Why insurers shouldn’t count on building codes to prevent quake damage

Seismologists, structural engineers, and developers aren’t always on the same page when it comes to earthquake-resistant building codes, a world-renowned seismologist tells the Insurance Bureau of Canada’s 2026 InSight Summit.

“Let’s imagine we have a building built to the current code,” said keynote speaker Dr. Lucy Jones, who spent 33 years with the U.S. Geological Survey, and who served as Los Angeles’ Science Advisor for Seismic Safety. “What if your ground shaking exceeds what the code [says]?

“We’ve got a problem that the engineers and seismologists look at things in different ways. As seismologists, we do theoretical wave equations and say, ‘Oh, look at the strong shaking.’ And the engineers say, ‘We’ve never recorded this. We need real data.’”

And then on Feb. 6, 2023, a Magnitude 7.8 earthquake struck southern and central Turkey and northern and western Syria. Estimated damage from the event was more than US157.8 billion, with death estimates ranging between 59,000 and 62,000.

Jones showed a slide with a black line indicating what kind of shaking the building codes anticipated. “And their building code is the same as ours [in California],” added Jones. Blue and red lines showed what kind of shaking was actually recorded at the epicentre of the quake in Syria and Turkey.

For small buildings, a few stories tall, the building codes were built for quake frequencies of less than one second, said Jones. But for the tall buildings, “we were really far off,” said Jones, with the codes underestimating the shaking by a factor of five to 10.

“And the seismologists tended to go, ‘Hey, that’s what we were talking about,’” Jones said. And “the engineers are now going, ‘Uh, okay.’

“So we’ve got an issue there. I will say, at least discussions are happening, but don’t believe that we’ve got it covered with the building code.”

Code coverage

Jones asked the audience of insurance professionals to consider what building codes actually offer, adding that building codes do not say the structures can’t collapse. Plus, large stocks of older buildings have been built to previous code standards.

She showed slides of damage caused by various earthquakes in Los Angeles. All of the damage happened to older structures, she noted. “We no longer allow them to be built, but that doesn’t make them disappear,” she said.

She noted one dozen cities in Southern California require quake-resistant retrofits, and three cities are addressing problems related to concrete building structures.

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“We’re getting somewhere, but there are still a huge number of buildings out there [that can] be running into trouble,” she said.

Jones and other seismologists modelled a quake along California’s San Andres Fault to measure what kind of damage it could do downtown Los Angeles, assuming all structures were built to the current, highest building codes.

In the modelling, 1% (about two, three, or four) of the buildings would completely collapse. Another 10% would have to be torn down, accounting for dozens of structures, and another 40% would not be usable immediately after the event.

“So we will not be able to use most buildings in Southern California…and these are the modern buildings built to code,” she said.

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Some developers in North America shy away from spending more on up-front costs required to build to more quake-resistant standards, Jones said. “Our codes are trying to minimize life loss while minimizing upfront costs. It is not minimizing long-term costs. It’s minimizing the cost for the developer and the building owner.”

She noted in California, “it adds about 1% to the cost of construction to build to what we call a recoverable standard that you can repair the building afterwards.”

But it’s not a requirement, she added.

In fact, in California, commercial lenders don’t even require earthquake insurance if developers can show their Probable Maximum Loss following an earthquake is less than 20% of the value of the building, Jones said.

“You’d be surprised at the industry that’s out there to give you ratings of 19.4% or 19.7%,” she said. “Essentially, nobody gets commercial earthquake insurance, so the banks are going to be sitting there [after an earthquake event] holding the bag.”

Why is it worth it for developers to invest more upfront to build to a higher earthquake standard?

Jones referenced March 2011 Magnitude 9.0 earthquake that struck the east coast of Honshu, Japan. More than 20,000 people were killed, 140,000 people were displaced and more than 500,000 buildings and structures were damaged or destroyed by the earthquake and resulting tsunami.

Then, Jones showed a slide of a city that appeared untouched by the disaster.

“The city of Sendai is basically due west of the [Honshu quake’s] epicenter,” she said. “They received the strongest level of shaking, and this is what Sendai looked like after the earthquake.

“There’s essentially no damage. Because in Japan…earthquakes happen several times more often. So just overall, the code is going to be higher.

“But also, if you’re a Japanese structural engineering company, and your building fails in an earthquake, you will lose so much face you’ll never again get another job. It’s a cultural issue. They never go towards the lower level.”

David Gambrill

David has twice served as Canadian Underwriter’s senior editor, both from 2005 to 2012, and again from 2017 to the present.