While the coronavirus and the accompanying quarantine have been grabbing all the headlines, there have been several serious earthquakes around the world that have caused some serious damage. These earthquakes – some of which were years ago – are having profound effects on the insurance world in their respective countries. With all the other difficulties facing insurance providers at this point, earthquakes seem to be put on the backburner, but that may not be an option.
Croatian Dividends Put on Pause
On March 22, 2020, early in the morning, an epochal earthquake struck the Croatian capital of Zagreb. The earthquake was a magnitude 5.3 on the Richter scale, with several aftershocks. This is the worst earthquake faced there in 140 years.
Buildings lost roofs and walls, including one of the spires of a historic cathedral, and the streets were lined with the wreckage. The city, which was under social distancing regulations like everywhere else, was forced to empty its populace into the streets for safety reasons – Croatia has several hundred confirmed cases of COVID-19.
Following the earthquake, and as the coronavirus quarantine continues, Croatia has ordered insurers to stop paying out dividends in order to keep the money supply liquid in the midst of the two tragedies. This is to be in force until April 2021. The country simply cannot risk insurance companies running out of cash.
New Zealand Legal Battles
New Zealand had its own spate of earthquakes that struck in 2010 and 2011. This seems far-removed from the present situation, but Tower Insurance Ltd. would say otherwise. The insurance underwriter paid more than $80 million New Zealand to repair the damage in Canterbury (that’s about $48 million U.S.). They claim this should have been paid by the Earthquake Commission, and so they have filed suit after years of attempting to get paid.
With so many insurers and governments trying their best to stay afloat during the COVID-19 crisis, no one has time to wait any longer. This lawsuit could take a long time, but doubtless both parties are hoping for a speedy resolution. Should the EQC lose, the New Zealand government could feel the sting of the crisis more, while Tower Insurance could lose their ability to respond to coronavirus matters.
Utah and Beyond
Add to this the 5.9 earthquake in Utah only recently and several smaller quakes shaking the world, and the situation looks very serious. The world certainly has not stopped for COVID-19, although the people on it have certainly tried to. With cash becoming more and more precious, and seismic activity affecting so many places, there may be more disputes with multiple facets like these in the near future.
Sources:
https://www.theguardian.com/world/2020/mar/22/croatia-earthquake-causes-widespread-damage-zagreb