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Insurers receive claims after 5.9 magnitude earthquake strikes

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Insurers have already received a small number of claims after one of the largest earthquakes on record to hit eastern Australia struck today, causing damage to buildings but no reported serious injuries.

The quake, measuring 5.9 on the Richter scale, hit at 9.15am, with the epicentre at Victoria’s Mansfield around 40 kilometres south of Mount Buller, 130km from Melbourne and 300km from Canberra.

Walls shook and windows rattled across Victoria and the tremor was felt across Bass Strait in north-west Tasmania, and in parts of SA, the ACT and NSW. Buildings in Melbourne’s inner city were damaged and there were power outages.

IAG’s EGM Direct Claims Luke Gallagher says the insurer has so far received more than 100 claims for property damage across its brands CGU, RACV, WFI Insurance and Coles Insurance.

“The priority at the moment is people’s safety and we urge everyone to follow the directions of the emergency authorities as there could be aftershocks which could cause further damage,” he said.

Allianz Australia says it has had 70 claims so far. "While the majority of customers are reporting minor cracking, we are aware some customers have experienced more extensive damage," it said.

Home insurance policies generally cover damage caused by an earthquake, the Insurance Council of Australia (ICA) said in a statement emailed to insuranceNEWS.com.au.

ICA is monitoring the number of damage claims received by its members resulting from today’s earthquake, as well as a series of aftershocks at a lower magnitude than the primary shock.

“Insurers have received a small number of claims. We’re working with Emergency Services and we’re monitoring the situation,” the ICA said on Twitter. “Insurers stand ready to help. If your property has been impacted, please contact your insurer or broker.”

“We are working with the Victorian State Government to ensure assistance is forthcoming for impacted property owners,” an ICA spokeswoman said.

Today’s quake occurred along the Governor Fault line, which is one of the largest in Victoria and separates the Melbourne and Alpine regions. Its depth was 10 kilometres. Aftershocks may last weeks but should be weaker.

Prime Minister Scott Morrison pledged federal assistance for the earthquake response.

“Those who may be in distress tonight – during the day there in Melbourne and across Victoria today – will be well looked after and well attended to in terms of any needs that they have,” he said.

Under current COVID restrictions, insurers are permitted to conduct assessments and arrange emergency make safes and urgent repairs. IAG says customers who have suffered damage to their homes or properties should make contact to lodge their claim and receive immediate support, such as emergency make safe repairs and temporary accommodation.

Catastrophe modeller Risk Frontiers GM Resilience Andrew Gissing says Australia has experienced earthquakes measuring higher than 6 but they have struck more remote areas in the NT and WA.

Australia is fortunate to not be situated on a tectonic plate boundary like New Zealand and Japan, where large earthquakes occur quite frequently, but it can still experience small to moderate earthquakes.

“It is absolutely possible to get far more damaging earthquakes in the Australian context," he told insuranceNEWS.com.au. "When you look at potential losses you get from a very rare earthquake event, it is significantly greater than what you would get from a similar bushfire occurrence.

“That is certainly something I suspect insurers would be concerned about, future earthquakes around our major cities.” 

Adelaide and Perth have a history of earthquakes in the surrounding regions.

“The concern would be that in Australia we experience an earthquake which was bigger than we experienced this morning, closer to one of our major centres, which would impact more buildings in those centres causing significant loss,” Mr Gissing said.

A magnitude 5.6 earthquake in 1989 in Newcastle in NSW caused $3.2 billion in insured losses and killed 13 people and injured around 160. About 35,000 insurance claims were lodged, with 300 buildings demolished, including more than 100 homes. Damage occurred to 147 schools, 3000 commercial and other buildings and 35,000 homes.

Insurers accepted most claims, some from as far away as Sydney’s northern beaches.

“Australia certainly has an earthquake risk. Not as big as other parts of the world, but we have got significantly exposed populations in that sense and if we did get a good-sized earthquake as we saw in the Newcastle event, we can get significant insured losses as a consequence,” Mr Gissing said.