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 Man-made Total
2003 $22,039 $551 $4,141 $26,731
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 Event Location Overall Insured (2) Fatalities
1 Mar. 11, 2011 Earthquake, tsunami Japan: Honshu, Aomori, Tohoku; Miyagi,
Sendai; Fukushima, Mito; Ibaraki; Tochigi,
Utsunomiya. Includes tsunami.
$210,000 $40,000 15,880
2 Jan. 17, 1994 Earthquake USA: CA: Northridge, Los Angeles, San Fernando Valley, Ventura, Orange 44,000 15,300 61
3 Feb. 22, 2011 Earthquake New Zealand: South Island, Canterbury, Christchurch, Lyttelton 20,000 14,600 185
4 Feb. 27, 2010 Earthquake, tsunami Chile: Bio Bio, Concepcion, Talcahuano, Coronel, Dichato, Chillan; Del Maule, Talca, Curico. Includes tsunami. 30,000 8,000 520
5 Sep. 4, 2010 Earthquake New Zealand: Canterbury, Christchurch, Avonside, Omihi, Timaru, Kaiapoi, Lyttelton 7,400 5,900 NA 
6 Jan. 17, 1995 Earthquake Japan: Prefecture Hyogo, Kobe, Osaka, Kyoto 100,000 3,000 6,430
7 Jun. 13, 2011 Earthquake New Zealand: Canterbury, Christchurch, Lyttelton 2,500 2,000 1
8 May 5 and May 29, 2012 Earthquake (series) Italy: Emilia-Romagna, San Felice del Panaro, Cavezzo, Rovereto di Novi, Carpi, Concordia, Bologna 16,000 1,600 18
9 Dec. 26, 2004 Earthquake, tsunami Sri Lanka; Indonesia; Thailand; India; Bangladesh; Myanmar; Maldives; Malaysia. Includes tsunami. 10,000 1,000 220,000
10 Oct. 17, 1989 Earthquake USA: CA: Loma Prieta, Santa Cruz, San Francisco, Oakland, Berkeley, Silicon Valley 10,000 960 68

(1) As of February 2014.
(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 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, and 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, 2012

($000)

Rank Group/company Direct premiums written (1) Market share (2)
1 California Earthquake Authority $566,664 19.9%
2 State Farm Mutual Automobile Insurance 231,877 8.1
3 Zurich Insurance Group Ltd. (3) 193,214 6.8
4 American International Group 183,585 6.5
5 Travelers Companies Inc. 137,800 4.8
6 GeoVera Insurance Holdings Ltd. 121,021 4.3
7 AXIS Capital Holdings Ltd. 102,776 3.6
8 Liberty Mutual 93,982 3.3
9 ACE Ltd. 78,917 2.8
10 Swiss Re Ltd. 65,725 2.3

(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 LC.

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.

Ten percent of homeowners responding to a 2013 poll by the Insurance Information Institute said they have earthquake insurance. Homeowners in the West were most likely to buy earthquake coverage, 22 percent; followed by the Midwest, 11 percent; the South, 6 percent; and the Northeast, 5 percent. The survey also found that 18 percent of people earning $100,000 or more a year said they have earthquake insurance, a slightly higher percentage than any other income group. See page __ for information on earthquake insurance losses.

 

EARTHQUAKE INSURANCE, DIRECT PREMIUMS WRITTEN BY STATE, 2012 (1)

($000)

Rank State Direct premiums written
1 California $1,031,393
2 Washington 146,248
3 Missouri 87,104
4 Tennessee 74,176
5 Illinois 63,655
6 Oregon 57,250
7 New York 40,623
8 Kentucky 40,003
9 Texas 39,903
10 South Carolina 35,321
11 Indiana 34,564
12 Utah 34,546
13 Florida 32,106
14 Ohio 29,328
15 Vermont 28,328
16 Arkansas 26,882
17 Alaska 25,216
18 Nevada 19,195
19 Mississippi 17,152
20 Massachusetts 17,118
21 Georgia 16,296
22 Pennsylvania 16,150
23 Virginia 15,717
24 New Jersey 15,141
25 Oklahoma 11,634
26 North Carolina 11,556
27 Colorado 10,237
28 Hawaii 10,213
29 Maryland 9,635
30 Louisiana 9,536
31 Arizona 8,963
32 Alabama 8,952
33 Michigan 8,323
34 Kansas 7,173
35 Connecticut 6,782
36 Minnesota 6,070
37 Wisconsin 6,069
38 Iowa 5,090
39 Montana 4,195
40 Idaho 2,965
41 Wyoming 2,948
42 Nebraska 2,656
43 New Hampshire 2,570
44 D.C. 2,349
45 New Mexico 2,317
46 West Virginia 1,933
47 Maine 1,633
48 Rhode Island 1,430
49 Delaware 1,146
50 North Dakota 762
51 South Dakota 687
  United States $2,091,239

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

Source: SNL Financial LC.

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  • Earthquake insurance dropped from $2.6 billion in 2011 to $2.1 billion in 2012.
  • California had the largest amount of earthquake premiums in 2012, at $1.0 billion, accounting for 49 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 (7 percent of premiums) Missouri (4 percent), Tennessee (4 percent) and Illinois (3 percent).

CALIFORNIA EARTHQUAKE INSURANCE FACT FILE

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

 

EARTHQUAKE INSURANCE, 2003-2012

($000)

Year Net premiums written (1) Annual percent change Combined ratio (2) Annual point change (3)
2003 $1,048,714 5.9% 55.9 -31.0 pts.
2004 1,098,441 4.7 48.6 -7.4
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 1,565,626 6.7 36.5 -19.3

(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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