Wednesday, August 29, 2007

LAT Earthquake Insurance Reporting Falls Short

California's insurance coverage for earthquakes is even more inadequate than New Orleans' levees were in protecting that unfortunate city against a hurricane disaster.

The same kind of neglect is in evidence. Just as the Army Corps of Engineers and other agencies of the government failed totally to see that the levee system was extensive enough or strong enough to withstand even a hurricane like Katrina that glanced by New Orleans, so California' s Earthquake Authority is not only short of providing complete coverage: It provides coverage to only the small minority -- about 15% -- of California homeowners who buy it, and even for them the coverage is saddled with a high 15% deductible before it kicks in. This means that a $300,000 home would have to sustain $45,000 of covered damage, before the homeowner could collect anything. And much of what is understood generally as part of the property, such as garages and swimming pools, do not count toward satisfying the deductible at all. They are not covered.

Now, as L.A. Times reporter Marc Lifsher wrote in Tuesday's newspaper, the Legislature is preparing to reduce the required minimal support for the Earthquake Authority that the private insurance companies have hitherto had to give to satisfy claims, when they arise, by $1 billion from the initial $2.2 billion.

This move, another prospective giveaway by a corrupt Legislature and governor's office to a powerful private industry, would increase dramatically the chance that the Earthquake Authority's assets would be inadequate to pay even the small percentage of homeowners who carry the insurance, when a quake on the order of the San Francisco earthquake of 1906, or even the Northridge quake of 1994, occurs.

I say when, because ultimately another large earthquake is inevitable in California, and the state's ever-increasing density of population makes it ever more likely that the damages will be greater than they were in 1906 or 1994 (In Northridge, they were about $40 billion).

The reporter in this case has demonstrated before that he does not understand the numbers in the insurance business. Now, again he has failed to write an article which gives an accurate picture of the danger. His editors at the Times cannot escape responsibility either.

He does speculate, no doubt correctly, that fewer people will buy the insurance if the premiums go up. But he devotes no attention whatsoever to the question of how many homeowners, in a big quake, would be without any coverage, and he does not discuss the question then, of whether, the government would actually come to those people's rescue with its own funds.

We see in the Katrina disaster how government aid has been way short of providing enough to restore the New Orleans and Mississippi Gulf Coast areas to what they were before the 2005 hurricane. Just this week, the television networks have been recording that fact on the hurricane's second anniversary, and Time magazine did a major story. The unhappy truth is that the government, at least in the Bush Administration, has lost its will to provide adequate aid in such big disasters, and without substantial private insurance the relief is not going to come.

Yet in California, where the earthquake danger in the metropolitan areas may well exceed the hurricane danger along the Gulf Coast, state lawmakers allowed the insurance companies to ditch their responsibilities after they paid out $15 billion in Northridge claims and then bluffed the Legislature in 1996 into believing they would quit business in the state altogether unless they were relieved of most future liability to pay earthquake claims.

Originally, as Lifsher reports, the Earthquake Authority was projected to accumulate $6 billion in reserves and have 2 million insured homeowners by the end of 2008. It is falling well short of those goals, although, in this inadequate article, the author doesn't even say what reserve it has at present. He does report it has about 755,000 customers, one third the number projected by the end of next year.

There is nothing in this article about what scientists have said the odds of a big quake are in various areas of this state. Yet studies have been done on this matter, and the estimates are readily available. The odds on such a quake occurring in the next 30 years in both Northern and Southern California are high.

The Times, under Tribune Co. control, has let vital areas of coverage slip, but none more than in science, where the staff is just not anywhere near what it was. Still, it is necessary that the paper find someone who can cover the subject of insurance protection against damaging earthquakes far more satisfactorily than Lifsher has been doing.

I should not end this piece without saying a word about the death of David Garcia, a long time Southern California environmental reporter on television who was one of the few in the media who really was an earthquake expert and joined his knowledge with real interest. Garcia, who died in Palm Desert Tuesday of liver cancer at the age of 63, was the reporter for Channel 11, KTTV, during the Northridge quake, and performed impressively. He was an esteemed colleague and well liked by the earthquake scientists.

There have been no major damaging earthquakes in urban areas of California since 1994, and in their absence, public attention has drifted away from the danger. But it is there. Such earthquakes will occur, and we have to prepare for them. The Times, as the paper's largest newspaper, has a major responsibility to assist the public in this regard.

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The Washington Post has an excellent story today on Japan's success developing Internet service much faster and more comprehensive than the U.S. The speed at obtaining information is, on the average, about 30 times higher in Japan than here. Also, in Japan, television seen on the Internet often matches in clarity that seen on ordinary television sets.

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