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NU Online News Service, Oct. 16, 11:55 a.m. EDT
A 7.2 magnitude earthquake along the Peninsula segment of the San Andreas Fault in the San Francisco area could cause a $19 billion insured loss, a modeling firm estimates.
Newark, Calif.-based Risk Management Solutions outlined this and other quake exposures in its upcoming report marking the Oct. 17 20th anniversary of the Loma Prieta Earthquake.
That event struck the San Francisco Bay area with a 6.9-magnitude earthquake.
RMS said its report, in addition to exploring the current earthquake risk in the San Francisco Bay area, also will examine the role of the California Earthquake Authority (CEA) in the recovery from a major event and the implications of default rates in the California residential real estate market on overall impacts from a major event.
Preliminary findings from the report are that a 7.2-level quake would see $4 billion of loss coming from residential damage, with the remaining $12 billion attributed to commercial losses.
RMS said that currently, the residential earthquake insurance take-up rate is estimated at 12 percent across California, and if a take-up rate of 36 percent is considered (the highest take-up rate over the past 20 years, after the 1994 Northridge Earthquake), the portion of residential losses covered by insurance policies would increase to nearly $14 billion.
The report also details:
• The first generation of catastrophe models, as well as the advances in the art and science of catastrophe modeling since the inception of the earthquake modeling industry in 1989.
• The impacts of the potential changes to the California Earthquake Authority policy coverages on insured losses.
The report will be released at www.rms.com.