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Experts say Washington has large gaps in commercial earthquake coverage; parametric and captive options recommended
Summary
Chair Wallen opened the Oct. 21 Consumer Protection & Business Committee work session; Office of the Insurance Commissioner staff and private consultants warned lawmakers that earthquake coverage is expensive for most homeowners, uncommon for commercial properties and that lenders could face material exposure absent better inventory and risk transfer strategies.
Chair Wallen opened the Oct. 21 work session with two agenda items, starting with a briefing by the Office of the Insurance Commissioner on earthquake insurance for Washington residents and businesses.
David Ford, senior policy adviser for property and casualty at the OIC, told the committee that "insurance is best designed when there are many people pool together sharing the risk and very few of us have damaging events," and he explained why earthquake coverage is typically excluded from standard property policies. He said residential earthquake endorsements often carry very high deductibles — "up to 25% of the policy limit" — and that such endorsements can cost "about 50% of what an annual homeowners premium cost would be." (David Ford, 00:02:00). The OIC also distinguished admitted carriers from surplus‑line (non‑admitted) carriers, noting surplus lines serve as a safety net for risks the admitted market will not cover and that surplus lines place about 14% of Washington's insurance market, largely in commercial…
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