The first few days of 2016 have brought a flurry of earthquakes to the residents of northwest Oklahoma. On New Year's Day, a magnitude 4.2 earthquake struck the city of Edmond, Oklahoma. A city that felt another earthquake of magnitude 4.3 just days before.
More recently, a swarm of seismic activity began near Fairview, Oklahoma on January 6th. Since then, five earthquakes with magnitudes greater than 4.0 occurred causing property damage in the area. This is only the latest sequence in a remarkable increase in seismic activity in the state. Scientific and government bodies suggested a strong relationship between the increase in earthquakes with wastewater injection, enhanced oil recovery and hydraulic fracturing processes in the region.
These earthquakes represent an emerging risk for the insurance industry. This is a complex situation from scientific, legal, and social viewpoints. The insurance industry continues to evolve within this dynamic situation, and opinions along with the terms and conditions in earthquake policies can vary. In Oklahoma, a scenario of widespread devastation is still unlikely, as the earthquakes are small to moderate-sized; however, repeated damaging events could leave unprepared homeowners to finance repairs out of pocket.
At Swiss Re, we are studying the effect of the increase rates of seismicity on our earthquake models. If you are interested in learning more, look for an upcoming publication with the results of our analysis of the potential losses produced using increased earthquake frequency.
Category: Climate/natural disasters: Earthquakes
Location: Oklahoma, United States