Alaska insured earthquake losses limited
Insured losses from the magnitude 7.0 earthquake that struck Alaska on Nov. 30, 2018 are likely to be limited by a low earthquake insurance take-up rate (about 9-12 percent for homeowners and higher for businesses) and high deductibles (10-20 percent of policy limit), according to Morgan Stanley Research.
The epicentre of the earthquake was about 7 miles north of Anchorage and about 27 miles in depth. No fatality has been reported.
However, strong ground shaking caused widespread damage to infrastructures such as roads, bridges, and pipes and building contents, Morgan Stanley noted. USGS (US Geological Survey) estimates 50 percent probability of economic losses greater than $100 million and 18 percent chance of $1 billion or higher. At the same time, analysts noted that standard homeowners or commercial policies do not cover earthquake damage.
The strongest earthquake recorded in the US was the 1964 magnitude 9.2 quake (150x stronger than the recent Alaska event) near Anchorage, which caused $540 million economic losses and $45 million insured losses ($357 million in 2017 dollars but not adjusted for exposure growth).
Among the largest commercial property insurers in Alaska are State Farm (32 percent market share), Allstate (20 percent), USAA (18 percent), Liberty Mutual (9 percent), and Country Financial (8 percent), according to Morgan Stanley.
The latest earthquake adds to recent natural catastrophes such as hurricanes Florence and Michael, Asian typhoons, and California wildfires, which could support P&C pricing, the analysts noted.
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