NEWARK, Calif. - October 13, 2014 According to RMS, the world’s leading catastrophe risk management firm, earthquake risk in the San Francisco Bay Area is on the rise while earthquake insurance penetration statewide has dropped significantly since the Loma Prieta earthquake that rocked the Bay Area 25 years ago, causing nearly $6 billion in economic losses. As a result, the next “big one” has potential to be financially devastating to the Bay Area economy, according to RMS analysis.
A worst-case, magnitude 7.9 earthquake on the San Andreas Fault could strike an urban center with 32 times the destructive force of Loma Prieta, potentially causing commercial and residential property losses over $200 billion. Residential earthquake insurance penetration in California, which would be vital to facilitate rebuilding after an earthquake, has dropped by more than half since Loma Prieta, with only 10 percent of households currently covered. Without insurance, homeowners may walk away from their homes after an earthquake if the residual value of their property is less than the outstanding value of their mortgage. Even those with insurance are likely to struggle to meet high deductibles, potentially leading to significant blight and disrepair in badly damaged neighborhoods.
“The Bay Area has made significant progress in terms of infrastructure preparedness and retrofitting, but without significant earthquake insurance penetration to facilitate rebuilding, the recovery from a major earthquake will be considerably harder,” said Dr. Patricia Grossi, earthquake expert and senior director of model product management, RMS. “Now is the time for Bay Area residents to come together to develop innovative approaches and ensure resilience in the face of the next major earthquake.”
The magnitude 6.9 Loma Prieta earthquake on October 17, 1989 caused 63 deaths, injured 3,757 people, destroyed more than 11,000 homes leaving 12,000 individuals displaced and caused $6 billion in property damage.
It was an unusual event; while the earthquake was centered almost 50 miles from San Francisco, liquefaction of reclaimed land in parts of San Francisco and Oakland elevated the impact and proved a significant factor in the overall $6 billion in loss. Liquefaction from earthquakes still poses a significant threat to buildings situated around the San Francisco Bay.
There is a 63 percent chance that a magnitude 6.7 or larger earthquake will hit the Bay Area over the next 30 years, according to the United States Geological Survey. The next major earthquake could strike much closer to urban centers than Loma Prieta, with more destructive force.
According to RMS modeling, the most likely location of the next big earthquake to impact the San Francisco Bay area is on the Hayward fault, which could reach a magnitude of 7.0. The area is also at risk of an earthquake on one of the many other faults in the area. For example, an earthquake on the San Andreas fault could reach magnitude 7.9 could cause commercial and residential property losses surpassing $200 billion. A cluster of smaller earthquakes could also impact the area, which, sustained over months, could have serious implications for the local economy.
While the Bay Area has become more resilient to damage from shaking, liquefaction still presents a very major risk, in particular in low-lying parts of San Francisco and Oakland.
The risk for loss of life, property and prosperity are higher than ever in the San Francisco Bay Area. Since 1989, the population of the region has grown 25 percent, the value of residential property has sky rocketed 50 percent, reaching $1.2 trillion, and commercial activity has significantly expanded. The Bay Area is now the most productive economy in the U.S. with a gross domestic product of $535 billion, ranking 19th in the world compared to national economies.
While earthquake insurance penetration remains low, a magnitude 7.0 earthquake rupturing on the Hayward fault could produce $25 billion in insured loss across residential and commercial lines of business. Commercial earthquake policies provide cover for damage to buildings, contents and business interruption. Substantial claims could also arise under other lines of coverages, however, such as fire, workers compensation and even general liability.
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Newark, CA – September 24, 2020 – RMS, the world’s leading catastrophe risk solutions company, estimates that total U.S. insured losses from Hurricane Sally will be between US$2.0 and US$3.5 billion. The estimate includes losses to the National Flood Insurance Program (NFIP) of between US$400m and US$800m. U.S. insured loss estimates for Hurricane Sally (US$ billions): Wind & Surge Inland Flood NFIP Total 1.3 - 2.3 0.3 - 0.4 0.4 - 0.8 2.0 - 3.5 “Sally made landfall with much stronger winds than expected. While it weakened considerably as it moved inland, the slow-moving nature of the storm brought persistent wind and storm surge to much of the Gulf coastline, combined with heavy rainfall and widespread flooding to interior regions. Sally is another example of how hurricane damage can take many different forms”, said Jeff Waters, senior product manager, RMS North Atlantic Hurricane Models. This estimate includes wind, storm surge, and inland flood losses across parts of the Gulf and Florida regions, based on analysis of RMS ensemble footprints in Version 18.1 of the RMS North Atlantic Hurricane Models and estimates from the RMS U.S. Inland Flood HD Model. RMS ensemble footprints are reconstructions of Sally’s hazards that capture the uncertainties surrounding observed wind speeds and storm surge. Losses reflect property damage and business interruption to residential, commercial, industrial, and automobile lines of business. Estimates include post-event loss amplification (PLA) and non-modeled sources of loss. RMS expects the majority of insured losses will impact residential lines. The estimate also includes losses to the National Flood Insurance Program (NFIP), which RMS expects to reach US$400 million to US$800 million. NFIP losses were derived using an RMS view of NFIP exposure based on the 2019 policy-in-force data published by FEMA, the Version 18.1 North Atlantic Hurricane Models, and the U.S. Inland Flood HD Model. “We expect Sally to be a sizable event for the NFIP. The majority of NFIP take-up occurs in coastal counties, especially in the states most impacted by the hurricane, notably Alabama and Florida. However, the inland extent of heavy rainfall from this event means we’ll likely see NFIP losses stemming from inland flood as well,” said Rajkiran Vojjala, Vice President, Model Development. Sally made landfall near Gulf Shores, Alabama on Wednesday, September 16, 2020 as a Category 2 hurricane on the Saffir-Simpson Hurricane Wind Scale. At landfall, Sally produced sustained winds of 105 mph (170 km/h), according to the National Hurricane Center. Informed by a suite of real-time observational data sources, RMS HWind products estimated comparable winds at and just after landfall. The landfall location was also well-forecast by the HWind forecasting products. “In the days leading up to landfall, our HWind forecasts consistently provided clients with scenarios indicating a potential Alabama landfall location, even prior to the NHC official forecasts trending east away from New Orleans. This event is another strong validation point in demonstrating the predictive value of these products,” said Pete Dailey, Vice President, Model Development. In the 24-36 hours following landfall, Sally weakened quickly as it tracked further inland into Georgia and parts of the Carolinas, before being downgraded to a “remnant low” on September 17. Hurricane Sally was the eighteenth named storm of the 2020 North Atlantic hurricane season, the seventh hurricane, and the fourth U.S. landfalling hurricane of this very active season. Sally is the eighth named storm to make landfall in the contiguous U.S. so far in 2020, a new record for U.S. landfall activity as of mid-September. RMS industry loss estimates for landfalling U.S. hurricanes are comprehensive, reflecting modeled and non-modeled impacts from all major drivers of damage, including wind, storm surge, and inland flooding. ENDS The technology and data used in providing the information contained in this press release are based on the scientific data, mathematical and empirical models, and encoded experience of scientists and specialists. As with any model of physical systems, particularly those with low frequencies of occurrence and potentially high severity outcomes, the actual losses from catastrophic events may differ from the results of simulation analyses. RMS SPECIFICALLY DISCLAIMS ANY AND ALL RESPONSIBILITIES, OBLIGATIONS AND LIABILITY WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THE CONTENTS OF THIS INFORMATION OR USE THEREOF, INCLUDING ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL RMS (OR ITS PARENT, SUBSIDIARY, OR OTHER AFFILIATED COMPANIES) BE LIABLE FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THE CONTENTS OF THIS INFORMATION OR USE THEREOF. …
NEWARK, Calif. – September 22, 2020 – RMS, the world’s leading catastrophe risk company estimates insured losses for the Western U.S. will be between US$4.0 and US$8.0 billion. These losses reflect estimates as of September 20, 2020, and further escalation in losses are likely as many fires are still ongoing in California, Oregon, and Washington. RMS estimates insured losses from major wildfires in Northern California, Oregon, and Washington as follows (US$ billions): Regions Insured Losses as of September 20, 2020 Northern California 3.0 - 5.0 Oregon & Washington 1.0 - 3.0 Wildfires in the Western U.S. have led to over four million acres burned so far (2.5 million in Northern California and over 1.5 million in Oregon and Washington) and over 13,500 structures damaged or destroyed as of September 20, 2020. Michael Young, Vice President, Product Management said: “While this season is exceptionally noteworthy on many fronts, I want to highlight a silver lining: 30 to 60 percent of structures in many of these mega complex footprints actually survived the fire. This is because building science has identified many factors that increase the survivability of structures such as wildfire-resistant vents. We need to find bold ways to duplicate those measures at scale. If this is the new normal, we can’t afford not to embrace effective steps towards mitigation.” RMS estimates include losses from property damage, including evacuation and smoke damage, business interruption (BI) across residential, commercial, industrial lines, and additional living expenses (ALE). Smoke and evacuation are significant contributors to losses during the ongoing Western U.S. wildfires, contributing about 20 percent of losses in Northern California fires and about 35 percent in Oregon and Washington fires, respectively. The RMS loss estimate is based on detailed modeling of fire spread, ember accumulations, and smoke dispersion of the fires utilizing the RMS U.S. Wildfire HD Model, part of the suite of RMS North America Wildfire High-Definition (HD) Models, released in February 2019. The model covers the contiguous U.S. and explicitly simulates ember and smoke to support detailed analysis of the impact of a wildfire beyond historical fire perimeters. The model’s findings were supported by Damage Inspection Specialist (DINS) damage surveys for California Fires, published damage reports for Oregon and Washington fires, and the RMS U.S. Wildfire Industry Exposure Database. As many major fires are still active in these states, additional increases in loss are possible. Learn more about the RMS North America Wildfire HD Model here. ENDS The technology and data used in providing the information contained in this press release are based on the scientific data, mathematical and empirical models, and encoded experience of scientists and specialists. As with any model of physical systems, particularly those with low frequencies of occurrence and potentially high severity outcomes, the actual losses from catastrophic events may differ from the results of simulation analyses. RMS SPECIFICALLY DISCLAIMS ANY AND ALL RESPONSIBILITIES, OBLIGATIONS AND LIABILITY WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THE CONTENTS OF THIS INFORMATION OR USE THEREOF, INCLUDING ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL RMS (OR ITS PARENT, SUBSIDIARY, OR OTHER AFFILIATED COMPANIES) BE LIABLE FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THE CONTENTS OF THIS INFORMATION OR USE THEREOF. …