Earthquakes and Tsunamis

WORLD

The deadliest earthquake in 2014 resulted from a magnitude 6.1 earthquake that hit Wenping in the Yunnan Province of China in August, with 731 people killed or missing. Economic losses totaled $5 billion, according to Swiss Re. There were a total of 15 catastrophic earthquakes in 2014, one of them in the United States, in South Napa, California. Insured losses from earthquakes and tsunamis were $313 million in 2014, higher than the $45 million in insured losses resulting from earthquakes in 2012 but far below 2011’s record $54 billion, according to Swiss Re.

The second largest earthquake in 2014 in terms of total damages was the August 6.0-magnitude quake in South Napa, California, that caused $700 million in total damage and $153 million in insured losses. 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, 2005-2014 (1)

(2014 $ millions)

YearWeather-related
natural catastrophes
Man-madeEarthquakesTotal
2005$123,018$6,593$284$129,895
200614,6855,9849520,764
200726,8406,59064034,069
200846,9099,09446456,467
200923,7644,59967229,036
201032,2125,18114,64052,032
201168,9806,25556,429131,664
201272,2356,0301,89480,159
201336,5317,8574644,434
201427,4376,95831334,708

(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 2014 dollars by Swiss Re.

Source: Swiss Re.

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THE TEN MOST COSTLY WORLD EARTHQUAKES AND TSUNAMIS BY INSURED LOSSES, 1980-2014 (1)

($ millions)

Losses when occurred
RankDateEventLocationOverallInsured (2)Fatalities
1Mar. 11, 2011Earthquake, tsunamiJapan: Aomori, Chiba, Fukushima, lbaraki, lwate, Miyagi, Tochigi, Tokyo, Yamagata$210,000$40,00015,880
2Feb. 22, 2011EarthquakeNew Zealand: Canterbury, Christchurch, Lyttelton24,00016,500185
3Jan. 17, 1994EarthquakeUSA: CA: Northridge, Los Angeles, San Femando Valley, Ventura, Orange44,00015,30061
4Feb. 27, 2010Earthquake, tsunamiChile: Concepcion, Metropolitana, Rancagua, Talca, Temuco, Valparaiso30,0008,000520
5Sep. 4, 2010EarthquakeNew Zealand: Canterbury, Christchurch, Avonside, Omihi, Timaru, Kaiapoi, Lyttelton10,0007,400NA
6Jan. 17, 1995EarthquakeJapan: Hyogo, Kobe, Osaka, Kyoto100,0003,0006,430
7Jun. 13, 2011EarthquakeNew Zealand: Canterbury, Christchurch, Lyttelton2,7002,1001
8May 20 and May 29, 2012Earthquake (series)Italy: Emilia-Romagna, San Felice del Panaro, Cavezzo, Rovereto di Novi, Carpi, Concordia16,0001,60018
9Dec. 26, 2004Earthquake, tsunamiSri Lanka, Indonesia, Thailand, India, Bangladesh, Myanmar, Maldives, Malaysia10,0001,000220,000
10Oct. 17, 1989EarthquakeUSA: CA: Loma Prieta, Santa Cruz, San Francisco, Oakland, Berkeley, Silicon Valley10,00096068

(1) As of January 2015. 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: © 2015 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 2014 dollars). It ranks as the fifth-costliest U.S. disaster, based on insured property losses (in 2013 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 11 earthquakes (which include landslides) in the United States in 2014, according to Munich Re. On August 24 a 6.0-magnitude earthquake struck South Napa, California, killing one person and causing $700 million in total damage and $150 million in insured losses, according to Munich Re.

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

($ millions)

Insured losses (2)
RankDateLocationOverall losses
when occurred
Dollars
when
occurred
In 2014
dollars (3)
Fatalities
1Jan. 17, 1994California: Northridge, Los Angeles, San Fernando Valley, Ventura, Orange$44,000$15,300$24,44061
2Apr. 18, 1906California: San Francisco, Santa Rosa, San Jose5241804,300 (4)3,000
3Oct. 17, 1989California: Loma Prieta, Santa Cruz, San Francisco, Oakland, Berkeley, Silicon Valley10,0009601,83068
4Feb. 28, 2001Washington: Olympia, Seattle, Tacoma; Oregon2,0003004001
5Mar. 27-28, 1964Alaska: Anchorage, Kodiak Island, Seward, Valdez, Portage, Whittier, Cordova, Homer, Seldovia54045340131
6Feb. 9, 1971California: San Fernando Valley, Los Angeles5533520065
7Oct. 1, 1987California: Los Angeles, Whittier360751608
8Aug. 24, 2014California: Napa, Vallejo, Solano, Sonoma, American Canyon7001501501
9Apr. 4, 2010California: San Diego, Calexico, El Centro, Los Angeles, Imperial; Arizona: Phoenix, Yuma150100110NA
10Sep. 3, 2000California: Napa805070NA

(1) Costliest U.S. earthquakes occurring from 1950 to 2014, 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 2014 dollars by Munich Re.
(4) Inflation-adjusted to 2014 dollars based on 1913 Bureau of Labor Statistics data (earliest year available).

NA=Data not available.

Source: © 2015 Munich Re, Geo Risks Research, NatCatSERVICE.

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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)

RankDateLocationMagnitudeInsured loss
(current exposures)
1Feb. 7, 1812New Madrid, MO7.7$112
2Apr. 18, 1906San Francisco, CA7.893
3Aug. 31, 1886Charleston, SC7.344
4Jun.  1, 1838San Francisco, CA7.430
5Jan. 17, 1994Northridge, CA6.723
6Oct. 21, 1868Hayward, CA7.023
7Jan. 9, 1857Fort Tejon, CA7.98
8Oct. 17, 1989Loma Prieta, CA6.37
9Mar. 10, 1933Long Beach, CA6.45
10Jul. 1, 1911Calaveras, CA6.44

(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)

RankGroup/companyDirect premiums written (1)Market share (2)
1California Earthquake Authority$573,96020.0%
2State Farm Mutual Automobile Insurance228,8988.0
3Zurich Insurance Group (3)217,9787.6
4American International Group150,8615.3
5Travelers Companies Inc.143,0225.0
6GeoVera Insurance Holdings Ltd.118,1284.1
7Liberty Mutual100,4963.5
8ACE Ltd.86,5563.0
9Swiss Re Ltd.84,2492.9
10Chubb Corp.58,9902.1

(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)

RankStateDirect premiums written ($000)
1California$1,636,448
2Washington157,949
3Missouri90,310
4Tennessee77,636
5Illinois63,616
6Oregon63,239
7New York44,211
8Kentucky41,366
9Utah38,977
10South Carolina36,702
11Indiana36,269
12Texas33,743
13Florida29,244
14Ohio28,777
15Vermont28,337
16Arkansas28,330
17Alaska24,973
18Nevada19,898
19Massachusetts19,809
20Mississippi18,174
21Virginia17,147
22New Jersey16,687
23Georgia15,964
24Pennsylvania14,892
25Oklahoma13,107
26North Carolina12,261
27Maryland11,728
28Hawaii11,602
29Alabama10,593
30Arizona10,150
31Colorado9,448
32Louisiana8,398
33Kansas7,602
34Michigan7,390
35Connecticut6,720
36Minnesota5,972
37Wisconsin5,546
38Iowa5,076
39Montana3,993
40Idaho3,441
41Wyoming2,944
42Nebraska2,670
43New Hampshire2,563
44D.C.2,513
45New Mexico2,376
46Rhode Island2,215
47Maine1,879
48West Virginia1,688
49North Dakota1,176
50Delaware1,110
51South Dakota662
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).

EARTHQUAKE INSURANCE, 2004-2013

($000)

YearNet premiums
written (1)
Annual percent
change
Combined
ratio (2)
Annual point
change (3)
2004$1,098,4414.7%48.6-7.4 pts.
20051,106,6710.750.92.3
20061,315,42318.940.4-10.5
20071,246,538-5.230.0-10.4
20081,259,8721.133.53.5
20091,288,3532.336.32.8
20101,443,59812.041.45.1
20111,467,3721.655.814.4
20121,593,4518.636.3-19.5
20131,586,985-0.430.3-6.0

(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.