Earthquakes and Tsunamis

Earthquakes and Tsunamis

WORLD

The largest insured earthquake loss in 2013 resulted from a magnitude 7.0 earthquake that hit Lushan in the Sichuan Province of China in April, costing $25 million in insured losses and $6.8 billion in total damage, according to Swiss Re. There were a total of 12 catastrophic earthquakes in 2013, none of them in the United States. Insured losses from earthquakes and tsunamis were $45 million in 2013, far below 2011’s record $54 billion, according to Swiss Re.

The second largest earthquake in 2013, in terms of insured damages, was the October quake in the Philippines that caused $20 million in insured damages in Catigbian. On March 11, 2011 a devastating tsunami hit the coast of northeast Japan, triggered by a powerful earthquake approximately 80 miles offshore. The quake and tsunami caused $35.7 billion in insured damages, according to Swiss Re. Also, early in 2011, a powerful earthquake struck Christchurch, New Zealand, resulting in $15.3 billion in insured damages. The Japan and New Zealand quakes are among the 10 costliest world earthquakes and tsunamis, based on insured damages, according to Munich Re (see table).

 

WORLD INSURED CATASTROPHE LOSSES, 2004-2013 (1)

(2013 $ millions)

  Weather-related
natural catastrophes
Earthquakes/
tsunamis
Man-made
disasters
Total
2004 $51,954 $3,278 $4,221 $59,453
2005 120,755 279 6,559 127,594
2006 14,293 94 5,897 20,284
2007 25,530 548 6,536 32,614
2008 45,196 456 9,086 54,739
2009 23,330 662 4,575 28,568
2010 30,601 14,415 5,101 50,118
2011 67,281 55,562 6,180 129,024
2012 70,493 1,865 6,049 78,408
2013 37,002 45 7,870 44,917

(1) In order to maintain comparability of the data over the course of time, the minimum threshold for losses was adjusted annually to compensate for inflation in the United Sates. Adjusted to 2013 dollars by Swiss Re.

Source: Swiss Re.

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THE TEN MOST COSTLY WORLD EARTHQUAKES AND TSUNAMIS BY INSURED LOSSES, 1980-2013 (1)

($ millions)

      Losses when occurred   
Rank Date Location Overall Insured (2) Fatalities
1 Mar. 11, 2011 Japan: Honshu, Aomori, Tohoku; Miyagi, Sendai; Fukushima, Mito; Ibaraki;
Tochigi, Utsunomiya. Includes tsunami.
$210,000 $40,000 15,880
2 Jan. 17, 1994 USA: CA: Northridge, Los Angeles, San Fernando Valley, Ventura, Orange 44,000 15,300 61
3 Feb. 22, 2011 New Zealand: South Island, Canterbury, Christchurch, Lyttelton 20,000 14,600 185
4 Feb. 27, 2010 Chile: Bio Bio, Concepcion, Talcahuano, Coronel, Dichato, Chillan; Del Maule, Talca, Curico. Includes tsunami. 30,000 8,000 520
5 Sep. 4, 2010 New Zealand: Canterbury, Christchurch, Avonside, Omihi, Timaru, Kaiapoi, Lyttelton 7,400 5,900 NA 
6 Jan. 17, 1995 Japan: Prefecture Hyogo, Kobe, Osaka, Kyoto 100,000 3,000 6,430
7 Jun. 13, 2011 New Zealand: Canterbury, Christchurch, Lyttelton 2,500 2,000 1
8 May 5 and May 29, 2012 Italy: Emilia-Romagna, San Felice del Panaro, Cavezzo, Rovereto di Novi, Carpi, Concordia, Bologna. Multiple earthquakes. 16,000 1,600 18
9 Dec. 26, 2004 Sri Lanka: Indonesia; Thailand; India; Bangladesh; Myanmar; Maldives; Malaysia. Multiple earthquakes, includes tsunami. 10,000 1,000 220,000
10 Oct. 17, 1989 USA: CA: Loma Prieta, Santa Cruz, San Francisco, Oakland, Berkeley, Silicon Valley 10,000 960 68

(1) As of February 2014. Ranked on insured losses when occurred.
(2) Based on property losses including, if applicable, agricultural, offshore, marine, aviation and National Flood Insurance Program losses in the United States and may differ from data shown elsewhere.

NA=Data not available.

Source: © 2014 Munich Re, Geo Risks Research, NatCatSERVICE.

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UNITED STATES

The costliest U.S. earthquake, the 1994 Northridge quake, caused $15.3 billion in insured damages when it occurred (about $24 billion in 2013 dollars). It ranks as the fifth-costliest U.S. disaster, based on insured property losses (in 2012 dollars), topped only by Hurricane Katrina, the attacks on the World Trade Center, Hurricane Andrew and Superstorm Sandy. Eight of the costliest U.S. quakes, based on inflation-adjusted insured losses, were in California, according to Munich Re. There were six earthquakes in the United States in 2013 which caused only minor damage, according to Munich Re.

 

THE TEN MOST COSTLY U.S. EARTHQUAKES BY INFLATION-ADJUSTED INSURED LOSSES (1)

($ millions)

        Insured losses (2)  
Rank Date Location Overall losses when occurred Dollars when occurred In 2013 dollars (3) Fatalities
1 Jan. 17, 1994 California: Northridge, Los Angeles, San Fernando Valley, Ventura, Orange $44,000 $15,300 $24,050 61
2 Apr. 18, 1906 California: San Francisco, Santa Rosa, San Jose 524 180 4,240 (4) 3,000
3 Oct. 17, 1989 California: Loma Prieta, Santa Cruz, San Francisco, Oakland, Berkeley, Silicon Valley 10,000 960 1,800 68
4 Feb. 28, 2001 Washington: Olympia, Seattle, Tacoma; Oregon 2,000 300 395 1
5 Mar. 27-28, 1964 Alaska: Anchorage, Kodiak Island, Seward, Valdez, Portage, Whittier, Cordova, Homer, Seldovia; Hawaii; includes tsunami 540 45 340 131
6 Feb. 9, 1971 California: San Fernando Valley, Los Angeles 553 35 200 65
7 Oct. 1, 1987 California: Los Angeles, Whittier 360 75 155 8
8 Apr. 4, 2010 California: San Diego, Calexico, El Centro, Los Angeles, Imperial; Arizona: Phoenix, Yuma 150 100 105 NA
9 Sep. 3, 2000 California: Napa 80 50 68 NA
10 Jun. 28, 1992 California: San Bernardino 100 40 66 1

(1) Costliest U.S. earthquakes occurring from 1950 to 2013, based on insured losses when occurred. Includes the 1906 San Francisco, California, earthquake, for which reliable insured losses are available.
(2) Based on property losses including, if applicable, agricultural, offshore, marine, aviation and National Flood Insurance Program losses in the United States and may differ from data shown elsewhere.
(3) Inflation-adjusted to 2013 dollars by Munich Re.
(4) Inflation-adjusted to 2013 dollars based on 1913 Bureau of Labor Statistics data (earliest year available).

NA=Data not available.

Source: © 2014 Munich Re, Geo Risks Research, NatCatSERVICE.

 

The previous chart ranks historic earthquakes based on their total insured 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, conducted in 2012, is based on AIR Worldwide's U.S. earthquake model. It makes use of the firm's property exposure database and takes into account the current number and value of exposed properties.

 

ESTIMATED INSURED LOSSES FOR THE TOP TEN HISTORICAL EARTHQUAKES BASED ON CURRENT EXPOSURES (1)

($ billions)

Rank Date Location Magnitude Insured loss
(current exposures)
1 Feb. 7, 1812 New Madrid, MO 7.7 $112
2 Apr. 18, 1906 San Francisco, CA 7.8 93
3 Aug. 31, 1886 Charleston, SC 7.3 44
4 Jun.  1, 1838 San Francisco, CA 7.4 30
5 Jan. 17, 1994 Northridge, CA 6.7 23
6 Oct. 21, 1868 Hayward, CA 7.0 23
7 Jan. 9, 1857 Fort Tejon, CA 7.9 8
8 Oct. 17, 1989 Loma Prieta, CA 6.3 7
9 Mar. 10, 1933 Long Beach, CA 6.4 5
10 Jul. 1, 1911 Calaveras, CA 6.4 4

(1) Modeled loss to property, contents, business interruption and additional living expenses for residential, mobile home, commercial and auto exposures as of December 31, 2011. Losses include demand surge and fire following earthquake. Policy conditions and earthquake insurance take-up rates are based on estimates by state insurance departments and client claims data.

Source: AIR Worldwide Corporation.

 

 

TOP TEN WRITERS OF EARTHQUAKE INSURANCE BY DIRECT PREMIUMS WRITTEN, 2013

($000)

Rank Group/company Direct premiums written (1) Market share (2)
1 California Earthquake Authority $573,960 20.0%
2 State Farm Mutual Automobile Insurance 228,898 8.0
3 Zurich Insurance Group (3) 217,978 7.6
4 American International Group 150,861 5.3
5 Travelers Companies Inc. 143,022 5.0
6 GeoVera Insurance Holdings Ltd. 118,128 4.1
7 Liberty Mutual 100,496 3.5
8 ACE Ltd. 86,556 3.0
9 Swiss Re Ltd. 84,249 2.9
10 Chubb Corp. 58,990 2.1

(1) Before reinsurance transactions, includes state funds.
(2) Based on U.S. total, includes territories.
(3) Data for Farmers Insurance Group of Companies and Zurich Financial Group (which owns Farmers' management company) are reported separately by SNL Financial.

Source: SNL Financial LC.

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EARTHQUAKE INSURANCE

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. Earthquake coverage is available mostly from private insurance companies. 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 about 30 percent in 1996, two years after the Northridge, California, earthquake.

Seven percent of American homeowners responding to a 2014 poll by the Insurance Information Institute said they have earthquake insurance, either as an endorsement to their homeowners policy or as a separate policy, down from 10 percent in 2013 and 13 percent in 2012. Homeowners in the West were most likely to buy earthquake coverage,10 percent; followed by the Midwest, 7 percent; the South, 6 percent; and the Northeast, 2 percent. The survey also found that 11 percent of people earning $100,000 or more a year said they have earthquake insurance, a slightly higher percentage than any other income group.

 

EARTHQUAKE INSURANCE, DIRECT PREMIUMS WRITTEN BY STATE, 2013 (1)

($000)

Rank State Direct premiums written ($000)
1 California $1,636,448
2 Washington 157,949
3 Missouri 90,310
4 Tennessee 77,636
5 Illinois 63,616
6 Oregon 63,239
7 New York 44,211
8 Kentucky 41,366
9 Utah 38,977
10 South Carolina 36,702
11 Indiana 36,269
12 Texas 33,743
13 Florida 29,244
14 Ohio 28,777
15 Vermont 28,337
16 Arkansas 28,330
17 Alaska 24,973
18 Nevada 19,898
19 Massachusetts 19,809
20 Mississippi 18,174
21 Virginia 17,147
22 New Jersey 16,687
23 Georgia 15,964
24 Pennsylvania 14,892
25 Oklahoma 13,107
26 North Carolina 12,261
27 Maryland 11,728
28 Hawaii 11,602
29 Alabama 10,593
30 Arizona 10,150
31 Colorado 9,448
32 Louisiana 8,398
33 Kansas 7,602
34 Michigan 7,390
35 Connecticut 6,720
36 Minnesota 5,972
37 Wisconsin 5,546
38 Iowa 5,076
39 Montana 3,993
40 Idaho 3,441
41 Wyoming 2,944
42 Nebraska 2,670
43 New Hampshire 2,563
44 D.C. 2,513
45 New Mexico 2,376
46 Rhode Island 2,215
47 Maine 1,879
48 West Virginia 1,688
49 North Dakota 1,176
50 Delaware 1,110
51 South Dakota 662
  United States $2,706,844

(1) Includes the California Earthquake Authority, a state fund.

Source: SNL Financial LC.

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  • Earthquake insurance rose from $2.1 billion in 2012 to $2.7 billion in 2013.
  • California had the largest amount of earthquake premiums in 2013, at $1.6 billion, accounting for 61 percent of U.S. earthquake insurance premiums written. This figure includes the state-run California Earthquake Authority, the largest provider of earthquake insurance in California. The next highest ranking states were Washington state (6 percent of premiums) Missouri (3 percent), Tennessee (3 percent) and Illinois (2 percent).

CALIFORNIA EARTHQUAKE INSURANCE FACT FILE

Download/View File: Adobe Acrobat File (PDF File) (51 K)

 

EARTHQUAKE INSURANCE, 2004-2013

($000)

Year Net premiums
written (1)
Annual percent
change
Combined
ratio (2)
Annual point
change (3)
2004 $1,098,441 4.7% 48.6 -7.4 pts.
2005 1,106,671 0.7 50.9 2.3
2006 1,315,423 18.9 40.4 -10.5
2007 1,246,538 -5.2 30.0 -10.4
2008 1,259,872 1.1 33.5 3.5
2009 1,288,353 2.3 36.3 2.8
2010 1,443,598 12.0 41.4 5.1
2011 1,467,372 1.6 55.8 14.4
2012 1,593,451 8.6 36.3 -19.5
2013 1,586,985 -0.4 30.3 -6.0

(1) After reinsurance transactions, excludes 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.

Source: SNL Financial LC.

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