Of all the sundry worries that vex us every day, annihilation by celestial object is fairly low on the list. The same can’t be said of the insurance industry, which knows it could be wiped out if we ever got another Tunguska event of 1908. If something similarly destructive happened in the skies above New York, what sort of price tag could we be looking at? Risk Management Solutions Inc. is glad you asked:
Their report, “Comet and Asteroid Risk: An Analysis of the 1908 Tunguska Event,” predicts if a medium-sized comet exploded over the borough of Manhattan, the damages would be massive. With the damage footprint encompassing the outer boroughs and Northern New Jersey, total losses may well top $1 trillion.
“Total economic exposure measures $760 billion between the outer and inner contours of the footprint, and $1.38 trillion inside the inner contour,” the report states. “As a result, property losses are estimated at approximately $1.19 trillion.”
Fortunately, the study notes earth-impacting objects of appreciable size are exceedingly rare, estimating a mean return period of 1,000 years (range from 400 to 1,800 years) for collisions with objects similar in size to the 1908 Tunguska event. What’s more, with oceans covering 70% of the earth’s surface, the odds of a direct strike on a metropolitan area are further reduced. Yet, no matter how remote the possibility of such an event insurers need to take precautions.
Those precautions basically boil down to spreading the risk, by making sure no single metropolis carries too many policies. But a question: wouldn’t an asteroid strike qualify as a proverbial “act of God,” and thus not be covered by basic homeowner’s insurance? Are the likes of RMS proposing a surcharge for Tunguska insurance? And if so, which ultimately has better odds of paying out—asteroid coverage, or a Powerball ticket? We’re actually leaning toward the latter, at least if you factor in the cost—we presume Tunguska insurance will run more than $1 per lifetime.
jackal // Nov 5, 2009 at 5:44 pm
I’d suspect a civilization-altering major asteroid/comet hitting anywhere on Earth might be more probable than a relatively small hit directly on a major metropolitan area. ~0.6% of the total surface area of the earth is considered ‘built-up’ (includes towns, villages etc), so this seems possible.
In that case, it’s perhaps likely there won’t be anyone to pay out to (or a financial system) so the insurance company’s likelihood of actual payout is lowered, ie: its more probable if the city you’re insuring for asteroids is wiped out that the rest of us are screwed too.
Great scam idea though, sell supernova and/or Gamma-Ray Burst insurance! Protect yourself against the damage from rogue stars..
Brendan I. Koerner // Nov 5, 2009 at 5:52 pm
Indeed, the more I read this post, the more I wish I’d written a more skeptical take. You’re right–this can only be a scam.
I’d still be curious to compare the odds here to Powerball, though. (Factoring in the policy vs. ticket prices, too.) Perhaps a math project for next week, when I’m off deadline.
Jordan // Nov 6, 2009 at 11:00 am
In a sense we’re already paying for a certain type of insurance in the form of NASA’s system for tracking near-earth asteroids. Honestly, I have a bit more faith in that paying off in the long run.
Brendan I. Koerner // Nov 6, 2009 at 8:28 pm
I remember how “knocking astroids askew” was on the list of peaceful uses for nuclear weapons. I’m sure the NASA and/or military have something in their back pocket, just in case.