New Fuel in Quake Policy Debate

The science of earthquake prediction is imprecise at best, and that’s a continuing problem when it comes to setting insurance premiums for California homeowners. The high rates charged by the California Earthquake Authority have been under challenge since the day the state agency was created in 1996; now there is new scientific information that is likely to stir up that dispute even more.

This week scientists reported that the earthquake hazard in Southern California may be less severe than previously estimated. Insurance Commissioner Chuck Quackenbush must include this new wrinkle in his current review of the earthquake authority’s rates.

Consumers Union challenged the original premiums--and the science they were based on--in December 1996. Last month an administrative law judge rejected the rates on the basis that the CEA did not use the best available science. The judge also questioned whether the CEA operating expenses were reasonable and its method of establishing rates was evenhanded.

The CEA points out that one technical element of the judge’s ruling could push up rates, but consumer groups more persuasively maintain that the judge’s overall finding, which Quackenbush can accept, reject or modify, should help to lower premiums. The new quake forecast could help that case.

The plain truth is that most homeowners find the state’s earthquake insurance too costly for what they get and more expensive than the few new private policies that are coming on the market. The Department of Insurance needs to offer a solid justification for the current CEA rates or require a reduction. What it can’t do is nothing, allowing the rates to stand without comment.