Just 5% of Napa County California residents have earthquake insurance: Impact Forecasting

Impact Forecasting’s Global Catastrophe Recap report for August 2014 indicates that just one in 20 people living in Napa County – the site of the strongest earthquake to strike the San Francisco Bay Area in 25 years – have quake insurance.

Napa County has a residential earthquake insurance penetration rate of 5.3% compared to an average of approximately 10% seen in surrounding counties, notes a press release Friday from Impact Forecasting, the catastrophe model development centre of excellence at Aon Benfield, the global reinsurance intermediary and capital advisor of Aon plc.

The magnitude-6.0 tremor – with an epicentre located 6.0 kilometres northwest of American Canyon, California – struck on the morning of Aug. 24, injuring at least 258 people and causing widespread damage to property, infrastructure and wineries, the press release states. In the city of Napa alone, at least 1,120 homes and other buildings were structurally damaged.

Total economic losses from the event are expected to minimally reach US$2.0 billion, with insured losses likely to be in the hundreds of millions of dollars as a result of low residential earthquake insurance penetration in Napa County and the locality, notes the report.

“Residential earthquake insurance penetration rates have gradually lowered in California during the past two decades from 33% in 1996 to roughly 10% today, and the Aug. 24 Napa County event serves as a reminder of the unpredictability and costly impacts of the peril,” Steve Bowen, associate director and meteorologist within Aon Benfield’s Impact Forecasting team, says in the statement. “While not expected to be as costly to insurers as the Northridge event in 1994, and possibly Loma Prieta in 1989, the Napa event proves the need of consistently analyzing the risks associated with U.S. earthquakes through such avenues as catastrophe modelling,” Bowen emphasizes.

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The Global Catastrophe Recap report, which reviews the natural disaster perils that occurred worldwide during August, notes that earthquake events were also recorded in Peru, Ecuador, Iran, Algeria, South Africa and China.

The last – a USGS-registered magnitude-6.1 earthquake that struck Yunnan Province in southwest China on Aug. 3 – claimed the lives of at least 617 people, injured more than 3,143 others, and has total economic losses forecast to be at least US$6.3 billion. China’s Ministry of Civil Affairs has indicated 25,800-plus homes collapsed and an additional 200,000 sustained varying levels of damage.

Beyond earthquakes, there were a great number of water-related events.

The report cites the heavy rain and thunderstorms in parts of Ontario on Aug. 4 that led to flooding. “The most substantial damage was recorded in the town of Burlington, where 2,300 homes were inundated by floodwaters following 191 millimetres of rain in a matter of hours,” the report states. Total economic losses were estimated at $275 million, and Insurance Bureau of Canada has cited insured losses at $90 million, it adds.

The report also cites the thunderstorms that swept across Alberta on Aug. 7-8, causing extensive property and automobile damage in Airdie and surrounding communities. “Local officials estimated that 75% of all cars in Airdrie were damaged, and hundreds of homes had shattered windows and punctured roofs due to the tennis ball-sized hail stones,” the report states.

Farmers in the region also reported heavy losses to crops, with insured losses expected to approach $100 million, and overall economic losses even higher.

Excessive rainfall was also an issue, producing substantial flooding, for parts of the U.S. Midwest, Northeast and Mid-Atlantic. In the greater Detroit area, for example, two months worth of precipitation fell in just 24 hours. Similar rainfall and flooding occurred in Baltimore and Long Island.

Impact Forecasting reports that total economic losses were expected to top US$2.0 billion, with more than US$1.0 billion cited in Detroit metro alone. Insured losses to private insurers and the National Flood Insurance Program were in excess of US$500 million.

Between August 31 and September 2, there was damage in more than a dozen states in the Midwest, Plains, Northeast and Mid-Atlantic, notes the report. “The stretch was highlighted by multiple tornado touchdowns in Michigan and Kansas, plus up to baseball-sized hail and winds gusting to 80 mph (130 kph). Total economic losses were expected in the millions of dollars (US).”

The report also cites the following events:

* multiple stretches of heavy rains and thunderstorms led to flooding throughout several sections of China, with total aggregated economic losses expected to be at least US$1.2 billion;

* monsoonal rains and active weather patterns led to flooding and landslides that resulted in 573 casualties in parts of India, Nepal, Japan, Bangladesh, Cambodia, Pakistan and South Korea;

* heavy rainfall and flash flood events were registered in Italy, Sweden and Denmark;

* Hurricane Iselle became only the second tropical storm since 1958 to make landfall on Hawaii’s Big Island, with total economic damages listed at US$66 million; and

* Super Typhoon Halong made landfall in Japan at tropical storm strength, bringing torrential rains and gusty winds to southern and central sections of the country, with total economic damage projected to reach into the hundreds of millions of dollars (U.S.).

Also in August, severe drought conditions continued and worsened in Guatemala and Sri Lanka as the agricultural sector was hit hard in both countries.