A shake in insurance history - The 1906 San Francisco Earthquake
The San Francisco Earthquake and Fire of 1906 remains one of the most widely known natural disasters in modern history and is of particular relevance for the insurance industry. The disaster struck at a point in time where large cities with natural hazard exposures were rapidly growing in population, commerce and communication. A century later, Swiss Re’s publication, “A shake in insurance history - The 1906 San Francisco Earthquake” examines the broader ramifications of this event.
The 1906 earthquake spawned a wealth of scientific and engineering research, challenged existing risk perceptions, accelerated insurance evolution and the development of hazard mitigation and management techniques. As the century progressed, the insurance industry increasingly used seismic science for risk evaluation. This collaboration evolved into today’s sophisticated earthquake risk management tools that insurers and others use to evaluate risks.
Improved understanding of seismic loss potentials enabled the insurance industry to achieve optimal capital allocation for catastrophic risks and enhance its preparedness for meeting the needs of its clients and society in the event of a catastrophe. The insurance industry will continue to play a key role in loss recovery as the continual development of large cities in disaster-exposed areas will boost demand for insurance protection. The ongoing concentration of values in these regions will foster new concepts for broadening the scope of risk transfer and sharing.
This publication recounts the San Francisco Earthquake and Fire in a historical context and describes how the event helped lay the foundation for modern insurance. The perception and complexities of managing catastrophic seismic risks in today’s society are explored along with the potential solutions for managing these risks.
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