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Member, Beacon International Group, Ltd.
A major San Francisco earthquake could cause more than $100 billion in insured property damage, according to a report by Oldwick, N.J.-based A.M. Best Co. Inc.
If a 7.6 magnitude quake struck San Francisco "today, insured loss undoubtedly would be severe, placing financial stress on thinly capitalized insurers with heavy concentrations of earthquake, fire, multi-peril and automobile damage coverage in the stricken area," according to Best's 2006 Annual Earthquake Study.
According to Best, only 11% of commercial insurance packages in California last year included earthquake coverage, as did only 12% of the residential insurance packages.
"A catastrophe affects more than insurers' financial solvency," says Best. "Its impact is felt by the individuals directly hit by a catastrophe as well as by the broad economy. Given the massive levels of earthquake underinsurance, a megaquake would savage regional economies and could throw the national economy into recession."