California Earthquake Authority
Established by the California Legislature in 1996, the California Earthquake Authority (CEA) is a privately financed, publicly managed entity that helps California residents to protect themselves against earthquake loss. Today, the CEA is one of the world’s largest residential earthquake insurers. Acting through its 17 participating insurers, the CEA sells earthquake policies exclusively to homeowners, mobile home owners, condominium owners, and renters throughout the state. An updated overview by the Insurance Information Institute (I.I.I.) titled “California Earthquake Authority” explains how the CEA operates and the types of coverage it provides. The purchase of earthquake insurance by California policyholders is not mandatory. The percentage of policyholders buying the coverage appears to rise and fall depending on how long ago the last significant earthquake occurred. In 1996, about one-third of state homeowners purchased the coverage, compared to just 12 percent today. The CEA has a total claims-paying capacity of around $9.6 billion and is funded from policyholder premiums, contributions from and assessments on participating insurers, returns on invested funds, borrowed funds, and reinsurance (insurance for insurers).
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