AIR Currents

October 23, 2017

Editor's Note: For 30 years, AIR has been helping companies assess and manage the financial risk from infrequent but potentially devastating extreme events. To provide a sense of the potential impact, AIR periodically publishes a list of the costliest historical U.S. hurricanes and earthquakes—were they to recur today. In Part II of this two-part series, we discuss the top 10 earthquakes. The rankings below correspond to the significantly updated AIR Earthquake Model for the United States, as well as the updated U.S. industry exposure database reflecting replacement values of properties insured against the earthquake perils as of the end of 2016.

Rankings of historical insured earthquake losses in the United States are based on reported insured losses at the time the events took place. While these losses may be trended to today’s dollars, they are not trended to today’s exposures. The number and value of properties in the United States, particularly in areas at risk, have increased dramatically in the past century, well beyond the rate of inflation. It is therefore more interesting and relevant to consider the potential impacts of historical events were they to recur today. For example, when a series of three large earthquakes occurred in the Central United States in the winter of 1811-1812, the largest nearby town—New Madrid, Missouri—was home to fewer than 500 inhabitants. A recurrence of those earthquakes today would cost the industry in excess of USD 59 billion.

The following chart shows the estimated impact of the top 10 historical U.S. earthquakes. The events were simulated using the significantly updated AIR Earthquake Model for the United States, which was released in June. AIR’s model includes updated views of tectonic and induced earthquake risk in the United States based on newly available data. The updated suites of ground motion prediction equations (GMPEs) implemented in the model reflect the wide range of tectonic settings within the United States. The fire-following module was updated to include a substantially increased resolution, a cutting-edge approach to fire ignition and fire spread modeling, and a comprehensively updated fire suppression component. AIR researchers have also updated the liquefaction module and added two new sub-perils: tsunami and landslide. Among other improvements to the vulnerability component, our updated U.S. earthquake model includes significant improvements for assessing the vulnerability of non-engineered wood frame construction, which constitutes the overwhelming majority of residential buildings in the United States. The resulting estimates of insured losses in the chart below represent what these events would cost the insurance industry today based on AIR's detailed industry exposure database and peril-specific take-up rates.


The real purpose of catastrophe models is to prepare for potential large losses before they occur. To account for the full range of potential scenarios, AIR models contain many possible events that could result in even higher losses than those listed below.

Table 1. Estimated insured losses for the top 10 historical earthquakes based on current exposures.
Year Event Location Magnitude 2017 Insured Loss*

*Modeled loss to property, contents, and business interruption and additional living expenses for residential, mobile home, commercial, and auto exposures as of December 31, 2016. Losses include demand surge and fire following earthquake and account for tsunami, liquefaction, and landslide. Policy conditions and earthquake insurance take-up rates are based on estimates by state insurance departments and client claims data. The model reflects recent updates to seismic and ground motion information, as well as updated building characteristics of insured properties.

1906 San Francisco, CA 7.8 USD 71 billion
1811–1812 New Madrid, MO 7.7 USD 59 billion
1700 Cascadia Subduction Zone, WA, OR, & CA 9 USD 47 billion
1838 San Francisco, CA 7.4 USD 31 billion
1886 Charleston, SC 7.3 USD 30 billion
1994 Northridge, CA 6.7 USD 15 billion
1868 Hayward, CA 7.0 USD 15 billion
1812 Wrightwood, CA 7.5 USD 12 billion
1857 Fort Tejon, CA 7.9 USD 8 billion
1989 Loma Prieta, CA 6.9 USD 4 billion

Historical Earthquakes

San Francisco, California (1906)

The M7.8 earthquake that struck San Francisco on April 18, 1906, remains one of the most devastating earthquakes in the history of California. It caused an estimated 3,000 deaths and USD 524 million in property loss (1906 currency), due to both shake damage and resulting fires. Shaking was felt throughout California and in parts of Nevada and Oregon.


In San Francisco, the effects were felt for about one minute from the mainshock, which was followed by several aftershocks. Pavement buckled, houses were destroyed, sewers and water mains were broken, and streetcar tracks were torn and bent out of shape. Pipelines were broken—shutting off water supply to the city—and roads were impassable, which in turn made it impossible to fight the fires that ignited due to overturned stoves and broken gas lines. At least 50 to 60 fires burned in the city for four days, resulting in devastating losses that significantly exceeded the shake losses. In the wake of this, the insurance industry had to significantly change the assessment of impacts from fire following earthquakes.

This earthquake created the longest fault rupture ever observed in the continental United States, extending nearly 300 miles along the northern San Andreas Fault. Horizontal displacement was observed in many areas with the largest at 21 feet near Point Reyes Station in Marin County. Indeed, the displacement caused by this earthquake and the strain of the rupture led to the elastic-rebound theory of earthquakes.

New Madrid Region (1811-1812)

Between December 16, 1811, and March 15, 1812, a series of devastating earthquakes struck the interior of the continental United States. The series defined the New Madrid Seismic Zone, named after New Madrid, Missouri, which was the town closest to the epicenter of the earthquake sequence. During the three-month period, the area was shaken by more than 100 earthquakes, among them a cluster of very large events: an earthquake with a magnitude of 7.3 on December 16, 1811, another with a magnitude of 7.1 on January 23, 1812, and the largest with a magnitude of 7.7 on February 7, 1812.

In an area sparsely populated at the time, most of the destruction was done to the landscape, which still shows evidence of uprooted forests, massive landslides, sand blows, and fissures covering an area of about 232,000 square miles. Shaking was felt throughout much of the United States—primarily in Arkansas, Illinois, Kentucky, Missouri, and Tennessee—and even as far away as Quebec, which constitutes an area more than five times larger than the area affected by the 1906 San Francisco earthquake.

The earthquake generated huge waves along the Mississippi River, throwing boats onto the banks, which in turn collapsed back into the river. Elsewhere along the river, whole islands disappeared. According to records, the only life that was claimed was in the town of New Madrid due to falling buildings.

Measuring Earthquake Intensity

The severity of an earthquake can be measured by the damage it inflicts on the earth’s surface or by the energy released at the point of rupture below the surface. Earthquake magnitude characterizes the total energy released by an earthquake, while earthquake intensity refers to the resulting level of ground shaking at a particular location and the observed effects of an earthquake on people, buildings, and other features. While the magnitude of an earthquake is a characteristic of the earthquake as a whole, intensity varies from place to place.

An earthquake’s intensity at different locations can be described using the Modified Mercalli Intensity (MMI) scale, which was first developed in 1902. The MMI at a particular location is based on human judgment and the observed post-event damage. Today, instruments called seismographs directly measure ground motion intensity, which can be characterized by physical parameters such as peak ground acceleration (PGA) and spectral acceleration (Sa).


Cascadia Subduction Zone (1700)

On January 26, 1700, a 1,200-kilometer section of the Cascadia subduction zone ruptured, producing one of the largest earthquakes ever experienced. (The strongest recorded earthquake to strike North America was the Great Alaska Earthquake.) This M9.0 megathrust earthquake struck the Cascadia region, which extends along the West Coast from Cape Mendocino, California, through Oregon and Washington, up to Vancouver, British Columbia. The resultant tsunami not only wiped out a winter village on nearby Vancouver Island but is also documented to have reached as far away as Japan, causing damage to several coastal villages there.

The tectonic stresses in this zone are due to the subduction of the Juan de Fuca Plate beneath the North American Plate at a rate of about 40 mm/year. Subduction zones like this accumulate strain as they resist the convergent plate motion, sometimes rupturing large areas as megathrust earthquakes with magnitudes of 8.0 and higher. Geological evidence suggests that 13 earthquakes of this size have occurred along the Cascadia subduction zone in the last 6,000 years. However, for the past three centuries, these plates have been locked together, generating enormous stresses.

If this earthquake were to recur today, major cities affected would include Seattle, Portland, Vancouver, Victoria, and Tacoma. Shorelines along the west coast of North America and countries across the Pacific Ocean could be in danger of damage from tsunami.

San Francisco, California (1838)

In late June of 1838 (the exact date is uncertain), a long segment of the San Andreas Fault ruptured, causing intense shaking from Monterey to San Francisco as well as in the East Bay. Hundreds of aftershocks, some of them damaging, continued for three years. The magnitude of the mainshock is estimated at about 7.4 and the visible rupture—10 to 12 feet wide as described by a local resident—extended 38 miles from near San Francisco to near Santa Clara. Approximately 50 miles south of Santa Clara in Monterey, the shaking intensity was strong—possibly stronger than during the 1906 San Francisco earthquake—suggesting that the rupture extended farther south to the San Juan Batista area, as it did during the 1906 rupture. Estimates of the total rupture length range from 60 to 100 miles.

Predating the Gold Rush and California's secession to the United States, the Bay Area in 1838 was dotted with a few Spanish missions and was sparsely populated by settlers. There were no reports of casualties from the earthquake, but there were numerous accounts of violent shaking and damage. Eyewitnesses reported that the earth undulated in waves and cracked; trees swayed and snapped; and streambeds were displaced. Crockery and glassware broke, and houses and walls—often constructed of adobe—cracked. A house collapsed in San Jose, and the Mission Dolores in San Francisco was heavily damaged.

Charleston, South Carolina (1886)

On September 1, 1886, Charleston, South Carolina, was struck by an M7.3 earthquake—one of the largest shocks on record for eastern North America. Craters and fissures from this earthquake were observed over an area of 500 square miles. More than 50 miles of railroad track was severely damaged and the track 4 miles northwest of Charleston formed S-shaped curves in places where they were formerly straight.

Sand boils were widespread in the area and formed craterlets as wide as 20 feet. Some of these craterlets spewed waterspouts as high as 15 to 19 feet. Fissures more than a yard wide appeared along canals and stream banks. Wide cracks appeared along the banks of the Ashley River and, as the banks collapsed, large trees were uprooted and carried into the river along with the sand.

The earthquake damaged or destroyed most of the buildings in Charleston and killed 60 to 100 people. Structural damage was reported as far away as central Alabama, Ohio, eastern Kentucky, Virginia, and West Virginia. Shaking was reported as far away as Boston and Chicago.

Northridge, California (1994)

On January 17, 1994, an M6.7 earthquake shook Northridge, a neighborhood of Los Angeles, in Southern California. The earthquake claimed the lives of 60 people, injured more than 7,000, and left 20,000 homeless. Throughout the greater Los Angeles area, across several counties, more than 40,000 structures, including Anaheim Stadium, were damaged.

The earthquake affected several freeways when the columns supporting the overpasses collapsed, causing those portions of the freeway to fall onto the freeway beneath. Overpass collapses occurred on the Santa Monica, Simi Valley, and Golden State freeways, among others.

Most of the buildings that were damaged were multi-story wood frame buildings, especially those with a "soft story,” (e.g., those with parking areas or other large open spaces on the ground floor). Eleven hospitals had to be shut down due to heavy damage, which caused other hospitals to be overburdened with incoming patients injured from the earthquake. It is worth noting that school buildings, for which earthquake reinforcement is mandatory, survived fairly well. Widespread damage to beam-column connections in moment resisting steel frames was observed in this earthquake, revealing a common shortcoming in joint design and construction, subsequently leading to improvement in design requirements. The effect of the Northridge earthquake on homeowners' insurance in California was immediate. Because earthquake insurance had to be offered as part of homeowners' insurance, residential property coverage became exceedingly difficult to obtain. The State of California reduced the extent of coverage that insurance companies were mandated to offer to a "mini-policy" and in September 1996 the California Legislature created the California Earthquake Authority to make minimal earthquake insurance available on a broad scale.

Hayward, California (1868)

On the morning of October 21, 1868, an M7.0 earthquake struck the San Francisco Bay Area. It was the strongest in the region since written recordkeeping began in 1776 and was called the "Great San Francisco Earthquake" until the more damaging 1906 quake occurred. A 20-mile segment on the southern end of the Hayward Fault, a right-lateral strike-slip fault, ruptured the surface, roughly from Fremont to San Leandro. The deep rupture beneath the surface likely extended north another 15 miles to the Berkeley area. The average horizontal strike-slip displacement of the fault was around 6 feet, while the crack that opened at the surface averaged 6 inches wide. Although the area was sparsely populated at the time, the earthquake remains one of the most destructive in California history, causing damage as far away as Napa to the north and Hollister to the south (some 130 miles apart). The East Bay towns immediately above the fault suffered extensive damage. In Hayward, then a town of about 500 residents, almost every building was severely damaged; most were knocked off their foundations and rendered uninhabitable. Nearby San Leandro and Fremont, north and south of Hayward, experienced slightly milder shaking. Still, many brick, adobe, and even some wood-frame structures were severely damaged.

Farther away in the much larger cities of Oakland and San Jose, many chimneys toppled and some brick buildings were damaged. Shaking was intense across the Bay in parts of San Francisco, which suffered an estimated USD 350,000 in property damage (1868 currency)—by far the highest concentration of both exposure and loss. Buildings constructed on reclaimed landfill in the Bay fared especially poorly. In total, 30 people were killed.

The 2014 USGS National Seismic Hazard model included a comprehensive update on California active crustal faults called the Uniform California Earthquake Rupture Forecast 3 (UCERF3). UCERF3 advanced the possibility of multi-fault cascading ruptures, such as the 1992 Landers California earthquake, as well as other similar global earthquakes, allowing for ruptures jumping from faults to faults. Comparing the UCERF3 to the UCERF2 model, there is an increase in the probability of earthquakes with M6.7 and larger in Northern California. For example about a 32% probability of an M6.7 or greater earthquake occurring on the Hayward and Hayward-Rodgers Faults in the next 30 years.

Wrightwood, California (1812)

One of the earliest large earthquakes described in the history of California occurred on December 8, 1812, in an area then known only as Alta California, a polity of New Spain. The coast of Southern California and farther inland was sparsely populated with Spanish colonists and missionaries, and Native Americans. It is estimated that the epicenter of this M7.5 earthquake was near modern-day Wrightwood, Orange County, and the lateral extent could have extended into the San Bernardino Valley. Given the many active faults in the area, the rupture may have been from multiple segments, potentially beginning on the San Jacinto Fault and propagating onto the San Andreas Fault, where the slip reached possibly as far north as Elizabeth Lake.

This earthquake is often referred to as the San Juan Capistrano earthquake, as 40 Native Americans attending mass were killed when the great stone church at that famous mission collapsed. Major structural damage was also reported at Mission San Gabriel Arcángel, and minor damage was reported at missions San Fernando Rey and San Buenaventura to the north in what is now Ventura, California. To the south, missions San Luis Rey and San Diego documented shaking, but had no damage.

Fort Tejon, California (1857)

The biggest earthquake in California's historical record occurred on January 9, 1857, at approximately 8 a.m. A continuous segment of the San Andreas Fault from the San Benito County line to the San Bernardino area, measuring over 220 miles, ruptured at the surface, traces of which can still be seen today. The average slip of the right-lateral strike-slip event was 15 feet, and the maximum slip was around 30 feet.

The magnitude of the 1857 earthquake is estimated to be approximately 7.9, but the epicenter is uncertain. The strongest reported shaking was located in Fort Tejon, giving the earthquake its name. However, evidence of foreshocks to the earthquake suggests an epicenter closer to Parkfield, more than 60 miles northwest of Fort Tejon. The duration of the event is estimated at one to three minutes, and aftershocks continued to shake the area for over a year.

Fortunately, the large area affected by the quake was very sparsely populated at the time, and there were very few reported deaths. The tremor was felt from Marysville, more than 30 miles north of Fort Tejon; to San Diego, about 180 miles south; to Las Vegas, 220 miles east. Fort Tejon experienced the most severe damage, with many adobe buildings collapsed or rendered uninhabitable. In Ventura, the mission was badly damaged, and a house collapsed in Gorman. In Los Angeles, damage was limited to superficial cracks in walls and buildings. Evidence of ground fissures, sand blows, and liquefaction was reported over a wide area. Several streams and springs were reported to have reversed their flow, and many rivers overflowed their banks.

One issue of concern for a recurrence of an 1857-type event is the performance of modern high-rise buildings in Los Angeles. Even though Los Angeles is at a significant distance from the fault, tall structures are particularly susceptible to long-period ground motion generated by large earthquakes. Tall buildings have lower natural frequencies and when the ground motion is also dominated by low-frequency (long period) waves, the ground motion and building resonate, leading to greater building displacement and therefore damage. In addition, the area closer to the fault that would likely experience strong ground motion is much more highly populated than in 1857, which can be damaging to all kinds of buildings.

Loma Prieta, California (1989)

On October 17, 1989, an M6.9 earthquake struck Nisene Marks State Park in the Santa Cruz Mountains, rupturing a section of the San Andreas Fault about 62 miles south of San Francisco. The earthquake was the largest to occur along the San Andreas Fault since the 1906 San Francisco earthquake. It caused the deaths of 63 people and injured nearly 4,000 others. Damage occurred throughout the greater San Francisco-Oakland area. In Monterey Bay, liquefaction caused underground pipes to break and also caused significant and widespread damage to buildings, bridges, highways, and port facilities. Liquefaction occurred in San Francisco's Marina District where the soil conditions (loose sandy fills above deep soil deposits) amplified the ground shaking. In San Francisco and Oakland, reinforced concrete viaducts collapsed, resulting in heavy damage to U.S. Highway 101 and Interstate 280 in San Francisco; and to Interstate 880 in Oakland. Traffic was also disrupted for many weeks due to landslides near the earthquake's epicenter in the Santa Cruz Mountains.

The earthquake is sometimes referred to as the "World Series" earthquake because it occurred at 5:04 p.m. during a World Series game taking place in San Francisco, and consequently became the first earthquake to be broadcast live on television. It is believed that rush hour traffic was much lighter than usual that day due to people leaving work early or staying in town for the game (both teams were from the area), and that the death toll might have been much higher otherwise.




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