Same earthquake hitting the Northeast Bay today could create a $27bn insured loss and a $184bn economic loss in the heart of Silicon Valley, according to an RMS catastrophe modelling study

Thirty years ago, the Loma Prieta Earthquake struck California on 17 October 1989.

earthquake 450

Catastrophe risk modeller Risk Management Solutions (RMS) has made a study of the likely cost if the same earthquake hit California’s Central Coast today.

In 1989 the Loma ‘quake cost $6bn in economic losses and some $902m insured losses, tiny by today’s values, particularly by US re/insurance market loss event standards.

RMS calculated that if Loma Prieta struck again today in exactly the same place, it would cost $38bn in economic losses and generate a $4bn insured loss.

Protection gap widened

The vast change in risk landscape between 1989 and 2019 is due to several reasons, RMS explained.

Increased productivity is one major factor.

If the Loma Prieta event were to happen again today, the headquarters of six of the world’s ten largest technology companies would experience strong shaking, greater than Mw 6 on the scale of magnitude.

In 2017, the San Francisco Bay Area was the 19th largest economy in the world with a GDP of $748bn. This means more buildings in the same area, increasing the likelihood of substantial damage.

However, particularly shockingly for the US market, the protection gap has also increased since 1989 for insuring California earthquake risk.

Relatively low insurance penetration of about 10% means a significant portion of homes are not adequately protected and will take longer to rebuild which will disrupt communities and the region’s economic output, RMS emphasised.

At the same time, the local population has increased. Since the event, the eight counties most heavily affected (San Francisco, San Mateo, Santa Cruz, Monterey, San Benito, Santa Clara, Alameda, and Contra Costa) have added almost two million residents, a growth of nearly 35%, RMS pointed out.

The Golden State has been lucky in avoiding major earthquakes; California’s catastrophe risk losses have been largely caused by wildfires in recent years.

Highly likely

The same magnitude earthquake hitting the Northeast Bay today could create a $27bn insured loss and a $184bn economic loss, right in the heart of Silicon Valley.

“While an identical earthquake to Loma Prieta will not occur again, the likelihood of an earthquake of the same magnitude (Mw 6.9) or higher hitting the Bay Area within the next year is very high: 5.3%,” RMS warned.

RMS modelled four different earthquake scenarios of the same magnitude as Loma Prieta (Mw 6.9) impacting different communities around the Bay Area.

The scenarios outline the economic losses, insured losses, and the number of casualties which a similar sized event could cause today.

Here are some screen grabs highlighting the scale of exposure. 

The chart below shows economic and insured losses for each scenario compared to the modeled 1989 Loma Prieta loss based on present exposure. 

RMS Loma quake chart

Modelled range of fatalities and the day-time weekday average for the scenarios and the 1989 Loma Prieta Earthquake are shown in the table below.


Expected range of fatalities

Day-time weekday average number of fatalities

East Bay



Northeast Bay



South Bay






1989 Loma Prieta




Development in the years following the 1989 Loma Prieta event has concentrated heavily in the area between the San Andreas and Hayward faults, RMS noted.

Epicentral location for the Loma Prieta Earthquake shown with the purple star. (sources: USGS and RMS Exposure Source Database).

RMS Loma quake