Group 8
2022-06-22

Earthquake Risk: An Underprepared Fatal Peril

Acute earthquake risk left uninsured by traditional policies

With California being the most vulnerable state to the earthquake risk, earthquakes cost approximately $4.4 billionin the US annually. Although the Northridge quake in 1994 is still the costliest earthquake event on the US record, many cities and states in the US are experiencing earthquakes and their follow-up events, such as tsunamis, landslides, great and small, almost every year. 

While earthquakes are recognized as the deadliest natural disaster in history and as one of the perils that have caused huge material losses over the past two decades, less than 20% of earthquake related losses were covered by insurance. This can be explained with accumulated asset concentration in cities since traditional insurers cannot provide enough capacity to cover higher-value assets. Lack of loss history due to no technology available in the past and low occurrence frequency are also reasons that earthquake risk is not properly insured by traditional policies. 

Utilizing highly advanced technology and partnering with data providers, Descartes’ data scientist team monitors the evolving earthquake risks in near real-time. This data-driven approach allows us to offer transparent and economical solutions. Once the magnitude hits the predetermined threshold, it directly leads to pay-out so that our clients can financially bounce back faster than ever. 

Descartes’ parametric insurance as a revolutionary approach against earthquake exposures

Descartes’ parametric insurance has emerged as an innovative risk transfer solution for earthquake risks to fill the gap left by traditional insurance. Corporates and public entities are  provided with the insurance products modeled and customized to the specific flood risk they are exposed to respecting their budget. 

Fill out the form to download our latest fact sheet and learn more about Descartes’ parametric earthquake insurance in action in the US. 

Acute earthquake risk left uninsured by traditional policies

With California being the most vulnerable state to the earthquake risk, earthquakes cost approximately $4.4 billionin the US annually. Although the Northridge quake in 1994 is still the costliest earthquake event on the US record, many cities and states in the US are experiencing earthquakes and their follow-up events, such as tsunamis, landslides, great and small, almost every year. 

While earthquakes are recognized as the deadliest natural disaster in history and as one of the perils that have caused huge material losses over the past two decades, less than 20% of earthquake related losses were covered by insurance. This can be explained with accumulated asset concentration in cities since traditional insurers cannot provide enough capacity to cover higher-value assets. Lack of loss history due to no technology available in the past and low occurrence frequency are also reasons that earthquake risk is not properly insured by traditional policies. 

Utilizing highly advanced technology and partnering with data providers, Descartes’ data scientist team monitors the evolving earthquake risks in near real-time. This data-driven approach allows us to offer transparent and economical solutions. Once the magnitude hits the predetermined threshold, it directly leads to pay-out so that our clients can financially bounce back faster than ever. 

Descartes’ parametric insurance as a revolutionary approach against earthquake exposures

Descartes’ parametric insurance has emerged as an innovative risk transfer solution for earthquake risks to fill the gap left by traditional insurance. Corporates and public entities are  provided with the insurance products modeled and customized to the specific flood risk they are exposed to respecting their budget. 

Fill out the form to download our latest fact sheet and learn more about Descartes’ parametric earthquake insurance in action in the US.