Last week, I was in Napa Valley conducting site visits of residential and commercial structures following the American Canyon earthquake. I also visited the insurance village at the Red Cross Relief Center in Napa, where multiple insurance companies had mobile sites established to assist policyholders. As part of our visit, I reached out to more than a dozen independent adjusting firms with resources in the area to obtain ground information immediately after the earthquake. PCS issued a catastrophe designation for this event on the day it occurred.
Given the low penetration of earthquake insurance in the affected area, a large percentage of the insured losses are expected to come from commercial policies. Many businesses in downtown Napa were “red-tagged,” indicating they had sustained critical structural damage. Some were “yellow-tagged” which allows access inside for limited purposes. The U.S. Post Office and Napa County Offices buildings downtown were closed, given the extent of the damage caused by the earthquake. But the Napa Tourist Information Center was open for business. Sustaining only cosmetic damage, most of its losses are likely to come from damage to wine inventory that was for sale, along with cleaning and mitigation expenses. Many of the area’s wine stores experienced similar losses.
The earthquake affected many residences, mostly with damaged or fallen chimneys. Given that more than 90 percent in the Napa area were not insured by the CEA (California Earthquake Authority), though, relatively few such losses are likely to factor into the PCS loss estimate for the event based on our methodology.
Because the commercial losses are likely to be considerably larger than those for property and auto – and based on the low levels of catastrophe losses in the United States so far this year – the American Canyon earthquake could significantly affect the distribution of catastrophe losses by category this year.
PCS has begun the process of gathering data and developing loss estimates for this event. We expect to release our preliminary estimate next week.