In the News
Quake Coverage Down
to 14% in Parts of Missouri

• Timothy Darragh
• August 2019
• 

Just 14% of homeowners in the most earthquake-prone region of Missouri have earthquake insurance, the state insurance department said in a new report.

Insurers have continued to flee the marketplace and others have declined to write new policies, driving the average annual price of earthquake coverage in the highest-risk region to $452 in 2018, and over $500 in three counties, it said.

The rate of price increases in the highest-risk areas rose 700% since 2000—far faster than in low-risk areas, it said.

The report comes out as Southern California was rocked on July 4 by a magnitude 6.4 earthquake, followed by a magnitude 7.1 quake the following day.

California Earthquake Authority Chief Executive Officer Glenn Pomeroy said “insurance penetration throughout California is extremely low—dangerously low. You take that 7.1, and you slide it over 150 miles, and put that under the City of Los Angeles, or under the Bay Area, we would be looking at uninsured losses in the billions of dollars and thousands of homes probably destroyed. In economic loss, that would be hard to calculate.”

The level of concern is high in Missouri because counties in the southeastern corner of the state sit atop the New Madrid Seismic Zone, where the United States Geological Survey estimates the chance of having a magnitude 7.7 earthquake similar to the series of quakes that shook the region in 1811-1812 in the next 50 years is about 7% to 10%. The chance of having a magnitude 6 or larger earthquake in 50 years is 25% to 40%, it said.

In such an event, roads, bridges, pipelines and levees would fail, and the million residents living in and around Memphis, Tennessee would be “severely impacted,” it said.

If that were to happen, insured losses of $120 billion could be expected, according to the risk modeling firm AIR Worldwide, it said.

Back in 2000, the report said, 60% of residences in the New Madrid area had earthquake insurance.

The trend changed around 2006, it said, when Allstate announced it was ending earthquake coverage in all states. Insurers fled the marketplace, creating a “coverage crisis.”