Tag Archives: Earthquake Insurance

California Revamps Earthquake Maps, Adds 50 New Faults

Posted on by

California residents without earthquake insurance might want to rethink that decision. Why? Because geology officials in the Golden State have recently released an updated seismic activity map of the state – the first such update since 1994 – and it includes more than 50 surface fault lines that have been discovered in the last twenty years. The new map was unveiled during the 150th anniversary celebration of the California Geological Survey, which also presented an updated version of a second map identifying the composition of rock and soil.

According to state geologist John Parrish, the maps can help guide decisions about where to build schools and hospitals, and where construction standards should be higher. “These maps are used to make a lot of other maps, to map landslides … for tsunami coastal mapping. They can tell you what kind of a surface you’re building on, and how close you are to a fault,” Parrish said.

The new maps don’t merely show fifty new faults – they have interactive digital version linked to Google maps, and they also correct distortions leftover from a previous digitizing attempt that left some geologic features more than half a mile from where they were actually located.

As for the fifty new faults added to the roughly 15,000 present in California, while they’re new to the seismic activity map, they have been mapped before. Some of them announced themselves years ago, including the system responsible for 1999′s 7.1 Hector mine quake, which, thanks to the epicenter in the middle of the Mojave Desert, didn’t cause much damage despite its magnitude, though others, like the fault which caused 1994′s Northridge quake are not on the map, even though that system wrecked most of downtown Coalinga. This is because they are “blind thrusts” with no depictable surface ruptures.

Chris Wills, supervising engineering geologist in charge of the project said that the new map, “…really puts the earthquake hazard in context: Where do our earthquakes come from? Where are the most active faults distributed in the state? Where are the most recently active faults that we would tend to worry about most in the state of California? Where are they less common?”

The statewide map is an addition to existing, localized seismic mapping projects where are required by California law. Since 1971, the state geologist has been required to map surface ruptures as an aid to planners in preventing the construction of buildings designed to be used by people on active faults. A newer 1994 law requires the mapping of additional seismic hazards, like landslides and liquefaction.

Since 1998, the National Hazards Disclosure Act has required real estate sellers or their agents to inform potential buyers if a property is located within one of these areas.

As new as the map is, Wills observed, it’s already out of date, because the April 4th quake that struck Baja California at a magnitude of 7.2 produced surface ruptures north of the U.S.-Mexico border. “Anytime you try to do a compilation of everything you know about a state you lag behind studies of an individual area,” he said.

Moody Downgrades California’s Earthquake Rating

Posted on by

The California Earthquake Authority (CEA) has reported that Moody’s Investors Service has affirmed the A3 rating on the Authority’s 6.169% fixed-rate Series 2006-B revenue bonds, due to mature July 20, 2016, and downgraded the rating outlook from stable to negative. Specifically, Moody feels that the risk to bondholders is written into California law, in the form of a provision allowing for, “…the possibility that state authorities may curtail CEA’s activities under certain circumstances.”

In response, representatives of the CEA pointed out that the provision was on the books when the bonds were originally issued, and that it is also counterbalanced by another statute which states that the state Insurance Commissioner may not in any way, “…impede or in any manner interfere with the full and timely payment of principal, interest and premiums on revenue bonds of the authority.”

Moody’s elaborated on their original outlook, stating that the CEA’s rating could return to “stable” if they can “…maintain its claims-paying capacity at levels that can absorb losses at or above a 1-in-500 year return period” for the next 12 months.”

According to the CEA, the first nine months of that twelve-month period already hold enough reinsurance contracts and other claims-paying resources to maintain a capacity equal to or above the proscribed level, and that it intends to maintain that 1-in-500-year return level – or improve it – during 2011, as has been the case every year since the 2006 bonds were issued. CEA CEO Glenn A Pomeroy made a statement to the press, “While the CEA is pleased that the A3 rating on the bonds has been affirmed, we believe Moody’s decision to change the rating outlook is unsupported by the facts.”

The Earthquake Authority also shared that under the most recent scientific and loss-modeling calculations, including the Uniform California Earthquake Rupture Forecast by the Southern California Earthquake Center, the U.S. Geological Survey and the California Geological Survey; the Next Generation of Ground-Motion Attenuation Models, CEAs expected earthquake losses to its portfolio had been revised downward, and their claims-paying capacity has tracked those expected losses.

The CEA said it “…looks forward to and anticipates Moody’s re-evaluation and return to a stable outlook in 2011.”