Tourism firms under-insured for big quake

Few West Coast tourism operators are insured for loss of earnings, even though an overdue major earthquake on New Zealand's biggest fault line could devastate their business, a researcher has found.

The Alpine Fault runs 400km from Milford in the south to Springs Junction in the north. It last produced a sizeable earthquake (magnitude 7.8-8) in 1717 and it is known to have produced such shakes every 100-300 years.

Caroline Orchiston, a PhD student at Otago University, has been researching for more than two years to find out how prepared West Coast tourism businesses are for a major quake.

A major earthquake would cause significant damage to roads, sewerage, water and other infrastructure, creating a nightmare business environment for up to two years.

Survey forms were sent to 540 tourism operators with a 50 per cent return rate. Only 15 per cent of operators carried loss of earnings insurance for one year or more.

"I asked them when they thought it would happen and most people put it outside their lifetime, more than 30 years away."

She said many operators were prepared but a lot were unaware of the full consequences of a large quake.

"In terms of business resilience, there is an under-insurance problem."

She said big faults produced big earthquakes and small communities that relied on tourism and each other for survival should be planning for it and talking about it with their neighbours, friends and families.

"The economics of tourism are crucial on the West Coast. People just need to put some thought into it. You can't just say it won't happen to me."

Tourism numbers are typically hit hard by major natural disasters for practical reasons, including lack of infrastructure and the negative disaster images circulating the world's media outlets.

Insurance and a good disaster plan would not only help businesses recover but also identify new opportunities in the post-earthquake months.

She said the earthquake in Sichuan, China, had a devastating impact on the community there but the area was an example of a place that had actually gained tourism numbers with more than one million visitors during the last Chinese New Year celebrations.

GNS Science said after the 7.8 Dusky Sound quake in July that the stress on the southernmost (offshore) section of the Alpine Fault had increased. But a detailed study was needed to better understand the probability of a southern Alpine Fault earthquake being caused by the Dusky Sound quake.

- NZPA