United States Earthquake Insurance Overview: Risk and Coverages by Region with a Comparison to Canada and Puerto Rico
August 2024
Author
Cody Webb, FCAS, CPCU, MAAA
Cuanto Consulting, LLC
Description
This report provides a comprehensive guide for actuaries, insurance companies and regulators to understand the scope and challenges of earthquake risk and insurance in the U.S. It also looks at Canada and Puerto Rico due to their proximity.
"United States Earthquake Insurance Overview: Risk and Coverages by Region with a Comparison to Canada and Puerto Rico" begins with a broad overview of seismic risk in the U.S., including the regions affected, risk measurements, available data, residual or connected threats, and a history of earthquakes and lessons learned from them. It then focuses on the U.S. insurance industry, which is composed of many carriers that offer different policy types, cover different risks and operate in different geographies. The report gives an overview of the various earthquake insurance products. It also discusses insurance availability and affordability and summarizes pricing algorithms of a sample of insurers, providing details on rate differentials, rating variables and property characteristics.
The report also compares the earthquake risk, exposure, insurance penetration and regulatory frameworks in Canada and Puerto Rico, and it highlights some of the challenges and opportunities for improving the insurance market and preparedness.
It then provides a detailed analysis of the governmental policies adopted at state and federal levels in the U.S. to address earthquake risk. These include insurance regulations, awareness campaigns, mitigation programs, and monitoring of insurance take-up rates. The report concludes with recommendations for what policymakers could consider.
Report
Podcast
United States Earthquake Insurance Overview
Acknowledgments
The author’s deepest gratitude goes to those without whose efforts this project could not have come to fruition: the volunteers who generously shared their wisdom, insights, advice, guidance, and arm’s-length review of this study prior to publication. Any opinions expressed may not reflect their opinions nor those of their employers. Any errors belong to the author alone.
Project Oversight Group members:
C. Ian Genno, FSA, CERA, FCIA
Himchan Jeong, FSA
Hoang Long Nguyen
Jianxi Su, FSA
Emiliano A. Valdez, FSA
At the Society of Actuaries Research Institute
Rob Montgomery, ASA, MAAA, FLMI
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