January 2005

CEA Takes Top Marketing Award for Consumer Outreach


The American Marketing Association has awarded the CEA its 2004 Marketing Excellence of the Year Award. The award was the highest honor handed out at the association’s awards luncheon on January 12, 2005.

This award is an extraordinary reminder of the CEA’s continuing success with its 2003
Do You Know?
consumer-communication campaign – the CEA’s first direct communication with current and former policyholders. The campaign featured a series of letters presenting information on earthquake preparedness as well as CEA insurance products and financial support. Thanks to the campaign, the CEA’s base-policy count has stabilized, and CEA supplemental-coverage sales have gone up by more than 20,000.

The American Marketing Association is one of the oldest and largest professional associations for marketers, with 38,000 members worldwide in every area of marketing. Competition for the prestigious Marketing Excellence of the Year Award included campaigns submitted by a wide variety of private, public, and nonprofit organizations.

We at the CEA feel grateful and honored to have received this award. And amazingly enough, we are still reaping benefits from this campaign: even a year after the letters were mailed, consumers who held on to the letter are calling to inquire about the CEA and ask questions.

Marketing and Events Spark Interest in CEA Supplemental Coverage

The last quarter of 2003 saw increased media messages and public discussions about emergency preparedness and insurance options, a direct result of natural catastrophes—fires, floods and earthquakes—that occurred that year. For the CEA, those natural events and the CEA’s successful Do You Know? campaign greatly increased consumer awareness about earthquake insurance and the CEA’s supplemental coverages. This increased awareness contributed to stopping what had been a steady, years-long decline in the sale of CEA base-limits policies.

But equally as important, the education and outreach efforts also led to a dramatic increase in the number of supplemental coverages sold in 2004. In November 2003, the CEA had 132,483 policies with supplemental coverages, but a year later, some 154,246 policyholders had elected to add supplemental coverages – an increase of over 20,000 in a single year.

Supplemental coverages enable policyholders to enhance their base-limits earthquake policy. Currently, these additional coverages include lowering the homeowner policy deductible from 15 percent to 10 percent, and on all CEA policies, increasing personal property coverage up to as much as $100,000 and increasing emergency living expenses up to $15,000.

Events such as the San Simeon earthquake and the San Diego firestorms of 2003 are disastrous and costly events, but they remind Californians to prepare for the unexpected, through mitigation or insurance.

Earthquake Anniversaries are Sobering Reminders to Prepare

January 17th marked not only the 11th anniversary of the 6.7 Northridge earthquake, but also the 10th anniversary of the devastating Great Hanshin Earthquake that shook Kobe, Japan. That temblor, measuring 7.3 in magnitude, took 6,433 lives and destroyed countless homes, buildings, and structures in moments. In the intervening 10 years, most of Kobe has been rebuilt, and the population has now stabilized at about the number who lived in the city in 1995. In Kobe, thousands of people remembered quake victims at a ceremony presided over by Japan’s Emperor and Empress – those present observed a moment of silence and held candles and bowed their heads in tribute to the victims.

Every day is earthquake season in California. The Kobe and Northridge anniversaries remind us that an unpredictable, devastating earthquake can strike anywhere in California, anytime, any day. As the world has learned from the recent earthquake-triggered tsunami tragedy in south Asia, earthquakes can happen anywhere, harming people, and destroying homes, crops, and property. The Kobe lesson is clear and absolutely underscores our consistent CEA messages: Always be prepared for disaster. And take the time to learn how to reduce injury and damage.

Seismically Active Areas Kept CEA Responding in 2004

California is the most seismically active state in the country, with thousands of earthquakes recorded each year. While most earthquakes are small and cause no damage, about 100 earthquakes of magnitude 3.0 or greater have been felt and watched closely since the December 2003 San Simeon earthquake – in fact, about 30 moderate earthquakes in the San Simeon region alone have been recorded since that 6.5 temblor.

December 22nd marked the one year anniversary of the San Simeon earthquake, California’s largest earthquake in five years. The CEA’s Earthquake Response Team was deployed to the Paso Robles and San Luis Obispo areas immediately after the quake struck and began working with participating insurers to monitor and assist with damage reports and begin claim processing for CEA policyholders. While that earthquake mostly damaged commercial buildings and infrastructure, the CEA received over 450 claims in the six-month period ending June 30th, and 63 CEA policyholders have received payments totaling more than $1.5 million. As part of its consumer-education outreach, the CEA purchased newspaper and radio ads throughout the Central Coast, encouraging policyholders to file claims if they thought their home had experienced quake damage.

In late September, the CEA responded to two more significant earthquakes – one was a magnitude 6.0 earthquake in the small town of Parkfield, situated on the San Andreas Fault between Interstate 5 and U.S. Highway 101. An estimated 17,000 CEA policyholders live within 50 miles of the Parkfield epicenter, but to date the CEA is aware of only three filed claims. The other temblor was a 5.0 that struck the rural Kern County community of Arvin. Both areas are seismically active, and the CEA continues to provide support for policyholders and help participating insurers adjust CEA claims.

CEA Governing Board Approves 2005 Business Plan

At its December 9th meeting, the Governing Board approved a Business Implementation Plan (BIP) and supporting budget for 2005. The projects included developing product enhancements, a rate filing reflecting current science, marketing initiatives, and mitigation. The CEA’s BIP is a valuable tool in enhancing the CEA’s claims-handling guidelines and procedures and in encouraging Californians to protect themselves and their property from earthquake damage.

Strategies identified in the BIP include coordinating with earthquake-response entities and collaborating with various stakeholders. We’re excited that the CEA will be working with others on planning activities involving the 100-year anniversary of the 1906 San Francisco earthquake.

In 2005, CEA staff will explore options to enhance CEA insurance products and research best practices in evaluation and repair of earthquake damage. The CEA will also explore financial alternatives for the financial structure and periodically reevaluate policy premium rates based on scientific data and CEA financial metrics.

On the subject of mitigation, the CEA submitted a program budget to the Board, which approved the budget at its December 9th meeting. The mitigation budget and accompanying plan outline potential mitigation pilot programs, each targeted to begin in early spring 2005 and run for six months, followed by a two-month review and evaluation of outcomes and effectiveness. A second Request for Proposal will launch in the coming weeks as the CEA continues the process of identifying viable long-term mitigation programming. Throughout the pilot process and in imaginative ways, the test programs will help people learn about their earthquake risk and show them how to protect themselves and their property in an earthquake.

Educating Insurance Agents a Key to Customer Satisfaction

Over the past year, the CEA has trained hundreds of insurance agents and brokers on CEA coverages. In October the CEA participated in the 25th Insurance Brokers and Agents of Sacramento annual event. More than 800 insurance professionals gathered to discuss and learn about the latest in insurance news and products. The CEA provided attendees with information about the CEA and earthquake insurance and handed out coupons to encourage agents to take the CEA’s online training course that provides two free continuing education credits. (http://www.earthquakeauthority.com/agent_login.htm)

“This important training equips agents to handle the complex challenges of helping policyholders after an earthquake,” said CEA CEO Elaine Bush. “Better trained agents will help the CEA reach its goal of providing fair, prompt, and consistent service for policyholders.”

In September, the CEA presented materials on earthquake coverage to independent brokers and agents at a conference of the American Agents Alliance, highlighting key aspects of earthquake insurance and CEA online-training opportunities.

The CEA also trained over 1,000 claims representatives in 2004 from participating insurers like State Farm, Farmers, Allstate, and others. The adjuster training concentrates on CEA policy coverage and claim-handling procedures. In addition, January 1st brought new California Department of Insurance regulations that require claim representatives to receive specific training on the handling of earthquake claims. CEA participating insurers have been busy training their claim representatives through methods such as in-house training.

2005 CEA Board & Advisory Panel Meeting Schedules Details

The CEA Governing Board approved a list of meeting dates for 2005. Unless otherwise noted, all CEA Governing Board meetings are on Thursdays and begin at 1:00 p.m.

CEA Governing Board

  •  February 24
  •  April 28
  •  June 30
  •  August 25
  •  November 17
  •  December 15

The CEA Advisory Panel meeting dates for 2005:
all meetings are on Thursdays and begin at 10:30 a.m.

  •  January 27
  •  March 24
  •  May 26
  •  July 21
  •  September 22
  •  October 27


 




Do You Know?

Every year Southern California has about 10,000 earthquakes, but most of them are so small they are not felt. Only a few hundred are greater than magnitude 3.0, and only about 15 to 20 are greater than magnitude 4.0. If there is a large earthquake, however, the aftershock sequence will produce many more earthquakes of all magnitudes for many months.

USGS Earthquake Hazards Program

   

Legal Advisory - As a matter of its standard operating procedure and as part of its general compliance program, the CEA continually confirms that it complies with all applicable laws, regulations, and rulings, including those regarding insurance rating and pricing.

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