A 7.8-magnitude earthquake struck Nepal on Saturday near the capital city of Katmandu, and the death toll has now exceeded 3,000 victims, according to BBC News.
The U.S. Geological Survey has placed preliminary estimates the costs of damages between $100 million and $10 billion, whereas IHS predicts that the recovery could exceed $5 billion, or 20% of Nepal’s gross domestic product (GDP).
"The standard of housing construction in Nepal is extremely low, which is why the damage to buildings has been extremely severe," Rajiv Biswas, chief economist, Asia-Pacific at HIS, told CNBC.
What is perhaps most unsettling about the earthquake, however, is the fact that scientists predicted it about a week prior at a convention in Kathmandu.
"It was sort of a nightmare waiting to happen," seismologist James Jackson told CNBC. "Physically and geologically what happened is exactly what we thought would happen.”
This earthquake may serve as a cautionary tale for the U.S. New research from the U.S. Geological Survey indicates that 143 million Americans live in an earthquake-prone area and potential losses could average $4.5 billion.
The report also found that eight states are experiencing “rapid earthquake growth,” largely as the result of oil and gas drilling. The damages in these states, which include Oklahoma, Colorado, Texas, New Mexico and others, could be exacerbated by the fact that these areas typically have less stringent building codes than the West Coast region.
The demand for earthquake insurance in the U.S. is rising, with the Insurance Information Institute reporting that total premiums in Oklahoma doubled between 2009 and 2013.
Still, many remain unprepared. Only 12% of Californian homeowners currently have some type of earthquake coverage, and that number drops to 6% nationwide.
This is quite the departure from a couple decades earlier, when 30% of Californians had earthquake insurance, partially because the 1994 Northridge quake inspired many to obtain policies.
The incident in Nepal may cause Americans to rethink their stance on earthquake insurance, though, for as Robert P. Hartwig, president of the Insurance Information Institute told WaPo in 2014, “nothing sells earthquake insurance like an earthquake.”
