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The Psychological Hurdle to Earthquake Preparedness

The final death toll from the earthquake and resulting tsunami in Japan is now expected to exceed 18,000. While that number paints a far graver picture than the initial, much lower estimates, many believe that the human fallout from a magnitude 9.0 quake would have been worse if it wasn’t for the country’s strict building codes.

In that sense, Japan’s path towards resiliency should be a lesson to other nations threatened by seismic activity. Either modernize and fortify your construction and infrastructure or jeopardize the lives of your citizens when the next major earthquake hits.

Unfortunately, improved building standards are not the only impediment to better preparedness. A new study from a University College London researcher Helene Joffe has shown that there are some significant psychological hurdles as well — and the underlying rationale may vary from culture to culture.

In Japan, for example, responses to her survey about how safe people would feel if an earthquake hit revealed a fatalistic outlook, meaning that many people didn’t believe that improved building standards — or any other preparedness efforts, really — would ultimately make any difference.

Japanese participants, while being the most confident in the structural integrity of their buildings, had a more negative response than those in the US when asked “How safe would you feel being inside your house during an earthquake?” The Japanese also scored lowest on the number of seismic adjustments they had made: an average of seven, compared with nine in the US. Joffe says there was far more talk of worry, anxiety, fear and a sense of vulnerability from Japanese respondents, while those in the US had a much greater feeling of optimism.

Japanese participants gave the impression that damage is caused by the force of an earthquake alone rather than arising as the result of interactions between uncontrollable geophysical events and controllable features of the built environment, says Joffe. “We found the Japanese participants to be more fatalistic than we expected,” she says. “The feeling was that you can do whatever to your house but what is going to happen is going to happen and there is very little you can do to change that.”

Other survey participants came from Turkey, another nation with high seismic risks. Here, too, people had a “there’s nothing you can do” attitude, something that was skewed both by religion and a distrust of government.

In Turkey, there was much more talk of earthquakes being an act of God. There was also much more talk of distrust in government and corruption. “They thought that their buildings were badly built and that there was nothing they could do to prepare because everything was negatively affected by corruption,” says Joffe.

We already know that there many hurdles to better disaster preparedness: budget constraints, complacency, a lack of urgency and an “it won’t happen to me” attitude, to name just a few. But according to Joffe, this new information means that policymakers must also begin to incorporate cultural understanding into their efforts.

Joffe’s team says the current models of seismic adjustment need to give a more prominent role to these cultural influences. They will use their results to identify how best to motivate people to make changes.

“If we find that fatalism is leading the Japanese not to make necessary adjustments, then it may be better to go in on the engineering side and retrofit their houses,” she says. “In Turkey, on the other hand, you’re not going to change vulnerability without starting with corruption.”

For more on the other psychological hurdles, read this excellent piece that FM Global’s Ruud Bosman wrote for us recently highlighting research that his company conducted.

Initial Estimates of Claims from Japan Quake

Though it is far too early to pin down an exact number for the amount of money the Japan quake will cost insurers, initial estimates have started to surface for some of the hardest hit insurers and reinsurers.

Swiss Re, the world’s second-biggest reinsurer, has estimated it will face claims of about $1.2 billion from the earthquake and tsunami in Japan.

The figure is low because Japan’s government insures residential properties covered by non-life companies against earthquake and tsunami damage and this protection is not reinsured internationally, the Zurich-based company said in an e-mailed statement today. The preliminary claims figure is net of retrocession and before tax, Swiss Re said.

Eqecat, a catastrophe modeling firm, has stated that insurers and reinsurers will likely have losses of $12 billion to $25 billion. However, AIR Wolrdwide has estimated losses of up to $35 billion from the quake alone.

AIG has recently reported that it will record $1 billion in claims for the first quarter, most of which can be attributed to the Japan earthquake and tsunami.

Zurich-based ACE Ltd., a major player in the insurance and reinsurance market, said its initial loss estimates are $200 million to $250 million.

Though Lloyd’s of London has not officially released an estimate, an anonymous market source has said “$3 billion in losses for the Lloyd’s market as a whole sounds plausible.”

QBE Insurance Group Ltd. of Australia has said it estimates $125 million in claims from the quake and tsunami.

Below is a video of the always-entertaining Joe Plumeri speaking on the topic of Japan’s insured losses.

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Earthquake, Tsunami Reshape Japan’s Coastline

In the wake of the devastating earthquake and tsunami that ravaged Japan, the world’s attention has rightfully turned to to ongoing nuclear crisis at Fukushima. Three reactors are at risk of meltdown while spent fuel rods at a fourth reactor are at risk of catching fire, which would spew radioactive gas into the atmosphere. More than 200,000 people have either been evacuated or told by authorities to shelter-in-place and all but 50 workers at the nuclear plant have been sent home as radiation levels continue to “soar.” By all accounts this is now a full-scale international crisis as Japan’s neighbors are at risk and with the nation’s prime minister reporting asking energy “what the hell is going on?” the incident is becoming more harrowing by the minute.

All we can do now is monitor the information being reported and hope for the best in an incident that may already have caused insured losses of up to $35 billion, according to risk modeling firm AIR Worldwide, and has triggered the biggest two-day stock market decline in Japan since 1987, according to comments by CNBC’s Erin Burnett today on Morning Joe.

Looking back at the initial disaster, however, more and more is becoming known about the gravity of the catastrophe. The video below from ABC shows how the quake and tsunami drastically reshaped parts of Japan’s coastline. The awesome power of nature will never cease to amaze. Truly heart-breaking imagery. (More images of destruction can be seen here and here.)

For more breaking news coming out of Japan, stay tuned to our Twitter feed, @RiskMgmt.

Business Interruption in Japan

Thousands are dead after the worst earthquake in generations struck off the northeast coast of Japan on Friday. The 8.9-magnitude quake rocked the country, sending cars off bridges and causing numerous buildings in the area to collapse while causing several tsunamis that essentially washed away entire parts of the island nation. The following aftershocks, which were only slightly weaker than the earthquake itself, were felt throughout the country, causing even more damage and death.

Companies there have evacuated and closed plants in the aftermath of the world’s fifth-largest earthquake since 1900. Because Japan is the destination of so many global businesses, the economic effect of the earthquake will be felt throughout the world. From the Wall Street Journal:

  • Volvo
    The automobile company was among the worst hit. Its main facility in Japan that produces heavy-duty trucks was forced to halt production. Volvo employs 10,000 people in Japan.
  • Daimler
    One of the company’s facilities in Kawasaki was slightly damaged. Production is continuing with all employees accounted for.
  • Nestle
    The Swiss food giant has reported damage to two of its buildings, one of which was closed and production halted. The company says all employees are safe and accounted for.
  • GlaxoSmithKline
    Operations at one of its manufacturing plants is suspended for several days as damage is assessed.
  • Procter & Gamble
    A company spokesperson has reported that the majority of the consumer product company’s employees have been accounted for. It has suspended operations at its fabric care products plant.
  • Autoliv
    The world’s biggest producer of car safety products reported that it was forced to halt operations at one of its plants due to infrastructure damage.

Some telecom companies are also reporting damage to underseas cables.

An official from Chunghwa Telecom, who asked not to be named, said the affected cable belongs to the Asia Pacific Cable Network 2, which is owned by a consortium of 14 telecom operators led by AT&T Inc.

Though the emotional effects of such a devastating natural catastrophe will be felt for years to come, it is hoped that the economic effects won’t be so long-lasting. It’s hard to be optimistic when you see the damage, however. Below is a frightening video of the earthquake and tsunami as it unfolds.