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.