#EQI #CEA2 ▶#SocialCurrentSee®

If you read the last post on topic, the question of a $12 billion #SocialCurrentSee search continues because of the revelation that the California Earthquake Authority has that sum of claims-paying capacity in case of The Big One, a major earthquake or series of earthquakes With an estimated 920,000 policy holders currently enrolled by CEA, the claims-paying capacity would possibly net $13,043.47 to each policy holder if all should make a #EQI claim at the same time (not likely)See the calculation summary below▶ Of course, that is not a possible scenario because those hundreds of thousands of policy holders are spread across some 163,696 sq. miles of the Golden State, so just what are the chances that the whole state is impacted at the same time by a quake of any magnitude?

In reality, these calculations of dividing this $12 billion CEA "reserve" have no basis in fact, but, by comparison, here are just a few other entities that have a similar sum or net worth at stake 

Just a few of the comments, tweets in the moment
of this post archive created to
follow the subject  of $12B

Yes, $12 billion is a tidy sum of money, but not nearly enough to rebuild or replace the entire area of the most populous state in the USA  California, the basic epicenter for earthquake peril in the United States, not withstanding the current phenomena in Oklahoma, is probably less prepared for earthquake loss than virtually any other state in the nation The numbers don't lie 

920K = Total of current CEA policy holders▶ According to the CEA (via this data set on their website LINK), 

  • Largest provider of residential earthquake insurance in the U.S
  • Writes 76 percent of all residential earthquake policies sold in California (as of 2015)
  • More than 920,000 policies in force
  • Annual premium revenue more than $630 million
  • Over $12 billion in claim-paying ability

    39.35 million = Total population of California
    According to this source: "Looking at the data of population of California in the latest four years from 2011-2014, the Population of California have extended by 1.1 Million reliably. In this manner, the present year population should be around 39.075 million and the foreseen population of California for the year 2016 should be 39.35 million as estimated."

    2.9 occupants per household
    The U.S. Census Bureau today released the Profile of General Population and Housing Characteristics: 2010 for Alaska, Arizona, California, Connecticut, Georgia, Idaho, Minnesota, Montana, New Hampshire, New York, Ohio, Puerto Rico and Wisconsin. The demographic profiles provide 2010 Census data on age and sex distributions, race, Hispanic or Latino origin, household relationship and type, the group quarters population, and housing occupancy and tenure (whether the housing occupant owns or rents). Throughout May, these profiles are being released on a rolling basis for all 50 states, the District of Columbia and Puerto Rico.
    California (2010)
    • The median age was 35.2.
    • The average household size was 2.90 people per household. 
    • Among the state's occupied housing units, 55.9 percent were owned, compared with 44.1 percent that were rented.

    residential households in California per this bingo, 
    bango, bongo or just BING calculation

    55.9% of CA residential households are owner occupied

    7,585,051 CA dwellings "eligible" as potential CEA clients

    12.1% = 920,000 / 7,585,051

    So, with about 12.1% of eligible CA households now estimated to be enrolled or subscribing to EQI, thus eligible to claim a portion of the $12 billion "claim capacity" from the CEA, we observe▶ More on this topic in 1 2 3

    • $13,043.47 = "pro rata" share of $12B CEA "reserve"

    But, of course, this so-called pro rata calculation is not real-world because the CEA does not play claims that way.  

    An upcoming post will evaluate these calculations based upon a real-world scenario, including what happens when CEA does not write policies for certain homeowners, i.e., condominium owners in California.  Meanwhile, here is some data about California home values, courtesy of Bankrate.com, further evidence that $12 billion may not be the sum believed.

    California home values ($349,200 av. statewide)

    Mortgage rates | Closing costs | State tax rates
    Metropolitan areaQ3 2015
    Q3 2016
    Anaheim-Santa Ana-Irvine715.3740.13.5
    Los Angeles-Long Beach-Glendale510.6536.75.1
    Riverside-San Bernardino-Ontario292.83198.9
    San Diego-Carlsbad554.4589.36.3
    San Francisco-Oakland-Hayward795.5835.45
    San Jose-Sunnyvale-Santa Clara9651,0003.6

    Source: National Association of Realtors, Median Sales Price of Existing Single-Family Homes for Metropolitan Areas.

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    1. The posts here about the California Earthquake Authority (CEA), have prompted the following letter to the agency:

      "Referencing the history that is cited at your site (http://bit.ly/2gww1My) circa 1995-96, would you be able to supply copies of the actual "terms of agreement" that brought insurance companies back into the California marketplace after the devastating Northridge quake of January 17, 1994? The risk of earthquakes in California did not change then or since that time, so what changed about the marketplace or operating policy that brought these companies back to the marketplace? How many insurance companies (and which ones) are offering EQI in California outside of CEA participation and what portion of the market do these companies represent?"

      If and when this blogger receives a response from the CEA, that message will be shared and commented upon here.


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