NU Online News Service, June 16, 3:15 p.m. EDT
While the probability of an earthquake in the Pacific Northwest is considered "low" in the near future, insurers need to be mindful that they do occur and should mind their risk placements in cities there.
Aon Benfield offered the suggestion in a report titled "When the Earth Moves: Mega-Earthquakes to Come?" that reviewed the prospect of significant earthquakes throughout the world.
The report notes that 30 percent of commercial and residential property in the Pacific Northwest region has earthquake coverage. Coverage there costs half of what it does in peak earthquake zones in California.
However, the report cautions that banks and mortgage lenders do not "insist on insuring against this risk," and if they did it would have significant implications of insurers.
The zone is defined as running from Northern California into Vancouver Island in British Columbia, Canada.
Earthquake insurance rates for both commercial and residential properties have fallen by around 5 percent over the past two to three years, the report said. The region is generally seen as not particularly vulnerable to such losses.
A mega earthquake, in the magnitude 8 or higher scale, in this region would probably not be a market turning event, the report notes, since there was no upshot in the price of coverage globally after events in Chile and Haiti. This is particularly true because of the lower population density in the region.
The last major earthquake in this region was a magnitude 9 disturbance in early 1700, and there have been a total of 14 similar quakes over the last 7,700 years.
The 28-page report examines other regions of the world including the Caribbean, Chile, Indonesia and Japan. It notes that in Chile rates are renewing at increases of 75 percent or higher.
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