It’s still a few days until the annual Great ShakeOut earthquake drills during which people in homes, schools, and organizations practice what to do during earthquakes – the events encourage preparedness and buying policies – but sales of earthquake policies in California have already been spiking, according to the California Earthquake Authority.
More than 10 million Californians are expected to participate in the Oct. 20 ShakeOut event, and more than 52 million people are expected to participate in the event worldwide. The ShakeOut event gives people a chance to practice how to drop, cover, and hold on when the clock strikes 10:20 a.m.
According to the CEA, since the ShakeOut event started in 2008, earthquake sales have been busier in the fourth quarter.
But this year sales were already trending up by the start of the quarter. The CEA announced last month it had seen a significant increase in the purchase of CEA policies so far in 2016.
The authority has more than 908,000 policies in force. That’s an increase of roughly 29,000 policies in the first eight months of this year, or nearly twice the amount of new CEA policies purchased in all of 2015, according to the CEA.
Earthquakes themselves, such as the 6.2 Magnitude Italian Earthquake on Aug. 24 that killed 298 people, or the swarm that rattled a rural Southern California area near the U.S.-Mexico border in late September, help drive policy sales, said CEA CEO Glenn Pomeroy.
“The recent swarm down by Salton Sea has got scientists getting the word out that we need to be mindful of the fact we live in earthquake country, and there is a big one coming someday,” Pomeroy said.
Lowering rates and adding options earlier this year for California consumers also pushed up sales, he added.
“Californians now have access to so many better choices as a result of changes the CEA brought to the insurance market this year,” he said. “With a wide range of policy choices, such as all new deductibles to choose from, much increased in coverage in terms of personal property and loss of use, it really is a much greater value proposition now for consumers. You roll all those factors together and we really do see this very significant increase in new policies issued this year.”
While 2016 policy sales have been brisk, Pomeroy said sales of earthquake policies have been trending up for quite some time now.
“Actually, if you look back over the last 10 years, our average annual new growth rate is around 12,000 a year,” Pomeroy said. “In other words, from year to year, we’ll add another 12,000 policies onto our total book.”
This year policies have sold at nearly triple the annual growth rate, he said.
“There is renewed interest, or increased interest, in earthquake insurance, and I think that’s a good thing,” Pomeroy said. “We definitely believe more Californians need to be prepared for this risk.”
Insurance agents may have helped with sales too. Pomeroy said more and more agents are taking the CEA’s two-hour training course to educate themselves on the new earthquake policy options.
“In some cases we see more engagement by agents, which we think is a very good thing,” he said.
Pomeroy said agents should take advantage of the upcoming Great ShakeOut, and use the event as an excuse to talk to their customers about buying an earthquake policy.
“Earthquakes don’t happen very often, but when they do they can be devastating,” he said. “All the stakeholders, we need to participate in the Great California ShakeOut, the once-a-year drill that promotes greater awareness of the dangers of earthquakes.”
Was this article valuable?
Here are more articles you may enjoy.