Mitigation Program

2 Overview Required by Statute History Program Description Related Research Sponsored by the CEA Cost Benefits Rate Distribution

3 Mitigation Program Required by Statute California Insurance Code (CIC ) CEA Required to Set Aside 5% of Annual Investments Income for Mitigation Must be Available to the Public

4 Mitigation Program History 1 st Pilot Program – 1998 –2 Counties –One Stop Shopping –A Dismal Failure –What we Learned

5 Mitigation Program SAFER Program (State Assistance for Earthquake Retrofitting) Free seismic inspections with digital survey Latest technology and science; CUREE, state-of- the-art database, laser measuring, web based contractor training and bidding Trained licensed contractors Low-interest loans backed by Fannie Mae

6 Mitigation Program Inspections Include Foundations and Cracks Cripple Walls Water Heaters Chimneys Soil and Drainage

7 : Mitigation Program SAFER Results: What we found 7,100 inspections completed 87% improperly strapped water heaters 47% unbraced cripple walls 41% inadequate or no foundation bolting

8 Mitigation Program SAFER Results: Independent Survey 90% reported satisfaction 77% “very satisfied” 47% acted on one or more recommendations 49% completed all recommendations 3 in 4 homeowners who had not acted planned to do so in the near future

9 Mitigation Program What we Learned People are interested in the seismic stability of their homes People will not take the initiative on their own Preliminary assessment can streamline program 25% of homes only needed water heater retrofit

10 Mitigation Program Cost Analysis –Program Ran 21 Months –7,100 Assessment –3,345 Complete or Partial Retrofits –1,639 Complete Retrofits –Total Cost - $5.9 Million –$3,600 – Average Cost Per Retrofit

11 Partnerships Continued emphasis on results driven, science- based programs with broad consumer appeal CEA sponsored shake table test of full-scale wood-frame home Mitigation Program

12 Mitigation Program Additional Research Cal Tech –Premium Incentives Research –Computer Simulation –Determine the Appropriate Mitigation Discount Future Research –Slab Versus Raised Foundations

13 Mitigation Program Rate Distribution –Contiguous Rating Territories Versus Non-Contiguous Rating Bands –Help to Reduce Adverse Selection