PREPARING FOR THE NEXT BIG EARTHQUAKE Rotary Club of Los Gatos - - PowerPoint PPT Presentation

PREPARING FOR THE 
 NEXT BIG EARTHQUAKE

Rotary Club of Los Gatos

Chris Nance

Chief Communications Officer

November 7, 2017

The risk is REAL.

2

RISK

TOP FIVE THINGS TO KNOW

about the value of earthquake insurance

THOUSANDS of known faults

crisscross California

Earthquakes happen on UNKNOWN faults all the time

Most Californians live within

30 MILES of an active fault

1/1000 1/100 1/10 1 10 100

California Earthquake

Rupture Forecast

99% chance of a M6.7 or larger

earthquake sometime in the next 30 years

Actually greater than 99%

72% chance of a M6.7 or larger

earthquake sometime in the next 30 years in the Bay Area

51% chance of a M7.0 or larger

earthquake sometime in the next 30 years in the Bay Area…

3 times stronger than Northridge

HIGH RISK FAULTS AND HISTORIC EARTHQUAKES

San Andreas Hayward

You Are Here M6.9 1989 Loma Prieta EQ M7.9 1906 San Francisco EQ M6.7 1868 Hayward EQ

M7.8 SCENARIO EARTHQUAKE: LOS GATOS

Los Gatos

The 1906 San Francisco earthquake reoccurred … TODAY

WHAT IF …

APRIL 18, 5:12AM: M7.7-M7.9 EARTHQUAKE

House damaged during 1906 San Francisco Earthquake

12

Photo: Steinbrugge Collection, UC Berkeley Earthquake Engineering Research Center

Strong shaking would be felt by more than 2 MILLION single family households ....from Eureka to Salinas

250,000 households DISPLACED

Residential damage:

$175 BILLION

Insured: $15 Billion Uninsured: $160 Billion

Most Californians don’t have earthquake insurance

Less than 10% of our homes are covered

RISK BENEFIT

TOP FIVE THINGS TO KNOW

The risk is REAL. So is the benefit of EARTHQUAKE INSURANCE.

17

about the value of earthquake insurance

“The GOVERNMENT will bail me out.” Government assistance, if available, is LIMITED to urgent health and safety needs. Government loans must be REPAID.

MYTHS ABOUT

earthquake insurance

18

Many think their RESIDENTIAL POLICY covers earthquakes. Earthquakes are NOT COVERED under a residential policy – a separate earthquake policy is required.

MYTHS ABOUT

earthquake insurance

19

Earthquake insurance COSTS TOO MUCH, provides TOO LITTLE COVERAGE and the DEDUCTIBLE IS TOO HIGH. CEA has dramatically LOWERED RATES, expanded COVERAGE CHOICES – and now

• ffers a wide range of DEDUCTIBLE OPTIONS.

MYTHS ABOUT

earthquake insurance

20

RISK BENEFIT CEA

TOP FIVE THINGS TO KNOW

Your earthquake risk is REAL. So is the benefit of EARTHQUAKE INSURANCE. CEA is a NOT-FOR-PROFIT residential earthquake insurer.

21

about the value of earthquake insurance

@CaliforniaEarthquakeAuthority @CalQuake #CEACEO

IN THE BEGINNING…

Earthquake coverage excluded from homeowners policy HOWEVER Homeowners insurance companies were required to offer separate earthquake insurance policy - at time of homeowner policy sale, and every other year there after.

23

CALIFORNIA LAW: MANDATORY OFFER

CEA: ESTABLISHED IN THE WAKE OF NORTHRIDGE EARTHQUAKE

January 17, 1994

24

Property Damage: $40 Billion

Residential: $20 Billion Insured: $10 Billion

AFTERMATH: Most insurance companies

stopped writing Homeowners insurance

1994: NORTHRIDGE EARTHQUAKE

25

26

PUBLICLY MANAGED • PRIVATELY FINANCED

GOVERNING BOARD: Governor Insurance Commissioner State Treasurer

Assembly Speaker and Senate Rules Chair

Non Voting:

PRIVATELY FINANCED: 978,000 Policyholders MISSION: Educate Mitigate Insure

A not-for-profit provider of residential earthquake insurance

27

Total: $15.2B

2017

1906 San Francisco ($9B*) 1994 Northridge ($6B*) 1989 Loma Prieta ($1B*)

$14 B $12 B $10 B $8 B $6 B $4 B $2 B $16 B

28

* Estimated CEA loss and expenses for reoccurrence of these historical events

Capital Reinsurance

Revenue Bonds

Industry Assessment Layers

CEA FINANCIAL STRENGTH

rated as A– (Excellent) by A.M. Best Co.

Claim-paying capacity:

$15.2 Billion

RISK BENEFIT CEA TODAY

The risk is REAL. So is the benefit of EARTHQUAKE INSURANCE. CEA is a NOT-FOR-PROFIT residential earthquake insurer. CEA has dramatically LOWERED RATES, and now

• ffers a wide range of COVERAGE CHOICES,

DEDUCTIBLE OPTIONS and new DISCOUNTS for retrofitting older homes.

29

TOP FIVE THINGS TO KNOW

about the value of earthquake insurance

1996 2016

Overall inflation is up 51%

+51%

Overall inflation

OVER THE LAST 20 YEARS…

Housing reconstruction costs increased by 168%

1996 2016

+168%

Reconstruction Costs

OVER THE LAST 20 YEARS…

CEA has lowered its rates
 by a combined 55%

1996 2016

11%

‘97

22%

‘06

12%

‘12

10%

‘16

OVER THE LAST 20 YEARS…

Without these rate 
 reductions, the average 
 CEA premium today would 
 be more than twice as high

1996 Original Policy Today’s CEA Options

Structure Personal Property 
 Coverage Deductible Loss of Use Coverage

additional living expenses

Mitigation Discount Replacement cost $5,000 15% $1,500 0% Replacement cost Up to $200,000 5%, 10%, 15%, 
 20%, 25% Up to $100,000 Up to 20%

Homeowner Policies: $1,500 emergency repairs with no deductible Policyholders are not 
 required to pay the deductible
 to receive their claim payment

Loss of Use never 
 has a deductible

TODAY: A NEW CEA

Product Enhancements

33

RISK BENEFIT CEA TODAY CHOICE

The risk is REAL. So is the benefit of EARTHQUAKE INSURANCE. CEA is a NOT-FOR-PROFIT residential earthquake insurer. CEA has dramatically LOWERED RATES, and now

• ffers a wide range of COVERAGE CHOICES,

DEDUCTIBLE OPTIONS and new DISCOUNTS for retrofitting older homes. Now Californians can choose the earthquake policies that meet their NEEDS and BUDGET.

34

TOP FIVE THINGS TO KNOW

about the value of earthquake insurance

NEW PREMIUM CALCULATOR

EarthquakeAuthority.com

35

NEW PREMIUM CALCULATOR

36

EarthquakeAuthority.com

NEW PREMIUM CALCULATOR

EarthquakeAuthority.com

37

NEW PREMIUM CALCULATOR

EarthquakeAuthority.com

38

Los Gatos
 Example

ZIP: 95032 Year built: 1980 Insured Value: $665,000 Number of Stories: 1 Foundation: Slab

Premium: $829/year Deductible:

15%

NEW PREMIUM CALCULATOR

EarthquakeAuthority.com

39

Deductible:

5%

Premium: $1,484/year

NEW PREMIUM CALCULATOR

EarthquakeAuthority.com

40

Building Code Upgrade Masonry veneer Personal property Separate deductible Breakables Loss of use

Deductible:

25%

Premium: $562/year

NEW PREMIUM CALCULATOR

EarthquakeAuthority.com

41

700,000 1,025,000 1,350,000 1,675,000 2,000,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 978,000 931,000 880,000 865,000 842,000 841,000 821,000 811,000 801,000 779,000 775,000 755,000 Organic New Participating Insurers TOTAL

MORE CALIFORNIANS CHOOSING CEA

2016 increase: 51,000 2006–2015 average annual increase: 7,200 2017 increase (through September): 47,000

CEA Policy Growth Continues

42

43

EarthquakeAuthority.com

CONTACT YOUR AGENT

EarthquakeBraceBolt.com

Financial Incentives to Retrofit Older Homes

44

EarthquakeBraceBolt.com

Targets Cripple Wall Failure

45

Napa 2014

After Before

EarthquakeBraceBolt.com

Retrofit Example

46

Foundation plate Plywood brace

• For Homeowners to Qualify:
• Owner occupied
• Available to all Californians
• For Houses to Qualify:
• ZIP Code
• Houses constructed pre-1979
• Raised continuous perimeter concrete foundation
• Sit on level ground or a low-slope site
• Have wood-framed walls (cripple walls) in the crawl space
• Reimburse up to $3,000

Financial Incentive for Qualifying Homeowners

EarthquakeBraceBolt.com

47

Reimburse up to $3,000 2014: 8 homes 2015: 526 homes 2016: 1,600 homes 2017: 2,000 goal 2018: 2,000+ goal - Registration will open in January

A growing program

EarthquakeBraceBolt.com

48

Northern California 2018 Program ZIP Codes

Albany 94706 Berkeley 94702, 94703, 94704, 94705, 94707, 94708, 94709, 94710 Burlingame/Hillsborough 94010 Daly City/Colma 94014, 94015 El Cerrito 94530 Emeryville 94608 Eureka 95501, 95503 Hayward 94541, 94542, 94544, 94545 Los Gatos 95030, 95032, 95033 Millbrae 94030 Oakland 94601, 94602, 94603, 94605, 94606, 94607, 94609, 94612, 94618, 94619, 94621 Piedmont 94610, 94611 Redwood City 94061, 94062, 94063, 94065 San Bruno 94066

MITIGATION

49

2018 registration will be open from January 23 through February 23 www.EarthquakeBraceBolt.com

50

EarthquakeAuthority.com