Impact of the 1906Bay Area Earthquake andSan Francisco Fires

USGS

Forum on Catastrophe Preparedness 4-7-06

David Keeton

Swiss Re

Impact of the 1906Bay Area Earthquake andSan Francisco Fires

The 1906 Catastrophe was a catalyst for numerous changes:

Science / Engineering

– Precipitated a whole new understanding of Earthquakes

Emergency Preparedness / Risk Management

– Demonstrated the magnitude of potential damage and logis tical challenges that can occur in a severe catastrophe

Economic Recovery

– Prompted immediate changes to the (re)insurance industry

Prior to the 1906Bay Area Earthquake

Science / Engineering

– Lessons learned following the 1868 Great Hayward Earthquake were not widely applied.

Emergency Preparedness / Risk Management

– Underestimated potential despite the recent 1871 Chicago and 19 0 4 Great Baltimore fires

Preparation for Economic Recovery

– Buildings were generally covered by Fire insurance

– However, most buildings required multiple policies to cover their full value

– Shake and Fire Following were typically excluded

Library of Congress

San Francisco 100 years ago 7th largest city in the US, with a population of 410 000

Booming economy; Architectural mix of new and old styles

Already shaken by earthquakes (1838, 1868) and not new to fires

No measures against large conflagrations and no improved seismic design

More than 90% of properties carried fire insurance ($ 2.6 m in premium)

Fire damage following earthquake mostly excluded

EQ was considered an uninsurable peril: EQ coverage was not offered

Library of Congress

Shaking and Fire in San Francisco

The fires destroyed 520 city blocks and raged for three days

Library of Congress

Museum of City of San Francisco

The Aftermath

28 000 buildings destroyed

$400 million in property damage (1906 dollars)

$80 million due to fire

3000 estimated fatalities

$235 million insured loss ($4.9 bn in 2005 USD)

100 000 settled claims

Paid loss was100 times the 1906 premium amount for fire in SF

Insured loss eliminated 47 years of US insurance mkt profit

Damage to insured property

Damage

Museum of City of San Francisco

Impact on Science / Engineering

A new era for seismology

Unprecedented amount of field and damage observations (Lawson report, 1908)

Mapping of 185 miles of surface rupture

Correlation of damage with local geology, building design and type of construction

Eventual mapping of state wide seismicity zones

Engineering

Today’s building codes & engineering are vastly improved.

Buildings rendered uninhabitable by ground shaking – 1868, 1906, 1989

Steinbrugge Collection

Courtesy of Monika Moore

Impact onEmergency Preparedness /Risk Management

Since the 1906 Bay Area Earthquake

Building code improvements

– Still a lot of building s tock built over bay fill zones

Changes to infrastructure design and maintenance.

– Key infrastructure e lements designed to higher s tandards / redundancy

Emergency response planning is vastly improved

– San Francisco has a complete ly independent fire water system (AWSS) credited with minimizing the fire damage to the Marina dis trict following Loma Prieta

Impact on Economic Recovery / Insurance

Difficult claims settlement

Shock and fire following

Incongruent earthquake exclusion clauses

Approx. 13 0 insurers

Numerous policies issued on s ingle locations

Carriers used different te rms and conditions

1906 meeting of NY companies

All fire losses would be paid –

NY Standard Fire Policy to be used in most instances

EQ exclusion standardized and Fire Following EQ not be excluded

In the end, Reinsurers followed the fortunes of the ir clients saving many companies from bankruptcy

SF Chronicle , 19 5 6

Roles of the (Re)Insurance Industry

Science / Engineering

– Support scientific research

– Incorporate information in Risk Management

Emergency Preparedness / Risk Management

– Share Risk Management knowledge / Expertise

– Promote public awareness

– There will be another significant catastrophe which will impact our lives similarly to the impact of the 1906 Earthquake

Economic Recovery

– Facilitate economic recovery via claims payments

Impact of the 1906Bay Area Earthquake andSan Francisco Fires

Before April 18, 1906, San Francisco looked something like this:

Impact of the 1906Bay Area Earthquake andSan Francisco Fires

Very few people dared to imagine that San Francisco would look like this a few days later:

Will we be prepared for the next extreme catastrophe and its unexpected lessons?