NAIC Earthquake Study Group

During the March 31, 2008 meeting of the National Association of Insurance Commissioners (“NAIC”) Property and Casualty Insurance Committee (“Committee”), Committee Chair Florida Insurance Commissioner Kevin McCarty announced the formation of an Earthquake Study Group that will report to the Committee.

Director Michael McRaith of Illinois agreed to chair the Study Group.

To be added to the NAIC’s interested parties list regarding this project, please contact:

Pam Simpson
NAIC
(816) 783-8232
(816) 460-7425
psimpson@naic.org

An article from National Underwriter regarding earthquake study is reprinted below.

 

Should you have any questions or comments, please do not hesitate to contact this office.

 

USGS Study Will Factor Into Earthquake Rates

BY MARK E. RUQUET
NU Online News Service, April 15, 3:32 p.m. EDT

California ’s earthquake insurer said a government study, finding a high probability of a major earthquake hitting the state in the next 30 years, will be factored into the rates it charges.

California Earthquake Authority (CEA) said it would use the data released yesterday by the U.S. Geological Survey “in determining insurance rates and the most accurate prices for consumers.”

The CEA, the state authorized underwriter of residential earthquake insurance, called the study “the first statewide, uniform scientific system to determine the probability of earthquakes.”

“Having uniform science available when determining earthquake rates represents real progress,” said CEA Chief Executive Officer Glenn Pomeroy in a statement. “It allows us to more accurately price our product for the customer.”

He added that the hazard hasn’t changed, just the understanding of the risk.

The study, titled “The Uniform California Earthquake Rupture Forecast, Version 2,” was done in collaboration with the California Geological Survey and the Southern California Earthquake Center. The purpose of the study was to create a statewide uniform map to model the probability of earthquakes that could be used by the CEA in setting rates.

The study says the state has a 99 percent chance of having a magnitude 6.7 or larger earthquake within the next 30 years.

Likelihood of a magnitude 7.5 or greater earthquake over the next 30 years was put at 46 percent, and that quake is most likely in the southern part of the state.

The probability of a magnitude 6.7 or larger earthquake over the next 30 years hitting the Los Angeles area stands at 67 percent, and 63 percent for the San Francisco Bay area.

For the entire state, the fault with the highest probability of generating at least one magnitude 6.7 quake or larger is the southern San Andres, standing at 59 percent likelihood over the next 30 years.

“This is a welcome addition to the body of knowledge out there,” noted Sam Sorich, president of the Association of California Insurance Companies and vice president, Western Region, for the Property Casualty Insurers Association of America.

He noted that the comprehensive nature of the study, the inclusion of the entire state instead of portions, which was the case in the past, will allow for better risk analysis.

“We now have better information as to where the risks are, and this will help to better assess the risk exposures and the level of risk,” he said.