An earthquake like 1994’s Northridge, California quake could cause $20 billion in insured losses today, catastrophe modeling firm RMS said last week.
RMS made the announcement on Friday, Jan. 17, which marked the 20th anniversary of the magnitude 6.7 California earthquake, which caused the largest U.S. earthquake insurance loss to date.
RMS noted that direct economic loss reached $40 billion and insured loss totaled $12.5 billion, with the majority coming from commercial and residential lines of business.
In spite of the fact that many structural advancements have been made since 1994, Dr. Patricia Grossi, senior director, global earthquake modeling at RMS, says that a similar 6.7 earthquake today would cause total insured losses of $16-$24 billion.
In addition, Dr. Grossi says that based on RMS data, a repeat of the Northridge earthquake would result in up to $155 billion in total economic loss.
By comparison, Hurricane Katrina—the most costly natural catastrophe in U.S. history— reportedly cost $148 billion, she says.
RMS also notes that the population of California is up 12 percent since 1994. This means that “theoretically 12 percent of the population has never experienced a significant shaking event and would be completely unprepared.”