Residents of Missouri's error says that a Missouri earthquake is expensive

The earthquake insurance costs have become unreasonable for many in Missouri, although it has been more than 100 years since the last major earthquake.

New Madrid, Mo. – If you live near New Madrid, Missouri in 2000, the cost of only $ 57 annually to secure your home against an earthquake. With seismic rift lines under your feet that – a few hundred years ago, you corrected the area, which was theft.

But today, insurance costs have become unreasonable for many. According to state data from 2023, it reaches $ 569 a year.

More than a hundred years have passed since the last major earthquake, but prices have risen in the past two decades. Why?

Shock on the display side

One reason is inflation. With the high cost of construction, insurance companies not only need to increase their prices, but also increase the amount of money they enjoy in the reserve if they want to make sure that they will be able to pay the claims. Since the amount they think will need to rise, these costs are usually transferred to the consumer.

“They want to make sure that even if an earthquake occurred – as in 100 years, or even in 200 years – they can still stay in the solvents,” said Hong Lee, an expert on actuarial science at the University of Jeelf in Canada.

But inflation is not the only reason – the earthquake price has exceeded. Another reason is the developments in how companies measured the risks.

Insurance companies use actuarial science to determine risk. This includes the use of sports and statistical models to determine the possibility of different events. But disasters are a difficult problem. It can be difficult to determine the risks, especially in the case of earthquakes, as it is not clear when it will be near or next step. But scientific progress allowed them to draw a clearer picture.

Michael R. said. Powers, Professor of Economics and Business at the University of Tinghua at China: “We have better scientific models, we have better ways to record data, and we may have more sensitive equipment throughout the rift area, and a feeling of throat.”

When these models became more accurate, the forces said that insurance companies have probably raised their prices to reflect the risks they carry.

In the early first decade of the twentieth century, the state's Ministry of Insurance report said that prices began to rise, as the United States's geological survey has updated its estimates of the possibility of an earthquake.

“The new predictions are estimated at 7 to 10 percent, in the next fifty years, to repeat a large earthquake like those that occurred in 1811-1812, which are likely to range between 7.5 and 8.0.” “There is an opportunity from 25 to 40 percent, in a 50 -year period of time, with a size of 6.0 earthquakes.”

The press statement continues to describe that the agency was using a new technology to predict the frequency of earthquakes and expectations have changed significantly since it was last estimated in 1985.

(Companies) uses government data, “said Powers. “They speak to government researchers to try to obtain estimates of risks and parameters of their models.”

But if that was in 2003, then why did the prices continue – and the superior inflation – since then?

He told me that a slight change in cost or pricing could cause a reactions that continue to increase prices.

Here is how it works. A slight change in the price will make some people drop their insurance. People who are likely to fall to their insurance are people in the slightest danger. Now, the client group contains a higher percentage of clients at risk, which means that providing insurance is more dangerous. Therefore, the insurance company raises prices to ensure that they have enough money in the reserves to stay solid in the event of the earthquake – and the episode begins again.

Some companies left the market, and decided that it was very risky to provide earthquake insurance. For example, the Missouri Farm Pureau office is no longer its earthquake insurance policy in New Madrid, and instead it provides it to its customers through third parties.

“We went with Lloyds in London, and we withdrew from us,” said Jason Jiner, sales manager of the Missouri office for the farm, which is based in New Madrid. “Perhaps this is because of the amount of risks, because if we have a large earthquake, it will affect Saint Lewis on Memphis, and there are a lot of risks in this field.”

The request is declined

Changing parking around the earthquake from consumers also plays a role in a lack of coverage. As I mentioned earlier by Colombia Missorian and Kamly, the next earthquake is far from being considered an imminent threat by most of the city's residents-it is more than the back anxiety, myth or grandmother. Only 11 % of the residence in the new Madrid region has earthquake insurance in 2021, a decrease from 60 % in 2000.

“(Major earthquakes) do not happen repeatedly as they do with other places, and it has been a long time because there is really frightening one, and I think this plays a big role in the consumer perspective.” “In other words, why should I buy the earthquake insurance for my home if there is no six -volume earthquake for more than 100 years?”

Besides financial concerns, there is historical concern – no one in New Madrid today knows anyone who lived in severe earthquakes in 1811. But they all lived or knew the people who lived through a large red herring in 1990.

Eppin Browning, a “climate science”, which was self -declared, predicted that there will be a major earthquake in New Madrid on December 3 or around 1990. Although there is no scientific foundation, its prediction led to great interest in panic and media. Disaster officials hit the opportunity to prepare people, even if that means panic.

“Even if it is not true, it is (IBEN BROWINING) who does a great service to prepare for emergency, because people are finally listening,” said Sikston General Safety Director, in 1990, according to the American Geological Survey report.

“Some local and local emergency management agencies are not sure of the legitimacy of prediction, unintentionally gave them credibility by using it as an opportunity to enhance the preparation of the earthquake.”

Before the catastrophe, people in Missouri whatever obtained nearly $ 22 million on insurance policies, according to the USGS report.

The report says: “The mandate of insurance in Missouri has informed about 2000 a day before December 3, and about 50 a day after that,” the report says.

Today, the madness of greatness has long been. But the efforts made to increase insurance coverage want to harness this fear – but to prepare, not crazy.

“Earthquakes not only occur in California,” a declaration begins from the Ministry of Trade and Insurance in Missouri. “It can happen here at any time and without warning. The chance of a large earthquake in the next fifty years is up to 40 % and can cause up to $ 300 billion.”

Brian Houston, a researcher at Missouri University, who focuses on disaster communications, said it is often necessary to hit fear to encourage work.

He said: “Because people are not very interested and very aware, more messages that raise fear may be required.”

The second part of the announcement is reported that most of the insurance of home owners do not cover earthquakes.

“We have found that many consumers do not realize that they are not covered by securing the earthquake because they thought it was part of the coverage of the owners of the house,” said the department spokesman Lauri Krui.

Karaki added that part of the reason is that the residents have the wrong concept is “not every person has an insurance agent like this traditional that we are used to – some people are looking for insurance on the online quotes now.”

Local agents in Missouri, such as Ginder, with Missouri Farm office, said about 30 % to 35 % of his clients choose earthquakes. This is about three times the average area – but it was much more.

“When I started for the first time, the rates were very low and I didn't ask people, I put it on their policy,” he said.

Missouri said that Missouri is a pioneer in the use of social media to clarify a message about the risk of the earthquake. The administration tells its campaign as one of the reasons why insurance coverage rates rise to 11.5 % in 2023 – which is about half a percent more than the previous year, but still slightly lower than No. 2021 of 11.6 %.

But no one in Missourian and a boy in the new Madrid region, including the mayor of the city, Nick White, spoke to the campaign. According to an offer from the National Insurance Commission in 2022, only 23 % of the population of which samples were taken had seen the campaign materials.

“Communication on this type of topic is a journey, not an event,” said Karaki.

Although a campaign to inform people may be a step in the right direction, it does not immediately treat the elephant in the room – the cost. This was many of the main objection of the new Madrid residents to insurance on the earthquake when asked. At the end of the day, you cannot intimidate people to buy something they cannot afford.

Correction of “market failure”

Political experts and officials have some ideas on how to reduce costs.

To solve problems caused by the high cost to maintain the reserves of claims, I assumed that the state should create a box of “last resort” where revenues are deposited over time in a special account at disaster strikes.

“I (I can) use this money to support insurance, or I can pay the money directly to the affected people, or I can pay this money through commercial insurance companies to their customers,” he said.

Allowing taxpayers to take over some long -term burden can serve as a successor to insurance companies.

He said: “If there is a specific long -term account in the background, the insurance company will slowly want to reduce its premium slowly.” “More people will start buying the earthquake insurance again.”

Another proposal proposed to me is to address the lack of suppliers – something that he calls “market failure” – by assigning insurance companies to provide earthquake insurance if they want to continue to do business in the state.

This can provide more consumer choice, reduce prices and spread disaster risk across more companies.

California does something similar – all companies that provide home owners insurance must provide earthquake insurance.

But Missouri's political climate is different from California.

Donni Brown is the Republican Republican actress in New Madrid and the former town of New Madrid. While he is concerned about insurance coverage numbers, he was not surprised by the price. He also works in the state seismic committee, which he said is looking for solutions to the coverage gap.

He said: “I am waiting to see what this committee comes.” “They have many experts, and many members who travel all over the world and study earthquakes, so I tend to these men, these experts, and we hope that they will reach a solution outside that committee, and then we can follow up on a legislative thing.”

While Brown doubts the government's involvement in the market, he said he was open to supporting suggestions from experts.

“The government is supposed to be here to help our citizens,” said Brown. ))

However, Brown does not believe that there will be political will in both the Senate and the House of Representatives to obtain a government solution. The Braun counterpart in the Senate, Republican Jason Ben, refused to comment.

Brown said: “You do not need to be out of view, non -mental.” “It is something that we should think of and when we have opportunities, we need to improve it.”

This story is the product of the Mississippi River Basin Ag & Water Desk office, an independent network based in Missouri University in partnership with a report by America, with great funding from the Walton Family Foundation.

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