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SAN FRANCISCO-New research on the effect of major California earthquakes suggests that if "the Big One" hits Los Angeles or San Francisco, workers compensation losses would total in the billions of dollars.

Expected workers compensation losses would range between $9.7 billion and $10.4 billion if a 7.5 magnitude earthquake were to hit downtown Los Angeles at 2 p.m. on a workday, according to a new actuarial estimate by reinsurance broker E.W. Blanch Reinsurance Services in San Francisco.

The figure is an updated projection from a 1990 estimate of $4.5 billion in workers comp losses that was made by the All-Industry Research & Advisory Council.

The new estimates by E.W. Blanch are trended for increases in wages and medical costs and adjusted for expected increases in workers compensation benefit levels.

Another loss projection based on computer modeling by San Francisco-based Risk Management Solutions estimates total workers comp losses at $4.4 billion if a 7.0 quake were to occur at midafternoon on the Newport-Inglewood Fault under downtown Los Angeles.

An 8.3 magnitude quake on the northern segment of the San Andreas Fault would cause $1.5 billion in workers compensation losses, according to the E.W. Blanch calculations based on the RMS model.

Loss costs would be lower in the Bay Area than in Los Angeles because the epicenter in the RMS model was not directly under the city, explains the California Workers Compensation Institute, which announced the results of the quake study updates last week.

Furthermore, the RMS model estimates may be lower because it uses Workers Compensation Insurance Rating Bureau data from policy years 1989 through 1991, the institute said.

However, both studies make clear that in terms of lives and workers compensation dollars, losses from "the Big One" would be staggering-certainly into the billions, pointed out the Institute in a bulletin.

For further information on the studies, contact E.W. Blanch Reinsurance Services at 201 California St., Suite 500, San Francisco, Calif. 94111; 214-398-6380.