Research from MS Amlin reveals a potential underestimation of severe loss scenarios in California's earthquake insurance models due to the exclusion of "supershear" rupture effects. This oversight could have serious financial implications for insurers and policyholders alike.
Incorporating supershear phenomena into insurance and reinsurance portfolios can increase estimated losses by 5% to 10% at a 200-year return period. More alarmingly, at the 500-year return period, losses could escalate by 30% to 60%. California, as the largest global market for earthquake insurance, faces unique risks given its geography and seismic history.
Senior research analyst Luke Wedmore, alongside research analyst William Sturgeon at MS Amlin, emphasizes the reality of supershear earthquakes in California. “I do think California is susceptible to supershear earthquakes," Wedmore asserts, referencing historical evidence of such events within the state.
Supershear earthquakes are characterized by ruptures that propagate along faults at speeds equal to or exceeding the shear waves they generate. This phenomenon can lead to a concentrated wave of seismic energy, analogous to a sonic boom, resulting in more intense shaking over a larger area. Buildings are prone to experience complex torsional forces due to simultaneous pressure from different seismic directions, complicating structural engineering.
"All that seismic energy from your P and S waves arrives at the same time," Wedmore explains, noting that the increased energy from supershear ruptures inherently contributes to their destructive power.
MS Amlin’s paper, titled *Supershear Earthquakes – An Insurance Blind Spot*, published in the *Journal of Catastrophe Risk and Resilience*, asserts that supershear events have accounted for up to 58% of insured earthquake losses, translating to $13.2 billion since 2016. Alarmingly, these effects are not integrated into current seismic hazard models, building regulations, or catastrophe models utilized in underwriting and capital planning.
The impact of supershear events is illustrated by the magnitude 7.7 earthquake in Myanmar in 2025, identified as a supershear rupture that produced a surface rupture of 475km—significantly longer than standard estimates, expanding the area impacted by shaking.
California's geology presents several factors conducive to supershear rupture, including the characteristics of the San Andreas Fault, where tectonic plates slide horizontally. The straight nature of the fault and differing geology on either side are key attributes believed to facilitate supershear behavior.
Notably, historical seismic events such as the 1906 San Francisco earthquake and possibly the 1979 Imperial Valley earthquake have been postulated as supershear events, underpinning the concern for future occurrences.
The baseline risk in California is further underscored by projections from the US Geological Survey’s UCERF3 model, which estimates a 60% likelihood of a magnitude 6.7 earthquake in Los Angeles and a 72% probability in the San Francisco Bay Area within the next three decades.
Wedmore hints at the paradox of California potentially experiencing an unusually long period of seismic quiet, suggesting that, “We might be in the longest earthquake drought on California’s major faults in the last 1,000 years.” Despite this lull, the risk remains substantial, and the possibility of supershear earthquakes persists.
Such long periods without major seismic events may induce a sense of complacency, especially after more than 30 years of relative stability since the 1994 Northridge quake. Yet, California has a history of major quakes, including Fort Tejon in 1857, the 1868 Hayward event, and the San Francisco earthquake in 1906.
As the industry grapples with the unpredictability of supershear behavior, MS Amlin has adopted a sensitivity approach, noting that approximately 36% of significant strike-slip earthquakes worldwide since 2010 have exhibited supershear characteristics.
This issue should prompt insurers to consider supershear as a tail risk rather than immediate pricing guidance. By stress-testing portfolios and identifying strike-slip faults suited for supershear rupture, companies can enhance their preparedness against potential risks.
"The purpose here is not necessarily to influence pricing, because many factors affect it, but to approach this as a tail risk," Wedmore states. Insurers are encouraged to reassess their risk frameworks ahead of the upcoming updates to US earthquake models.
Major model vendors are set to revise earthquake models aligned with new seismic hazard frameworks, suggesting a timely opportunity for the industry to address these gaps. Collaboration among scientists, engineers, and risk professionals is essential to deliver the needed practical insights and guidelines.
