STATE QUAKE INSURANCE PREMIUMS UP

Earthquake insurance premiums rose an average 16 percent in a six-county area of the Missouri Bootheel from 1993 to 1995.

That is more than twice the statewide average increase of 7.2 percent, a new study by the Missouri Department of Insurance shows.

The average premium for older homes rose 42 percent in the six-county area.

The six Bootheel counties -- Dunklin, Mississippi, New Madrid, Pemiscot, Scott and Stoddard -- are likely to suffer the most damage if a major earthquake occurs along the New Madrid Fault.

Many of the older homes are of solid brick or other masonry construction, which would sustain more damage than frame homes, state officials said.

In the 24-county New Madrid Fault zone, premiums for more than 27,000 owners of older homes jumped by 86 percent. Almost a fourth of those homes were in the city of St. Louis.

Many of the older, masonry houses in the region were built between 1900 and 1940, said Howard Aslinger, an American Family Insurance agent in Cape Girardeau.

Despite increased premiums, homeowners are continuing to purchase earthquake insurance, said insurance department spokesman Randy McConnell.

Statewide, the number of earthquake insurance policies rose by 3.7 percent over two years. In the New Madrid earthquake zone, the number increased 5.6 percent.

Seventy-eight percent of Cape Girardeau's insured homes had earthquake coverage in 1995, the highest in the 24-county region. The lowest was 42 percent in Oregon County.

Banks increasingly require earthquake coverage as a condition for residential or commercial loans in Southeast Missouri.

Aslinger said some 95 percent of the homeowner policies he writes carry earthquake coverage.

But fewer earthquake policies are being written for renters and on lower-valued homes. In the six-county area, the number of earthquake policies written for renters and on lower-valued homes declined by 12 and 13.8 percent, respectively, over the two-year period.

Insurance Director Jay Angoff said the situation isn't perfect, but it isn't a crisis either. He said earthquake insurance is available to homeowners, although at a higher cost. And most insurers have raised deductibles from 2 or 5 percent to 10 percent.

Still, Aslinger said, earthquake insurance remains affordable.

Angoff said some consumers have complained of difficulty in getting earthquake coverage.

But he said the situation isn't like California where insurers pulled out of the market because the state passed a law requiring companies to offer earthquake insurance.

Insurance companies grew more concerned about earthquake liability after the deadly Northridge, Calif., quake of 1994.The quake killed more than 30 people, leveled freeways and damaged buildings.

The quake proved costly to insurance companies, which found that their computer models had underestimated the liability of a major quake, McConnell said.

In 1995, 65 percent of the nearly 725,000 homes in the 24-county New Madrid Fault zone had earthquake coverage. Statewide, 43 percent of the 1.65 million homes had earthquake coverage.

The average cost of earthquake insurance reached 82 cents per $1,000 of coverage for all types of insured homes in the six most-earthquake-prone counties of Southeast Missouri in 1995. The cost amounted to $41 a year on average for a $50,000 home.

In contrast, the average rate statewide was 51 cents or $25.50 on a $50,000 home.

Earthquake coverage typically is available only as a rider or endorsement to a basic homeowner's policy.

In the 24-county New Madrid zone, including metro St. Louis, earthquake premiums for all insured homes increased an average of 7.4 percent. The figures varied greatly by county, ranging from increases of 27 percent in Bollinger and Pemiscot counties to decreases of 2.8 percent in Oregon County and 7.6 percent in Ste. Genevieve County.

Angoff said he can't explain the county-by-county differences in earthquake insurance costs because insurance companies aren't required to explain their rates, just report them.

Angoff said insurance companies are free to set their rates and territories in Missouri without approval of the insurance department.

The insurance director said he wants insurers to provide quake insurance without interference or funding from government.

He said the marketplace seems to be working when it comes to earthquake insurance coverage.

NEW MADRID EARTHQUAKE ZONE INSURANCE COVERAGE, COSTS