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January 2007

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The CEA welcomes two new members to the Governing Board in 2007:  State Treasurer Bill Lockyer and Insurance Commissioner Steve Poizner.  The CEA team has compiled informational binders and developed a series of briefings to ensure a smooth transition for our new Board members and their designees.  The team looks forward to the first meeting of the new Governing Board, scheduled for March 1, 2007.


As the new Board members begin their service, two distinguished Board members, former State Treasurer Phil Angelides and former Insurance Commissioner (and newly elected Lieutenant Governor) John Garamendi, have completed their service as CEA Board members.  CEA staff enjoyed working with these two dedicated public servants and their designees on a number of goals and objectives in the CEA Strategic Plan, including higher CEA policy counts, new rate plans and product enhancements, and the CEA’s first-ever revenue bonds.  Their ideas and participation led to a stronger and more successful CEA.

Bill Lockyear

Steve Poizner

Phi Angelides

John Garamendi

State Treasurer
Bill Lockyer

Insurance Commissioner
Steve Poizner

(Former) State Treasurer
Phil Angelides

(Former) Insurance Commissioner
John Garamendi


10 Year anniversary Logo

A decade of successfully meeting the earthquake insurance needs of California policyholders was celebrated November 30 in Sacramento at a historic joint meeting of the CEA’s Advisory Panel and the CEA Governing Board. A brief celebration reception followed the meeting. Both Board and Panel members noted the efficient working relationship among them and how individual expertise has benefited CEA as a whole.

Since the California Legislature established the CEA in l996 in the aftermath of the Northridge Earthquake the CEA has built a good working relationship with insurance companies. Today the CEA has access to more than $7.2 billion to pay claims.

This decade of CEA progress has had many significant benchmarks. At the November 30 joint meeting Board and Advisory Panel members noted that 2006 has been a very productive year for CEA.




This year the CEA made history with bold steps toward enhanced financial stability, record efforts in consumer earthquake coverage and mitigation education.

  • Using the best and latest science and a reduction in reinsurance costs the CEA Governing Board voted to reduce the base policy rates on July 1, by a statewide average of 22.1 percent resulting in a rate reduction for 85 percent of CEA policyholders. As a result of the base rate reduction, the written premium for base policies and supplemental coverage decreased slightly, from $496 million to $491 million, a 1 percent decrease.
  • The CEA’s successful July 13th sale of $315 million in investment-grade revenue bonds in less than two hours was a salient sign of the financial market’s confidence in the authority’s monetary stability.  This entrance into new capital markets will strengthen and diversify CEA finances as it continues to enhance financial stability in 2007.

Putting Down Roots Cover

  • The CEA contributed significant financial support to assist in the printing and distribution of more than 2.5 million copies of Putting Down Roots in Earthquake Country directly to consumers throughout Southern California and the Bay Area. A million copies of a commemorative events calendar were also distributed to the San Francisco Bay Area residents to make them aware of anniversary events and educational opportunities
  • The CEA also gave consumers more coverage options this year with an implementation of new product enhancements, including bifurcation of the personal property and loss-of-use increased limits, and an increase in building code upgrade of $10,000.  In the four months since implementation, more than 12,700 policyholders have selected the bifurcated coverage and more than 9,400 have selected the increased building code upgrade limit.
  • Consumer education is always a priority with CEA, but 2006 was a special opportunity because of the commemoration of the 1906 San Francisco Earthquake and Fire . Throughout the year CEA has been a major supporter of events that not only looked back at history, but also urged people to prepare for potential future earthquakes. CEA’s mitigation education efforts hit all-time highs as it participated and sponsored many educational efforts. As a participating member of the 1906 Centennial Alliance, the CEA supported many activities including:

1906 Centennial Alliance Calandar

    • The installation and promotion of the Oakland Museum of California’s exhibition titled Aftershock!: Stories from the 1906 San Francisco Earthquake and Fire.  The 5,000 square foot exhibition attracted more than 45,000 visitors during its four-month run, which set a record for the Museum.
    • The Hayward Fault Project, produced by the Math Science Nucleus, gave visitors a one-of-a-kind view of a cross section of the Hayward Fault.  The CEA’s sponsorship allowed this popular exhibition to remain open through the summer, thus giving an additional 8,000 people the opportunity to tour and learn more about one of California’s most active faults.
    • Duplication, distribution and closed-captioning of Written in Stone, an earthquake education video for use in Southern California middle and high schools.
    • Development, production, and promotion of a United States Geological Survey documentary titled Shockwave: The History of the San Andreas Fault, which broadcast on CBS television in April.
  • The CEA Call Center received more than 6,500 calls from consumers and agents (between May 1st and December 11th) requesting information about the CEA’s new product enhancements, the CEA rate filing, and copies of Putting Down Roots in Earthquake Country.  The Call Center team distributed more than 21,000 copies of the popular handbook and CEA product brochures.
  • Mitigation continued to be a constant mission for CEA in 2006. It continued to be a challenge to focus consumer attention on disaster preparedness, but CEA worked hard to find and support innovative mitigation projects throughout the state. Special emphasis is being put on analysis of mitigation efforts to assess what motivates consumers to take mitigation action.

In 2006 consumer mitigation education paralleled a record-setting year for educating insurance professionals about earthquake insurance coverage.



The CEA set more training records in 2006 as insurance professionals continued to be motivated to learn the latest information about CEA’s insurance policies. Through the end of December, the CEA had delivered in-person and online training to 1,176 adjusters and 1,018 agents. The CEA training team traveled throughout California and nationally to make presentations at insurance industry gatherings.

In December agents had to actually contend with road closures caused by flooding in order to attend training at the San Jose Airport Clarion Hotel. CEA’s commitment to earthquake insurance training does not end at the state line. In Dallas the CEA training benefited Farmers Insurance adjusters who travel nationwide when needed during regional disasters. CEA’s insurance policy training continues to gain a national reputation and is in continual demand as Participating Insurers work to make sure they are ready for the big one we all know is coming.


Also in November the Property Loss Research Bureau (PLRB) Western Regional Adjusters Conference in Santa Clara invited the CEA’s Earthquake Response Manager, to be the keynote speaker. The speech was entitled, "When the Big One Hits, Will Your Adjusters Be Ready?" and focused on the latest CEA earthquake claim-handling requirements and resources available to earthquake claim professionals.

CEA keeps its course content current with the latest CEA earthquake coverage options and rate updates.  In December the CEA Board approved updates to the CEA’s Claims Manual, which will make it even more useful for future classes and Participating Insurer reference. Insurance agents are already on waiting lists for 2007 training sessions that will continue to offer continuing education credits.

For more information about enrolling in on-site and online classes go to the CEA Web site at www.EarthquakeAuthority.com.



At its August 24, 2006, meeting, the Governing Board approved the CEA staff-recommended two-part action plan to protect the future of the CEA supplemental-coverage program.  The plan consisted of a new rate application for the CEA’s supplemental-coverage rates and an emergency rulemaking petition, asking the Insurance Commissioner to amend the CEA-related regulations to allow a limited, temporary transfer of CEA base-program capital to the supplemental program. 


On August 25, 2006, the CEA submitted a rate application for the supplemental-coverage program to the California Department of Insurance (CDI).  On November 13, 2006, CDI approved the supplemental-coverage program rate application, which provides an average statewide rate increase of 32.5 percent, phased in over two years.  The rate change will apply to new and renewal policies that are effective February 1, 2007, or later.

The CEA also submitted a petition for emergency and permanent rulemaking to the Insurance Commissioner, asking the Insurance Commissioner to amend the CEA-related regulations to allow a limited, temporary transfer of CEA base program capital to the supplemental program.  The Insurance Commissioner approved the petition on October 4, 2006, and the CDI submitted an emergency rulemaking filing to the Office of Administrative Law (OAL).  The OAL approved the filing and the requested emergency regulations became effective on November 15, 2006. 

Based on significantly increased reinsurance costs, it has been determined that the supplemental-coverage rate increase and the emergency rulemaking for the temporary transfer of funds are necessary in order for the CEA to continue offering flexible earthquake coverage options to Californians. 



Earthquake damage photo

Devastation of the 2003 San Simeon Earthquake.

The CEA Governing Board approved a proposal by the California Geological Survey (CGS) seeking financial support for a one-year research project.  CGS proposes to examine locations where CEA policyholders sustained damage from the 2003 San Simeon earthquake in order to determine correlations between geologic/slope conditions and paid claims. Work on the study is scheduled to begin in 2007 with CGS and CEA staff working cooperatively.

This support is a continuation of a productive partnership between the two agencies. The CGS provided the scientific data that helped CEA develop its initial recommendations for earthquake insurance zones in California.


CEA Governing Board: Upcoming Meetings

  • March 1, 2007
  • April 26, 2007
  • June 26, 2007
  • August 30, 2007
  • October 25, 2007
  • December 13, 2007

Unless otherwise noted, Governing Board meetings are on Thursdays and begin at 1:00 p.m.

CEA Advisory Panel: Upcoming Meetings

  • March 29, 2007
  • May 24, 2007
  • July 26, 2007
  • September 27, 2007
  • November 27, 2007

Unless otherwise noted, Advisory Panel meetings are on Thursdays and begin at 10:30 a.m.


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.  The CEA's use of information obtained from third parties is in compliance with applicable privacy laws and regulations.