Next San Fran quake could cause $25bn loss
The next large scale earthquake to hit the San Francisco Bay Area has the potential to be financially devastating, according to catastrophe management firm, RMS.
Despite a rise in earthquake risk in San Francisco, 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.
A worst-case, magnitude 7.9 earthquake on the San Andreas Fault could strike an urban centre with 32 times the destructive force of Loma Prieta, potentially causing commercial and residential property losses of 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, according to RMS.
“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.
According to RMS, the most likely location of the next big earthquake to impact the San Francisco Bay Area is on the Hayward Fault. It could reach a magnitude of 7.0 and produce $25 billion in insured loss across residential and commercial lines of business.
