Pacific basin-wide tsunami alerts after magnitude 8.8 earthquake in Kamchatka, Russia

We’re waking to reports of Pacific basin-wide tsunami alerts having been issued by numerous countries after a magnitude 8.8 earthquake occurred near the Kamchatka Peninsula of Russia this morning.

A magnitude 7.4 foreshock preceded the significant 8.8 earthquake, which the USGS said has occurred close to the epicentre of a historic magnitude 9.0 quake back in 1952. There have been numerous earthquakes in the region in recent days.

The magnitude 8.8 earthquake struck at 11.24am local time and has been followed by numerous earthquakes of magnitude 5.0 and higher.

At 8.8, the magnitude of this earthquake is said to be the joint sixth most severe in recorded history.

Initially, reports suggested tsunami waves of 3 to 4 metres might be widely experienced around the Pacific basin, with countries including the United States issuing alerts and warnings to residents.

Initial tsunami waves that hit the Russian coastline have been reported to be significant, with reports of damage experienced. There are also reports of structural damage in the Kamchatka Peninsula region and Russia’s far east, with buildings damaged from the major earthquake’s shaking.

For Japan, evacuation orders have been issued, but reports suggest tsunami waves of just 30 to 40 centimetres have struck the Hokkaido coastline so far.

According to a BBC report, seismologist Dr Lucy Jones explained that, “the tsunami could damage harbours and waterfront property in Hawaii – and possibly in California – but it is not expected to cause a catastrophic loss of life anywhere in the Americas.”

Predictions suggested that Hawaii could experience waves of 2 to 3 feet, while the west coast of the United States may see waves of 1 to 2 feet.

Hawaii’s governor recently said that a wave had been recorded passing through the Midway Atoll island between Japan and Hawaii at 6ft from peak to trough, leading him to say that the islands are still expecting meaningful tsunami effects.

Residents of Hawaii are being urged to head for higher ground as tsunami waves approach, while warnings now stretch from south America, around the Pacific basin to Asia.

Earthquakes of this severity can have widespread impacts, reaching far beyond the regions immediately affected by shaking, which this Kamchatka earthquake is now demonstrating.

At this stage it does not seem damage from this quake is going to be especially meaningful for the global insurance and reinsurance industry, but with the quake still impacting sea levels across the Pacific and the tsunami effect spreading further west, it remains to be seen if it becomes more of an event that would concern the sector.

Japan was really the major concern for the reinsurance and perhaps insurance-linked securities (ILS) market, given the role of risk capital there in protecting against domestic earthquake risks means sector capital would also be on-watch for any impacts driven by a quake from a neighbouring region.

Of course, there are a reasonable number of catastrophe bonds that potentially could have been exposed to such an event, had the tsunami caused significant damage, with Japan again seeming the most likely location for that to occur given its proximity to Kamchatka.

Cat bonds that cover earthquake risks in some cases cover tsunami related damages as well. Although some, but not all, would require the quake event to have occurred in the specific region where that coverage is targeted, meaning tsunami wave damages from a quake in a neighbouring country may not affect them.

This is an ongoing event at this time, with tsunami impacts only just beginning for Hawaii (4 foot waves reported so far) and even longer for the west coast of the Americas, should any sea level rise or waves spread that far.

Updates:
There have been reports of tsunami waves of just over 1 metre in height in Crescent City, northern California, while in Japan the highest waves recorded are between 1 and 1.5 metres. In Hawaii officials said that the disaster they had anticipated has not occurred, while in Japan warnings are now being downgraded.

Tsunami warnings are still in place for many countries, but so far the damage reported does not seem severe except for in the coastal regions of Russia where inundation has been more significant and damage from shaking caused by the earthquake has downed some buildings.

Specialist catastrophe bond investment manager Plenum Investments has commented on its expectations for catastrophe bonds, “From the impacted regions, the cat bond market covers Japan, the West Coast of the USA, and Hawaii.

“We don’t expect this event to have any meaningful impact on the cat bond market, since the tsunami is not expected to cause any major property destruction on the West Coast of the US or in Japan. Moreover, a significant proportion of cat bonds covering earthquakes in California cover only ‘shake’ losses, therefore excluding tsunami losses.”

Icosa Investments AG, another Swiss cat bond fund management specialist, also commented on the event earlier today, saying, “The severe earthquake itself off Kamchatka is not expected to have any noticeable effect on the cat bond market. The peninsula is sparsely populated and Russian risks are typically not covered in cat bond programmes, so the quake itself carries little relevance. The greater uncertainty concerns a possible tsunami that could cause damage even in distant coastal regions. For the cat bond market, Japan and the U.S. West Coast would be the primary areas of concern.”

With the effects of tsunami waves and sea level changes now having declined, although some warnings remain in place in the Pacific, it seems this major earthquake will not result in insured losses meaningful enough to concern ILS or global reinsurance markets.

See more on this earthquake from the USGS here.

See NOAA tsunami warnings on a map here.