Earthquakes
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EARTHQUAKES
Since 1900, earthquakes have occurred in 39 states and have caused damage in all 50. About 5,000 quakes can be felt each year. The earthquake and fire that devastated San Francisco on April 18, 1906 was one of the worst natural disasters in the United States. It produced insured losses of $235 million at the time, equivalent to $5.2 billion in 2007 dollars. A study by AIR Worldwide estimates the loss at $108 billion, were the quake to hit under today's economic and demographic conditions.
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California Earthquake Insurance Fact File
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THE TEN MOST COSTLY U.S. EARTHQUAKES
($ millions)
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Estimated property damage (1) |
Rank |
Year |
Location |
Magnitude |
Dollars when occurred |
In 2007 dollars (2) |
| 1 | 1994 | Northridge, CA | 6.7 | $13-$20,000 | $18-$28,000 |
| 2 | 1989 | San Francisco Bay area; Loma Prieta, CA | 6.9 | 7,000 | 11,702 |
| 3 | 1964 | Alaska and west coast of United States (tsunami damage from earthquake near Anchorage, Alaska) | 9.2 | 500 | 3,344 |
| 4 | 1971 | San Fernando, CA | 6.5 | 553 | 2,831 |
| 5 | 2001 | Washington, Oregon | 6.8 | 2,305 | 2,698 |
| 6 | 1987 | Southern California; primarily in Los Angeles–Pasadena–Whittier area | 5.9 | 358 | 653 |
| 7 | 1933 | Long Beach, CA | 6.3 | 40 | 638 |
| 8 | 1952 | Kern County, CA | 7.5 | 60 | 469 |
| 9 | 1992 | Southern California; Landers–Joshua Tree–Big Bear | 7.6 | 92 | 136 |
| 10 | 1992 | Northern California Coast; Petrolia–Eureka | 7.1 | 66 | 98 |
(1) Includes insured and uninsured losses.
(2) Adjusted to 2007 dollars by the Insurance Information Institute.
Source: U.S. Department of the Interior, U.S. Geological Survey; Munich Re; Insurance Information Institute. |
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The previous chart ranks historic earthquakes based on their total property losses, adjusted for inflation. The chart below uses a computer model to measure the estimated impact of historical quakes according to current exposures. The analysis, based on AIR Worldwide's U.S. earthquake model, makes use of the firm's property exposure database and takes into account the current number and value of exposed properties in 2005, when the study was conducted.
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ESTIMATED INSURED LOSSES FOR THE TOP TEN HISTORICAL
EARTHQUAKES BASED ON CURRENT EXPOSURES (1)
($ billions)
Rank |
Date |
Location |
Magnitude |
Insured loss (current exposures) |
| 1 | Apr. 18, 1906 | San Francisco, CA | 7.9 | $108 |
| 2 | Feb. 7, 1812 | New Madrid, MO | 7.7 | 88 |
| 3 | Aug. 31, 1886 | Charleston, SC | 7.3 | 38 |
| 4 | Jan. 9, 1857 | Fort Tejon, CA | 7.9 | 27 |
| 5 | Oct. 21, 1868 | Hayward, CA | 6.8 | 25 |
| 6 | Jan. 17, 1994 | Northridge, CA | 6.7 | 16 |
| 7 | Jan. 5, 1843 | Marked Tree, AR | 6.5 | 12 |
| 8 | Jun. 1, 1838 | San Francisco, CA | 7.2 | 11 |
| 9 | Oct. 12, 1877 | Portland, OR | 6.3 | 11 |
| 10 | Jul. 1, 1911 | San Jose, CA | 6.6 | 9 |
(1) Modeled loss to property, contents and direct business interruption and additional living expenses for residential, mobile home, commercial and auto exposures as of December 31, 2005. Losses include demand surge. Policy conditions and earthquake insurance take up rates are based on estimates by state insurance departments and client claims data.
Source: AIR Worldwide Corporation. |
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DEADLIEST EARTHQUAKES
On May 12 southwestern China was jolted by a severe earthquake with a preliminary estimate of magnitude 7.9. The epicenter was in a mountainous region outside Chengdu, capital of Sichuan Province. Forty-eight hours after the quake authorities were reporting that more than 13,000 were killed, but the death toll is expected to rise significantly. The quake is the most deadly natural disaster to hit China in the last 30 years. A 1976 earthquake in China killed 255,000 people, making it the world's most deadly earthquake, as tracked by Swiss Re. AIR Worldwide said that insured losses from the quake would be between $300 million and $1 billion and uninsured property damage would be about $20 billion. Eqecate estimated that economic damage from the quake will probably not exceed $75 billion.
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THE TEN WORST EARTHQUAKES IN TERMS OF VICTIMS (1)
Rank |
Victims |
Date |
Event/Magnitude (2) |
Place |
| 1 | 255,000 | 1976 | Earthquake (M 7.5) | China |
| 2 | 220,000 | 2004 | Earthquake (Mw 9.0), tsunami in Indian Ocean | Indonesia, Thailand et al. |
| 3 | 73,300 | 2005 | Earthquake (Mw 7.6); aftershocks, landslides | Pakistan, India, Afghanistan |
| 4 | 66,000 | 1970 | Earthquake (M 7.7); landslides | Peru |
| 5 | 40,000 | 1990 | Earthquake (M 7.7); landslides | Iran |
| 6 | 26,271 | 2003 | Earthquake (M 6.5) | Iran |
| 7 | 25,000 | 1978 | Earthquake (M 7.7) in Tabas | Iran |
| 8 | 25,000 | 1988 | Earthquake (M 6.9) | Armenia, ex "USSR" |
| 9 | 22,084 | 1976 | Earthquake (M 7.5) | Guatemala |
| 10 | 19,737 | 2001 | Earthquake (M 7.6) in Gujarat | India, Pakistan, Nepal et al. |
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(1) Based on Swiss Re's list of deadliest catastrophes, 1970-2007.
(2) M is general magnitude that indicates the strength of an earthquake at its epicentre. Mw measures the total energy released by an earthquake and is proportional to the size of the fracture surface and the displacement. The Richter magnitude ML is the maximum amplitude of the ground motion signal recorded on a standarized seismograph.
Source: Swiss Re, sigma, No. 1/2008. |
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EARTHQUAKE INSURANCE, 1999-2007
($000)
Year |
Net premiums written (1) |
Annual percent change |
Combined ratio (2) |
Annual point change (3) |
| 1999 | $730,494 | NA | 64.5 | NA |
| 2000 | 762,443 | 4.4% | 77.7 | 13.2 pts. |
| 2001 | 857,562 | 12.5 | 108.9 | 31.2 |
| 2002 | 999,455 | 16.5 | 86.6 | -22.3 |
| 2003 | 1,048,714 | 4.9 | 55.7 | -31.0 |
| 2004 | 1,098,441 | 4.7 | 48.4 | -7.3 |
| 2005 | 1,106,378 | 0.7 | 50.7 | 2.3 |
| 2006 | 1,315,494 | 18.9 | 40.1 | -10.6 |
| 2007 | 1,260,715 | -4.2 | 29.7 | -10.4 |
(1) After reinsurance transactions, excluding state funds.
(2) After dividends to policyholders. A drop in the combined ratio represents an improvement; an increase represents a deterioration.
(3) Calculated from unrounded data.
NA=Data not available.
Source: National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC. |
| - California's leading earthquake insurer, the state-run California Earthquake Authority (CEA), is also the largest provider of earthquake insurance in the U.S. The CEA, which is not included in the chart, accounted for $498.5 million in direct premiums written in 2007, down 0.6 percent from $501.4 million in 2006, according to A.M. Best. Direct premiums written for earthquake insurance totaled $2.04 billion in 2007, not including the CEA or $2.50 billion including the CEA.
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Standard homeowners, renters and business insurance policies do not cover damage from earthquakes. Coverage is available either in the form of an endorsement or as a separate policy. Earthquake insurance provides protection from the shaking and cracking that can destroy buildings and personal possessions. Coverage for other kinds of damage that may result from earthquakes, such as fire and water damage due to burst gas and water pipes, is provided by standard home and business insurance policies. Unlike flood insurance, earthquake coverage is available only from private insurance companies rather than from the federal government. In California, homeowners can also get coverage from the California Earthquake Authority (CEA), a privately funded, publicly managed organization. Only about 12 percent of California residents currently have earthquake coverage, down from over 33 percent in 1996, two years after the Northridge, California earthquake.
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EARTHQUAKE INSURANCE, DIRECT PREMIUMS WRITTEN BY STATE, 2006 (1)
($000)
Rank |
State |
Direct premiums written |
| 1 | California | $1,062,083 |
| 2 | Washington | 117,912 |
| 3 | Missouri | 78,431 |
| 4 | Tennessee | 57,818 |
| 5 | Oregon | 52,176 |
| 6 | Illinois | 46,052 |
| 7 | New York | 37,786 |
| 8 | Kentucky | 35,719 |
| 9 | Florida | 33,929 |
| 10 | Indiana | 31,154 |
| 11 | Ohio | 29,452 |
| 12 | South Carolina | 29,069 |
| 13 | Texas | 28,825 |
| 14 | Utah | 24,562 |
| 15 | Arkansas | 17,399 |
| 16 | Massachusetts | 16,700 |
| 17 | Alaska | 16,396 |
| 18 | Mississippi | 15,942 |
| 19 | New Jersey | 15,731 |
| 20 | Georgia | 15,523 |
| 21 | Pennsylvania | 14,057 |
| 22 | Nevada | 12,855 |
| 23 | Virginia | 10,901 |
| 24 | North Carolina | 10,170 |
| 25 | Colorado | 8,730 |
| 26 | Maryland | 8,723 |
| 27 | Alabama | 7,875 |
| 28 | Hawaii | 7,583 |
| 29 | Michigan | 7,368 |
| 30 | Arizona | 7,201 |
| 31 | Louisiana | 6,369 |
| 32 | Connecticut | 5,867 |
| 33 | Kansas | 4,859 |
| 34 | Oklahoma | 4,579 |
| 35 | Minnesota | 3,931 |
| 36 | Wisconsin | 3,815 |
| 37 | Iowa | 3,290 |
| 38 | Montana | 3,012 |
| 39 | Nebraska | 2,778 |
| 40 | Idaho | 2,617 |
| 41 | Rhode Island | 2,318 |
| 42 | D.C. | 2,287 |
| 43 | Wyoming | 2,276 |
| 44 | New Mexico | 2,175 |
| 45 | New Hampshire | 1,949 |
| 46 | West Virginia | 1,554 |
| 47 | Maine | 1,464 |
| 48 | Delaware | 1,352 |
| 49 | Vermont | 1,191 |
| 50 | South Dakota | 476 |
| 51 | North Dakota | 239 |
| | United States | 1,916,523 |
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(1) Excludes state funds.
Source: National Association of Insurance Commissioners (NAIC) Annual Statement Database, via Highline Data, LLC. Copyrighted information. No portion of this work may be copied or redistributed without the express written permission of Highline Data, LLC. |
| - The state-run California Earthquake Authority (CEA), the largest provider of earthquake insurance in California, is not included in this chart. The CEA accounted for $454.5 million in premiums written in 2006, down 9.7 percent from $503.4 million in 2005.
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