Let me be clear: the science of tsunami risk is complex. While large earthquakes like today’s can trigger tsunamis, not all quakes do. The Petrolia quake, for instance, wasn’t on the Cascadia Subduction Zone—the fault line most likely to generate a tsunami. But that nuance might be lost on insurance companies eager to shore up their bottom lines.
If insurers start lumping tsunamis into the same risk category as earthquakes and wildfires, we could see premiums rise not just for coastal properties but for homes miles inland.
This raises an important question: How much risk should homeowners bear versus what insurers take on? California’s Department of Insurance will undoubtedly face pressure to step in if insurers use the tsunami threat as a blanket excuse to hike rates or exit markets.
But state regulators have their hands full. Earlier this year, California Insurance Commissioner Ricardo Lara announced stricter oversight of wildfire insurance practices. Expanding those regulations to include tsunami risks would be an uphill battle.