The state-managed California Earthquake Authority (CEA) wants to increase the low percentage of homeowners now buying earthquake insurance. Presently, less than 15% obtain the coverage, down about 50% from the year after the Northridge Quake. Before Hurricane Katrina, that quake was the costliest disaster in the U.S., according to "Calif. May Lower Quake Insurance Rates in Wake of Katrina" (Insurance Journal, Sep. 25, 2005).
Under the CEA's propsed rate filing, prices for quake insurance would go down in most places in California, up in a few areas. Commissioner Garamendi argues that lower prices will increase the number of homeowners who buy the coverage. Commercial insurance trade associations argue that the prices are not conservative enough and will imperil the financial health of the CEA, according to the article.
According to the Southern California Earthquake Center (SCEC), a quake in the recently discovered Puente Hills fault under Los Angeles could result in thousands of deaths and $250 billion in damage, although it is an infrequent event. Major Losses of Up to $250 Billion Projected for Earthquakes on Puente Hills Fault Under Los Angeles. SCEC works closely with the CEA and private insurers and provides educational materials discussing issues of earthquake insurance availability, affordability and "take-up" rates. Earthquakes and Insurance, Then and Now
See also: USGS Response to an Urban Earthquake-Northridge '94
And: Insurance Information Institute - Earthquakes: Risk and Insurance Issues
Posted by dougsimpson at September 26, 2005 09:26 AM