Earthquake Coverage Increasingly Expensive, Hard to Find in Missouri

Missouri is the third largest market for earthquake insurance in the U.S., after California and Washington, but the coverage is getting more expensive and scarcer in high-risk areas, state insurance officials say.

On average, premiums for earthquake coverage in the six Missouri counties within the New Madrid fault zone increased by more than 500 percent between 2000 and 2014, and in one county by nearly 700 percent, according to the 2015 Earthquake Report released by the Missouri Department of Insurance in August.

“We have been watching the earthquake market closely for decades,” said Angela Nelson, director of the Division of Market Regulation for the MDI. “We’ve watched rates rise, deductibles increase and major companies leave the earthquake market. … In our view, we are at a critical juncture because the amount of uninsured residential property may jeopardize our state’s ability to fully recover from an earthquake event.”

Since 2000, 64 insurers have exited Missouri’s earthquake market, according to Nelson, who helped lead a national forum entitled “All Things Earthquake” at the National Association of Insurance Commissioners (NAIC) Summer National Meeting. Also since 2000, the percentage of homes in the New Madrid area with earthquake coverage dropped from 60 percent to 20 percent in 2014.

In Missouri, the New Madrid fault extends from the bootheel northwards to St. Louis. The counties most vulnerable to a repeat of the series of quakes that hit the New Madrid Fault zone in the winter of 1811-1812 are Dunklin, Mississippi, New Madrid, Pemiscot, Scott and Stoddard. Researchers believe the three primary earthquakes in 1811-1812 ranged in magnitude from 7.0 to 7.5, with aftershocks in the magnitude 6.0 to 6.5 range.

Global reinsurer Swiss Re recently estimated a recurrence of that New Madrid event would result in $150 billion in insured losses, the department said.

The MDI estimates that 562,734 Missouri residences in high-risk areas with an approximate value of more than $86 billion are not covered for earthquake losses. That figure does not include the value of uninsured contents.