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New Madrid Zone's earthquake risk in question

Scientists examining the New Madrid Seismic Zone report that the long-standing consensus that a major earthquake will likely devastate the New Madrid Zone is "significantly overestimated." A report which appeared in the April 23, 1999, issue of Science Magazine, called for revisions to the risk calculations insurance companies use to predict earthquake hazards in the New Madrid area. A small earthquake in Kentucky in mid-2003, reinforced the fact that the risks were not as high as previously expected.

The New Madrid Seismic Zone encompasses parts of seven states — Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee — and is named for New Madrid, Mo., where a series of catastrophic earthquakes struck in 1811 and 1812.

Contrasting views

Scientists have long held that major earthquakes occur in the New Madrid Zone about every 1,000 years. The Science Magazine report says the cycle of devastating earthquake activity is closer to 2,500 years, thus reducing the hazards. In addition, the report questions the accepted notion that the earthquakes of 1811 and 1812 were magnitude 8.0 on the Richter Scale. The report says that the amount of earth-shifting that occurred in the two 19th-century quakes is more consistent with a magnitude 7.0 temblor.

Earthquake probabilities in the New Madrid zone — the long-held estimates
Probability in the next 15 years (%) Probability in the next 50 years (%)

The Inland Marine Underwriters Association, an industry trade group, estimates that a magnitude 7.0 on the Richter Scale today would cause approximately $6 billion in damages.

Dr. Mohammad Yazd, Director of Earthquake Research and Modeling at Boston-based Applied Insurance Research Inc., which provides catastrophe models for the insurance industry, defends the current risk models in use today. "While we acknowledge the research value of these scientific findings, it would not be appropriate to modify [the New Madrid Zone's earthquake risk model] based on only one recent study, particularly when the study results contradict paleoseismic evidence," he says.

Insurance departments review earthquake
coverage rates and risk

The Missouri Department of Insurance (DOI) is currently reviewing the earthquake risk and coverage rates for the whole state, including counties in the New Madrid Zone. Randy McConnell, Public Information Administrator at the Missouri DOI, says that the department's review of the risk and rates will be complete sometime this summer and the report that appeared in Science Magazine might have an impact on the department's findings.

Arkansas' Earthquake Task Force, part of the insurance department, reviewed the state's risk for a catastrophic earthquake and concluded in April 1999 that the long-standing risk model still applies. The Task Force determined that the maximum losses due to a major earthquake in Arkansas would cost the state $1.25 billion.

Arkansas also passed legislation that will create a Market Assistance Program and the Arkansas Earthquake Authority to help citizens from all areas of the state purchase earthquake insurance.

Tennessee Department of Insurance actuary Dennis Christian says his state is still reviewing its commercial earthquake insurance rates. "The Insurance Services Office recommended higher rates in July 1998, but we didn't take them. Whether we adopt them in some form or not at all is still under review." Christian says that the department of insurance will likely consider the Science Magazine report in its next review of earthquake coverage rates.

Illinois' Department of Insurance will not review earthquake coverage rates, according to Nan Nases, a spokesperson for the department.

One idea is accepted by all scientists and risk evaluators: The seismic activity in the New Madrid Zone is not easily understood and studies tend not to make predictions of Mother Nature's whims more accurate. "This study certainly doesn't unmurk the waters," says McConnell.

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