PREPARING FOR THE NEXT BIG EARTHQUAKE

Transcription

1 PREPARING FOR THE NEXT BIG EARTHQUAKE Rotary Club of Los Gatos Chris Nance Chief Communications Officer November 7, 2017

2 TOP FIVE THINGS TO KNOW about the value of earthquake insurance RISK The risk is REAL. 2

3 THOUSANDS of known faults crisscross California Earthquakes happen on UNKNOWN faults all the time

4 Most Californians live within 30 MILES of an active fault

5 California Earthquake Rupture Forecast 1/1000 1/100 1/

6 99% chance of a M6.7 or larger earthquake sometime in the next 30 years Actually greater than 99%

7 72% chance of a M6.7 or larger earthquake sometime in the next 30 years in the Bay Area

8 51% chance of a M7.0 or larger earthquake sometime in the next 30 years in the Bay Area 3 times stronger than Northridge

9 HIGH RISK FAULTS AND HISTORIC EARTHQUAKES M San Francisco EQ Hayward M Hayward EQ San Andreas M Loma Prieta EQ You Are Here

10 M7.8 SCENARIO EARTHQUAKE: LOS GATOS Los Gatos

11 WHAT IF The 1906 San Francisco earthquake reoccurred TODAY

12 APRIL 18, 5:12AM: M7.7-M7.9 EARTHQUAKE House damaged during 1906 San Francisco Earthquake Photo: Steinbrugge Collection, UC Berkeley Earthquake Engineering Research Center 12

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

14 250,000 households DISPLACED

15 Residential damage: $175 BILLION Insured: $15 Billion Uninsured: $160 Billion

16 Most Californians don t have earthquake insurance Less than 10% of our homes are covered

17 TOP FIVE THINGS TO KNOW about the value of earthquake insurance RISK BENEFIT The risk is REAL. So is the benefit of EARTHQUAKE INSURANCE. 17

18 MYTHS ABOUT 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. 18

19 MYTHS ABOUT earthquake insurance Many think their RESIDENTIAL POLICY covers earthquakes. Earthquakes are NOT COVERED under a residential policy a separate earthquake policy is required. 19

20 MYTHS ABOUT earthquake insurance 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 offers a wide range of DEDUCTIBLE OPTIONS. 20

21 TOP FIVE THINGS TO KNOW about the value of earthquake insurance RISK BENEFIT CEA Your earthquake risk is REAL. So is the benefit of EARTHQUAKE INSURANCE. CEA is a NOT-FOR-PROFIT residential earthquake insurer. 21

22 #CEACEO

23 CALIFORNIA IN THE BEGINNING LAW: MANDATORY OFFER 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

24 CEA: ESTABLISHED IN THE WAKE OF NORTHRIDGE EARTHQUAKE January 17,

25 1994: NORTHRIDGE EARTHQUAKE Property Damage: $40 Billion Residential: $20 Billion Insured: $10 Billion AFTERMATH: Most insurance companies stopped writing Homeowners insurance 25

26 26

27 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

28 CEA FINANCIAL STRENGTH rated as A (Excellent) by A.M. Best Co. $16 B 2017 $14 B Industry Assessment Layers Revenue Bonds Claim-paying capacity: $15.2 Billion $12 B $10 B Reinsurance 1906 San Francisco ($9B*) $8 B $6 B 1994 Northridge ($6B*) $4 B $2 B Capital 1989 Loma Prieta ($1B*) 0 Total: $15.2B * Estimated CEA loss and expenses for reoccurrence of these historical events 28

29 TOP FIVE THINGS TO KNOW about the value of earthquake insurance 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 offers a wide range of COVERAGE CHOICES, DEDUCTIBLE OPTIONS and new DISCOUNTS for retrofitting older homes. 29

30 OVER THE LAST 20 YEARS Overall inflation is up 51% +51% Overall inflation

31 OVER THE LAST 20 YEARS Housing reconstruction costs increased by 168% +168% Reconstruction Costs

32 OVER THE LAST 20 YEARS CEA has lowered its rates by a combined 55% Without these rate reductions, the average CEA premium today would be more than twice as high 22% 11% % 12 10%

33 TODAY: A NEW CEA Product Enhancements 1996 Original Policy Today s CEA Options Structure Homeowner Replacement Policies: $1,500 cost emergency repairs with no deductible Personal Property $5,000 Coverage Policyholders are not Deductiblerequired to pay the 15% deductible to receive their claim payment Loss of Use Coverage Loss of Use never $1,500 additional living expenses has a deductible Replacement cost Up to $200,000 5%, 10%, 15%, 20%, 25% Up to $100,000 Mitigation Discount 0% Up to 20% 33

34 TOP FIVE THINGS TO KNOW about the value of earthquake insurance 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 offers 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

35 NEW PREMIUM CALCULATOR EarthquakeAuthority.com 35

36 NEW PREMIUM CALCULATOR EarthquakeAuthority.com 36

37 NEW PREMIUM CALCULATOR EarthquakeAuthority.com 2017 Choose Your Insurance Company

38 NEW PREMIUM CALCULATOR EarthquakeAuthority.com Los Gatos Example ZIP: Year built: 1980 Insured Value: $665,000 Number of Stories: 1 Foundation: Slab 38

39 NEW PREMIUM CALCULATOR EarthquakeAuthority.com Premium: $829/year Deductible: 15% 39

40 NEW PREMIUM CALCULATOR EarthquakeAuthority.com Premium: $1,484/year Deductible: 5% 40

41 NEW PREMIUM CALCULATOR EarthquakeAuthority.com Premium: $562/year Deductible: 25% Building Code Upgrade Masonry veneer Personal property Separate deductible Breakables Loss of use 41

42 MORE CALIFORNIANS CHOOSING CEA 2,000,000 CEA Policy Growth Continues average annual increase: 7, , increase: 51, ,000 1,675, increase (through September): 47, , , , , , , , , , ,000 1,350,000 1,025, , Organic New Participating Insurers TOTAL 42

43 CONTACT YOUR AGENT EarthquakeAuthority.com 43

44 EarthquakeBraceBolt.com Financial Incentives to Retrofit Older Homes 44

45 EarthquakeBraceBolt.com Targets Cripple Wall Failure Napa

46 EarthquakeBraceBolt.com Retrofit Example Before Plywood brace Foundation plate After 46

47 EarthquakeBraceBolt.com Financial Incentive for Qualifying Homeowners For Homeowners to Qualify: o Owner occupied o Available to all Californians For Houses to Qualify: o ZIP Code o Houses constructed pre-1979 o Raised continuous perimeter concrete foundation o Sit on level ground or a low-slope site o Have wood-framed walls (cripple walls) in the crawl space Reimburse up to $3,000 47

48 EarthquakeBraceBolt.com A growing program Reimburse up to $3, : 8 homes 2015: 526 homes 2016: 1,600 homes 2017: 2,000 goal 2018: 2,000+ goal - Registration will open in January 48

49 MITIGATION Northern California 2018 Program ZIP Codes Albany Berkeley 94702, 94703, 94704, 94705, 94707, 94708, 94709, Burlingame/Hillsborough Daly City/Colma 94014, El Cerrito Emeryville Eureka 95501, Hayward 94541, 94542, 94544, Los Gatos 95030, 95032, Millbrae Oakland 94601, 94602, 94603, 94605, 94606, 94607, 94609, 94612, 94618, 94619, Piedmont 94610, Redwood City 94061, 94062, 94063, San Bruno

50 2018 registration will be open from January 23 through February

51 EarthquakeAuthority.com