January 17, 2014 marks the 20th anniversary of the magnitude 6.7 Northridge, California earthquake, which caused the largest US earthquake insurance loss to date. Direct economic loss reached US$40bn and insured loss totalled US$12.5bn, the majority from commercial and residential lines of business.
In a commentary on the anniversary, catastrophe risk modeling specialist Risk Management Solutions (RMS) says that Northridge marked an industry-changing event for the catastrophe modeling and insurance industry, as well as the broader earthquake engineering community.
While much structural advancement has been made since 1994, RMS queries whether Los Angeles would be ready were a similar seismic event to strike today. According to Dr Patricia Grossi, senior director, global earthquake modelling at RMS:
- A similar 6.7 earthquake today would cause total insured losses of US$16bn – US$24bn.
- RMS data indicates that a repeat of the Northridge earthquake would result in up to US$155bn in total economic loss. Hurricane Katrina in 2005, to date the most costly natural catastrophe in US history, reportedly cost US$148bn.
- The population of California has increased by 12% since 1994, so theoretically 12% of the population has never experienced a significant seismic event and would be completely unprepared.
Further commentary by RMS on the quake can be accessed here.
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