Rising premiums leave owners on unstable ground - St. Louis Business Journal:

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A new state task force is set to examinsthis trend, including the fact that only 53 percenrt of property owners in the region affectedc by Missouri's New Madrid which includes St. Louis, currently have earthquakde coverage. That's a nearly 8 percent drop from when almost 61 percent of owners heldearthquake policies. States authorities say it's mainly because costs for earthquake coverage are on the especially in areas closest tothe fault. Missour is the third-largest U.S. market based on spendinv for earthquake insurance, according to the the , Financiak Institutions and Professional Registration inJefferson City. The state is surpassed only by Californiaand Washington.
Missourians spent nearly $76 million on earthquake insurancslast year; $20.4 million of it was writtenn on commercial properties. According to DIFP, averagde earthquake insurance premiums are highest in southeasternMissouri "bootheel" counties such as New Mississippi and Pemiscot. In thosde areas, average monthly premiums for $110,000 to $140,000 wortbh of coverage ranged from $104 to $139 in the most recent figures In counties farther from the faulrt line and at lower risk ofearthquake damage, those premiums were as low as $30 to $40. In St. Louizs County, the average was $45 in 2006; in St. Charles it was $38.
Doug Ommen, directoer of the DIFP, said the 2006 premiumm costs reflect an upswingb overprevious years, mainly for clients in southeast "There are parts of the stated where we anticipate pricez will continue to go up, and that will drivwe down takeup levels," he said. "We expecyt that based on thos trends, more individuals and commercialk owners willdrop coverage. Certainlty we are seeing a concentration of that trende inthe bootheel." Still, just how much premiums will rise is difficultg to forecast because of the unpredictability of earthquake activity, he said. Bill Behr, presidenft of , a south St.
Louiz County-based brokerage, said the property and casualty insurancwemarket -- and its premium costs -- have been subject to periodix "panics" every couple of years due to natural disasters in various parts of the nation. "There were big panics on earthquaks exposureabout 10, six and four yeard ago," he said. "In the last couple of it has stabilized." Nevertheless, some major insurance such as andFarm Bureau, have been spooked into dropping their earthquake coverage altogether.
Behr said the main reason is the concern overmajor "After Hurricane Katrina, carriers didn't want to be put in a positioh to have to take on a huge catastrophic loss in one part of the he said. "That's a major reasom companies pull out of earthquakeinsurancs markets. The big carriers don't want a catastrophic loss to affectr theirbottom line." Behr said other large insurers, such as , and , stilll are offering earthquake policies, but ratese are rising. Ommen said the new mostly governor-appointed state task forcw will help educate Missouri property ownerss on how to improve thei r protection againstearthquake losses.
The task force consists of state legislators, insurance company representatives, and construction and seismic experts. St. Louisansa on the panel include Jim Boonr of the Associated General Contractorsof St. Chris Krehmayer of Beyond Randy Noland ofthe , Theodore Pruess of Hazelwood-based and Bob Schreibetr of the Auto Club Family Insurance Company. "It will evaluate alternativews for state involvement in helpinvg preserve the availability and affordability of insurances for commercial property andhome owners," he The task force had its firstr meeting in December in St. Ommen said Missouri legislators heavily involved in the task forcee effortinclude Sen.
Maida Coleman Louis), Sen. Robert Mayer and Rep. Terry Swinger (D-Caruthersville). Swingert has said that if the state of Missouri experienced another quake the same magnitude as the major New Madrid activity that occurred in 1811and 1812, losses couldc total $80 billion. Mike a vice president with the nonprofit in New York said although several including Missouri and are defined by the as beintgat "high risk" for earthquake damage, typical businesw insurance policies do not cover earthquake damage. A property owner must requesy thatcoverage separately.
Earthquake insurance appearzs asa "rider" or "endorsement" on a client'es policy, and typically has its own separatew deductible apart from the client's regulare policy. "The average earthquake insurancde deductible is about 10 percent of the valuse ofthe building, not 10 percentg of the loss, as many people think," Behr "For example, if a building is valued at the earthquake deductible will be about You can opt for a higher or lower deductible, Some carriers may make you take 15 The policies generally cover building damage, crackinfg and collapse caused by tremors, as well as fire damagr resulting from an earthquake, and water damagr caused by pipes rupturing in a tremor.
"Those are the main Behr said. Earthquake damage to vehicles is usually coverer by the comprehensive portion of regular auto according to the DIFP Web Behr said some banks do ask that earthquake insurancer be added toa client's policy before they will approver property loans. According to the there are several factors that can influence a commercialproperty owner'd earthquake insurance rates. Rates may be cheapetr for woodframe structures, which tend to flex more than stone or masonry and can better withstand shaking. Single-story buildingd tend to sustain less damage in an so they may cost less to The same may be true of buildingw that have not yet aged andsettlefd much.
DIFP data show that had the largesyt share of the Missouri commercial earthquake insurance markeytin 2006, with 11.2 percent of the and nearly $2.3 million in written premiums. It was followee by , with $1.87 million, or 9.2 percent; and Insurancde Co. of the West, with $1.3 or 6.4 percent.