with a lot of rules about where to stand and how to take cover in the event of earthquake,” she remembers. Colman also recalls her father describing how, “the earth seemed to liquify, bubbling up dark and black out of large cracks in the vineyards,” she adds.

This is consistent with what happened during the Christchurch earthquake in New Zealand in 2016 when significant tremors caused sands to shift, releasing liquids that – literally – caused the earth to bubble. Since Koeberg shares the same sand and soil profile as Christchurch, Koeberg’s foundations were dug through the sands, laying 6 meter thick concrete onto the underlying bedrock. Koeberg was then built on top of pillars topped with neoprene rubber designed to absorb movement. This has made the power station able to withstand an earthquake of up to 7 on the Richter scale. As in the 2011 quake that triggered the Fukushima Daiichi nuclear disaster in Japan, however, “even the most advanced engineering techniques are no guarantee in an earthquake,” says Colman.

South Africans, however, generally don’t build using earthquake technologies – as they do in varying degrees in Japan, New Zealand and California. As such, “the impact of a quake in South Africa will be far more destructive – and much more costly,” says Colman.

While most personal and commercial policies in South Africa cover earthquakes under acts of god and all Old Mutual Insure policyholders cover both natural and mining related earthquakes and tremors, “policyholders are advised to verify with their brokers or insurers whether they are indeed covered for earthquake and tsunami (where applicable), especially in the Western Cape,” advises Colman.
While Colman also believes the South African insurance industry is adequately re-insured, “what would the cost be to the industry – and global re-insurers – in the event of a 6.5 magnitude quake along the heavily populated and urbanised Milnerton fault today?” she asks. South Africa is also a developing economy with huge growth and inclusion challenges.

“By far the vast majority of South Africans are not insured,” says Colman. How would the City of Cape Town – and national government – manage a seismic event that destroyed homes and other infrastructure along the Milnerton fault line, “where the vast majority of people and property is not insured?” she asks.

One only has to look at how Japan and New Zealand managed - and financed - their recent earthquake recoveries, compared with what happened in Haiti. “Counties with developed insurance industries and widely insured populations respond much more effectively to disaster,” observes Colman.

While there are no ready answers to many of these questions, it is important that South Africans, start, “creating awareness of earthquakes – and the most basic responses,” says Colman. Learning from other countries, “the best response in terms of saving lives, whether one is insured or not, is behavioural,” advises Colman.

During an earthquake safety depends on staying calm and reacting quickly and correctly. This means:
• If you're indoors, stay there.
• Move away from windows, skylights, doors and objects that could fall.
• Gather your family for a headcount.
• Shut off all utilities.
• Find a sturdy piece of furniture, like a heavy table or solid desk, to get under. Stay there until the shaking stops.
• Don't use elevators.
• If you're outside, move quickly and safely into the open – away from electrical lines, trees and buildings. Drop to the ground and wait for the shaking to stop.
• If you're driving, slowly pull to the side of the road away from traffic and stop.
• Don't stop on or under bridges, under power lines or near roadway signs that might fall. Once the shaking has stopped, drive carefully, looking out for debris in the road.
Danger remains after the shaking stops. In the aftermath of an earthquake, buildings can collapse. There can also be landslides, floods and fires.
If you're trapped under debris:
• Cover your mouth with a piece of clothing.
• Tap on a pipe or wall so rescuers can find you. If you shout, you may inhale dust or debris.
• Don't light a match or lighter.
• Don't move around or kick up dust.
If you're in your home:
• Be prepared for aftershocks.
• Only move around the house if it is safe (structurally sound) to do so. Otherwise, quickly and carefully move your family outside to safety.
• Check for gas or water leaks and electrical shorts. Don’t turn utilities back on until they have been inspected by a professional.
• When it’s safe, assess and document damage. Then contact your insurance company or broker.

Beyond awareness and behavioural responses, however, the insurance industry, the City of Cape Town and all municipalities, along with national emergency services and government should develop clear national, regional and local disaster management strategies, including evacuation plans. These strategies should also address, “how to manage – and fund – recovery in an economy where so few people have private insurance,” concludes Colman.

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