Swiss Re publication recounts one of the most significant events in insurance history: The 1906 San Francisco Earthquake and Fire

17 January 2006, Zurich, New York

Swiss Re today announced the release of "A shake in insurance history - The 1906 San Francisco Earthquake." This research publication was created to mark the centennial year of the 1906 San Francisco Earthquake and Fire, an event that altered the course of the insurance industry and has become a milestone in the annals of natural disasters. The publication was released today to also mark the date of two other significant earthquakes that occurred on January 17: the 1995 Kobe, Japan Earthquake and the 1994 Northridge, California Earthquake.

"A shake in insurance history" offers a historical snapshot of San Francisco at the turn of the century, demonstrating how the 1906 earthquake and fire became one of the most formidable natural catastrophes in US history and the subsequent, industry-altering impact this event had on insurance. The 1906 earthquake helped lay the foundation for modern insurance – it spurred an abundance of scientific and engineering research, led to many insurance precedents and challenged prevalent risk perceptions.


"The 1906 San Francisco Earthquake and Fire remains a milestone in insurance history, having acted as a catalyst for many changes in the way this industry evaluated and mitigated natural catastrophe risk," said Dr. Mariagiovanna Guatteri, one of the publication's co-authors and a catastrophe perils earthquake specialist at Swiss Re. "Modeling and mitigating risk is an ever-evolving process in which a multitude of factors need to be evaluated in order to find the most successful solutions. The centennial of this catastrophe showcases the need for – and Swiss Re's ongoing commitment to - understanding risks and provisioning for the possibility of infrequent large events."

 

Impact on an industry

In the years following the event, many findings from seismology experts were utilized by the insurance industry for earthquake risk evaluation and claim estimation. This collaboration evolved into today's sophisticated earthquake risk management tools used by insurers, reinsurers and other parties. This improved understanding of seismic loss potentials has enabled the insurance industry to enhance its preparedness for meeting the needs of its clients and society in the event of a catastrophe.
The publication provides examples of other disasters as reference points as well as examples of the kinds of economic and physical impacts disasters have on the communities in which they occur. The 1994 Northridge Earthquake, for example, caused direct economic losses of USD 41.8bn and approximately 4,000 buildings were destroyed or severely damaged. The 1995 Kobe Earthquake, which still ranks today as one of the costliest earthquake of all time, resulted in economic losses of approximately USD 100 billion.

 

Today's insurance perspective

The current insurance landscape is also explored in this publication, including the risk management challenges faced today, as well as proactive risk mitigation, disaster planning, economics, culture and new solutions such as catastrophe bonds and other additional sources of risk capital.

 

Notes to editors

Swiss Re is one of the world's leading reinsurers and the world's largest life and health reinsurer. The company operates through more than 70 offices in over 30 countries. Swiss Re has been in the reinsurance business since its foundation in Zurich, Switzerland, in 1863. Swiss Re offers a wide variety of products to manage capital and risk. Traditional reinsurance products, including a broad range of property and casualty as well as life and health covers and related services, are complemented by insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Re currently has the following ratings: (i) from Standard & Poor's: long-term counterparty credit, financial strength and senior unsecured debt ratings of "AA (CreditWatch negative)", and a short-term counterparty credit rating of "A-1+", (ii) from Moody's: insurance financial strength and senior debt ratings of "Aa2" (on review for possible downgrade), and a short-term rating of "P-1" and (iii) from A.M. Best: a financial strength rating of A+ (superior) (under review with negative implications).
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