Impact of the 1906 Bay Area Earthquake and San Francisco Fires

1. Impact of the 1906Bay Area Earthquake andSan Francisco Fires Forum on Catastrophe Preparedness 4-7-06 David Keeton Swiss Re USGS

2. Impact of the 1906Bay Area Earthquake andSan Francisco Fires The 1906 Catastrophe was a catalyst for numerous changes: • Science / Engineering • Precipitated a whole new understanding of Earthquakes • Emergency Preparedness / Risk Management • Demonstrated the magnitude of potential damage and logistical challenges that can occur in a severe catastrophe • Economic Recovery • Prompted immediate changes to the (re)insurance industry

3. Prior to the 1906Bay Area Earthquake • Science / Engineering • Lessons learned following the 1868 Great Hayward Earthquake were not widely applied. • Emergency Preparedness / Risk Management • Underestimated potential despite the recent 1871 Chicago and 1904 Great Baltimore fires • Preparation for Economic Recovery • Buildings were generally covered by Fire insurance • However, most buildings required multiple policies to cover their full value • Shake and Fire Following were typically excluded Library of Congress

4. San Francisco 100 years ago • 7th largest city in the US, with a population of 410 000 • Booming economy; Architectural mix of new and old styles • Already shaken by earthquakes (1838, 1868) and not new to fires • No measures against large conflagrations and no improved seismic design • More than 90% of properties carried fire insurance ($ 2.6 m in premium) • Fire damage following earthquake mostly excluded • EQ was considered an uninsurable peril: EQ coverage was not offered Library of Congress

5. Shaking and Fire in San Francisco The fires destroyed 520 city blocks and raged for three days Museum of City of San Francisco Library of Congress

6. The Aftermath • 28 000 buildings destroyed • $400 million in property damage (1906 dollars) • $80 million due to fire • 3000 estimated fatalities Damage Museum of City of San Francisco • $235 million insured loss ($4.9 bn in 2005 USD) • 100 000 settled claims • Paid loss was100 times the 1906 premium amount for fire in SF • Insured loss eliminated 47 years of US insurance mkt profit Damage to insured property

7. Impact on Science / Engineering • A new era for seismology • Unprecedented amount of field and damage observations (Lawson report, 1908) • Mapping of 185 miles of surface rupture • Correlation of damage with local geology, building design and type of construction • Eventual mapping of state wide seismicity zones • Engineering • Today’s building codes & engineering are vastly improved. Steinbrugge Collection Courtesy of Monika Moore Buildings rendered uninhabitable by ground shaking – 1868, 1906, 1989

8. Impact onEmergency Preparedness /Risk Management Since the 1906 Bay Area Earthquake • Building code improvements • Still a lot of building stock built over bay fill zones • Changes to infrastructure design and maintenance. • Key infrastructure elements designed to higher standards / redundancy • Emergency response planning is vastly improved • San Francisco has a completely independent fire water system (AWSS) credited with minimizing the fire damage to the Marina district following Loma Prieta

9. Impact on Economic Recovery / Insurance • Approx. 130 insurers • Numerous policies issued on single locations • Carriers used different terms and conditions • 1906 meeting of NY companies • All fire losses would be paid – • NY Standard Fire Policy to be used in most instances • EQ exclusion standardized and Fire Following EQ not be excluded • Difficult claims settlement • Shock and fire following • Incongruent earthquake exclusion clauses • In the end, Reinsurers followed the fortunes of their clients saving many companies from bankruptcy SF Chronicle, 1956

10. Roles of the (Re)Insurance Industry • Science / Engineering • Support scientific research • Incorporate information in Risk Management • Emergency Preparedness / Risk Management • Share Risk Management knowledge / Expertise • Promote public awareness • There will be another significant catastrophe which will impact our lives similarly to the impact of the 1906 Earthquake • Economic Recovery • Facilitate economic recovery via claims payments

11. Impact of the 1906Bay Area Earthquake andSan Francisco Fires • Before April 18, 1906, San Francisco looked something like this:

12. Impact of the 1906Bay Area Earthquake andSan Francisco Fires • Very few people dared to imagine that San Francisco would look like this a few days later: • Will we be prepared for the next extreme catastrophe and its unexpected lessons?