HomeMy WebLinkAbout04. Follow-up discussion on earthquake insurance 40
Central Contra Costa Sam ary District
June 20, 2017
TO: ADMINISTRATION COMMITTEE
VIA: ANN SASAKI, DEPUTY GENERAL MANAGER
PHIL LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
FROM: SHARI DEUTSCH, RISK MANAGEMENT ADMINISTRATOR
SUBJECT: EARTHQUAKE INSURANCE FOLLOW-UP
At the March 14, 2017 meeting, staff was asked to return to the committee with an
explanation of Central San's 2014 Earthquake Probable Maximum Loss Study, potential
impacts of more recent earthquake scenarios, and feedback regarding other agencies
that purchase earthquake insurance.
Probable Maximum Loss
At staff's request, Central San's insurance broker updated' the Earthquake Probable
Maximum Loss (PML) study in September 2014. The PML study used Central San's
insured property schedule and insurance-industry data to determine the maximum loss
from any single earthquake event. The findings from that study are summarized below.
Total Insured % of
Event Ground Up Deductible Loss Net of Value of locations
PML (5%) Deductible damaged damaged
locations
100-year $1771239031 $8,9539795 $8,1691263 $1797075,900 34%
250-year $32,6067741 $1018153366 $21,791,375 $216,307,320 41%
500-year $49,3161575 $1238887500 $36,428Y075 $25757707000 48%
1,000-year $681493,530 $145731,599 $5397619931 $294,831,989 55%
For the sake of comparison with other scenarios, consider that a 100-year event is
roughly equivalent to a 7.0 to 7.5 magnitude earthquake with a 10% probability of
occurring, that a 250-year event is roughly equivalent to a 7.6 to 8.0 magnitude
earthquake with a 4% probability of occurring, that a 500-year event is roughly
equivalent to a 8.1 to 8.9 magnitude earthquake with a 2% probability of occurring, and
that a 1 ,000-year event is roughly equivalent to a 9.0 or larger magnitude earthquake
with a 1% probability of occurring.
Administration Committee
Earthquake Insurance Follow-up
Page 2
According to the above table, a 100-year event would damage 34% of Central San's
structures for a loss of$17,123,031. Given a 5% deductible for each structure and
another 5% deductible for the contents of each structure, Central San would pay
$8,953,795 as a deductible and the insurer would pay $8,169,263.
As noted above, PML assumptions are based on insurance company models that do
not consider which fault ruptures, how close Central San's assets are to each fault or
other area-specific information which would have a significant impact on even probable
outcomes. The following section of this memo introduces two scenarios where such
data is included.
HAZUS
Staff currently serves-on the 2017 Local Hazard Mitigation Plan Steering Committee.
The entire planning partnership consists of 39 jurisdictions in Contra Costa County, The
Steering Committee was elected from the partnership to make decisions regarding the
criteria used to update the Local Hazard Mitigation Plan. As part of that assessment,
the Steering committee selected five earthquake scenarios for updated modeling using
HAZUS, FEMA's risk assessment tool. The following two scenarios came from this
updated modeling which was completed in February 2017.
The HAZUS model generates probabilities and costs of damage to critical infrastructure
ranging from slight to complete. Results of the model are based on characteristics of
each location including, among other factors, distance from the fault, soil types and
ground acceleration, zoning data, census data and historic damage information from
prior earthquakes. By multiplying the probability of a specific level of damage with the
cost of the corresponding levels of damage, staff has created a risk-weighted average
exposure.
To ascertain the potential value of earthquake insurance, the risk weighted average
exposure was then reduced to include the cost of deductibles. The insurance quote we
received includes a deductible of 5% of the total insured value for each structure and
another 5% of the total insured value for the contents inside the structure. Both
deductibles are subject to a $50,000 minimum. This results in significant deductibles for
higher cost structures. For example, the Headquarters office Building alone has a
deductible of over $1,000,000.
• Ha ired —This scenario presumes a 7.5 magnitude earthquake along the
Hayward fault. The risk-weighted average exposures for various locations are
shown on Table 1. The projected net value of earthquake insurance is shown in
Table 2.
Under this scenario, there are no structures on the Treatment Plant or Martinez
campus where the risk weighted average exposure exceeds the insurance
Administration Committee
Earthquake Insurance Follow-up
Page 3
deductible. However, there may be some Value in insuring pump stations in
orinda, which are closer to the Hayward fault and pump stations in Martinez,
which are generally situated on landfill.
• Concord/Green Valle —This scenario presumes a 0.8 magnitudeearthquake
along the Concord/Green Valley fault. The risk-weighted average exposure is
shown on Table 3 and the projected net value of earthquake insurance is shown
in Table 4.
Under this scenario, damage to most structures would not exceed the deductible
unless they suffered moderate damage. Ironically, the probability of more
significant damage is so low that the risk weighted exposure.for such outcomes
are also below the deductible threshold.
Other Agencies Purchasing Earthquake Insurance
Staff was asked to survey other water and wastewater agencies to find out if they had
purchased earthquake insurance,and if so, in what amounts. Of the 52 agencies within
the California Sanitation Risk Management Authority, only Delta Diablo purchases this
coverage. However, they only insure their recycled water facilities at a $5,000,000 limit.
For$5,000,000 in coverage of $20,000,000 in insured assets, Delta Diablo pays
$17,000 per year.
Neither East Bay Municipal Utility District, nor the Santa Clara Valley Water District
purchased earthquake insurance.
Attachments
TABLE 1
Haywired M7.5 Risk weighted Exposure
Site None dight Moderate Extensive Complete
Collections System Operations - $970,638 $1,430,607 $51,540
$2,091.
Acacia Pump Station - $4,373 $60,73 . $51,239 $55,737
Bates Blvd. Pump Station - $11,17+6
$57,046 $16,266 $48,448
Buchanan Field North Pump Station - $16,339 $111439 $324
$13,280
Buchanan Field South Pump Station - $20,545 $21,291 $838 $13,280
Clyde Pump Station - $7,399 $3,315 $38 $34
Concord Industrial Pump Station - $15,830 $7,172 $621
$10,202
Fairview Pump Station - $63,354 $52,969 $1,299 $165
Flushl(leen Pump Station - $7,795 $125,793 $127.,045 $40,006
Lower Orinda Pump Station - $441244 $434,133
$268,921 $104,401
Maltby Pump Station - $35,273 $15,980 $1,384
$2.2,732
Martinez Pump Station - $ 56,127 $179,214 $3,393
_ 2 $1,2.56,256
Mora,ga Pump Station - $377,113 $2.1409,546 $883,654 $901,393
Orinda Crossroads Pump Station - $55,367 $1,240,020 $1,677,279 $204,433
San Raman Pump Station - $458,405 $2,3921705 $644,994
$922.319
Sleepy Hallow Pump Station - $11,037 $1018,303 $67,€ 85 $26,O45
Via Roble Pump Station - $3,432 $55,378 $551929 $17,612
Damage Factors: Slight=25 Moderate=50% Extensive=75 Complete=100
Disk-Weighted Exposure =Probability of Damage x Cost of Damage
Haywired M7,,5 Fisk Weighted Exposure
Martinez Campus None alight Moderate Extensive Complete
HOB - $174,31.4 $121,952 $1,924 $513
Plant OPs/PBB - $8420734 $589,725 $9,302 $2,480
Primary Sed Tanks - $181,944 $127,321 $2,008 $536
Chem Feed Bldg/MCC22 - $70,367 $49,242 $777 $207
MRC _ $75,309 $52,700 $831 $222
Sub 16 - $24,039 $16,822 $265 $71
Headworks/ MCCS $140,620 $98,403 $1,552 $414
Sub 81 - $22,655 $15,854 $250 $67
Mech Mtc Bldg - $74,675 $52,258 $824 $220
Sub 73 - $46,656 $32,649 $515 $137
Standby Power Bldg - $351853 $25,089 $396 $106
B&G Building - $20,364 $14,250 $225 $60
SCB $7427908 $519,871 $8,200 $2,187
Sub 34 - $9,846 $6,890 $109 $29
Aeration Tank/UV Channel - $540,525 $378,24$ $5,966
$1,591
Sub 33 - $111284 $7,897 $125 $33
Sub 32 - $31523 $2,675 $42 $11
UV Building and UV Banks - $135,624 $94,907 $1,497 $399
Sub 17 - $231657 $16,576 $261 $70
Emg Switchgear Bldg $17,529 $12,266 $193 $52
Warehouse $23,231 $16,256 $256 $68
Filter Plant Fere bay - $153,090 $107,1.29 $1,690 $451
5
Sub 82 - $40,544 $28,372 $448 $119
Filter Plant Ops Filters, Pipe -
$109,230 $761437 $11206 $321
Gallery
Sub 40 - $96,923 $67,824 $1,070 $285
Clearwell - $271,070 $189,659 $2,992 $798
MCC 48 - $8,765 $6,133 $97 $26
Emg Solids Handling Bldg - $10,152 $7,104 $1.12 $30
Lab $42,365 $29,646 $468 $12.5
Damage Factors: Slight=25% Moderate=50% Extensive=75% Complete=100%
Risk-'freighted Exposure = Probability of Damage x Cost of Damage
TABLE 2
Haywired M7.5 #Loc Deductible potential Value of EQ Coverage
per Site
Site S%or$50k ea.Structure/Contents Slight Moderate Extensive Complete
Collections System Operations 2 $1,045,383 $0 $385,224 $0 $0
Acacia Pump Station 1 $100,000 $0 $0 $0 $0
Bates Blvd. Pump Station 1 $100,000 $0 $0 $0 $0
Buchanan Field North Pump Station 1 $100,000 $0 $0 $0 $0
Buchanan Field South Pump Station 1 $100,000 $0 $0 $0 $0
Clyde Pump Station 1 $100,000 $0 $0 $0 $0
Concord Industrial Pump Station 1 $100,000 $0 $0 $0 $0
Fairview Pump Station 1 $100,000 $0 $0 $0 $0
FlushKleen Pump Station 1 $100,000 $0 $25,793 $27,045 $0
Lower Orinda Pump Station 1 $153,757 $0 $280,376 $115,164 $0
Maltby Pump Station 1 $100,000 $0 $0 $0 $0
Martinez Pump Station 7 $502,704 $0 $0 $0 $753,553
Moraga Pump Station 2 $875,989 $0 $1,533,857 $7,665 $25,404
Orinda Crossroads Pump Station 2 $516,245 $0 $723,775 $1,161,034 $0
San Ramon Pump Station 1 $909,083 $0 $11483,623 $0 $13,636
Sleepy Hollow Pump Station 1 $100,000 $0 $8,303 $0 $0
Evia Roble Pump Station 1 $100,000 $0 $0 $0 $0
$0 $4,440,952 $11310,908 $792,593
Haywired M7.5 #Loc Deductible potential Value of EQ Coverage
per Site
Martinez Campus 1 $256,,533 $0 $0 $0 $0
HOB 1 $1,240,227 $0 $0 $0 $0
Plant Ops/PBB 1 $267,762 $0 $0 $0 $0
Primary Sed Tanks 1 $103,,558 $0 $0 $0 $0
Chem Feed Bldg/MCC22 1 $110,831 $0 $0 $0 $0
MRC 1 $100,000 $0 $0 $0 $0
Sub 16 1 $206,946 $0 $0 $0 $0
Headworks/MCCs 1 $100,000 $0 $0 $0 $0
Sub 81 1 $109,902 $0 $0 $0 $0
Mech Mtc Bldg 1 $100,000 $0 $0 $0 $0
Sub 73 1 $100,000 $0 $0 $0 $0
Standby Power Bldg 1 $100,000 $0 $0 $0 $0
B&G Building 1 $1,093,315 $0 $0 $0 $0
SCB 1 $100,000 $o $o $o $o
Sub 34 1 $795,475 $0 $0 $0 $0
Aeration Tank/UV Channel 1 $100,000 $0 $0 $0 $0
Sub 33 1 $100,000 $0 $0 $0 $0
Sub 32 1 $199,594 $0 $0 $0 $0
UV Building and UV Banks 1 $100,000 $0 $0 $0 $0
Sub 17 i $100,000 $o $0 $0 $o
Emg Switchgear Bldg 1 $100,000 $0 $0 $0 $0
Warehouse 1 $225,298 $0 $0 $0 $0
Filter Plant Forebay 1 $100,000 $0 $0 $0 $0
Sub 82 1 $160,750 $o $o $o $o
Filter Plant Ops, Filters, Pipe Gallery 1 $142,638 $0 $0 $0 $0
Sub 40 1 $398,926 $0 $0 $0 $0
Clearwell 1 $100,000 $0 $0 $0 $0
MCC 48 1 $100,000 $0 $0 $0 $0
Emg Solids Handling Bldg 1 $100,000 $0 $0 $0 $0
$0 $0 $0 $0
9
TABLE 3
Concord Green Valley (M6.8) Risk Weighted Exposure
Site Slight Moderate Extensive Complete
Collections System operations $593,250 $925,164 $41,815 $2,091
Acacia Pump Station $5,132 $1.,371 - $53
Bates Blvd. Pump Station $12,156 $6,593 $3,599 $894
Buchanan Field North Pump Station $10,931 $69,826 $34,151 $26,178
Buchanan Field South Pump Station $10,931 $69,82+5 $34,151 $26,178
Clyde Pump Station $13,746 $38,164 $6,569 $5,998
Concord Industrial Pump Station $24,414 $90,634 $23,341 $37,948
Fairview Pump Station $75,307 $153,832 $18,234 $330
FlushKleen Pump Station $9,555 $2,553 - $99
Lower orinda Pump Station $36,533 $10,917 $154 $308
Maltby Pump Station $45,066 $220,698 $79,354 $85,310
Martinez Pump Station $325,752 $347,3+68 $16,589 $1,2571262
Moraga Pump Station $203,010 $63,509 $23,652 $219,873
orinda Crossroads Pump Station $122.,995 $36,653 $515 $1,032
San Ramon Pump Station $2107680 $65,905 $24,545 $2281180
Sleepy Hollow Pump Station $9,139 $2,723 $38 $77
Via Roble Pump Station $4,207 $1,124 - $44
Damage Factors: Sligh t=25 Moderate=50Extensive=75% Corrm pl e te=100
Risk-Weighted Exposure =Probability of Damage x Cost of Damage
Concord Green Valley (M6.$) Risk Weighted Exposure
Martinez Campus Slight Moderate Extensive Complete
HOB $175,597 $551,851 $125,022 $130,576
Plant tips/PBB $848,935 $3,151,415 $509,261 $631,275
Primary Sed Tanks $183,253 $680,382 $131,538 $136,291
Chem Feed Bldg/ MCC22 $70,855 $263,140 $50,873 $52,711
MRC $75,564 $281,621 $54,446 $56,413
Sub 16 $24,215 $89,892 $17,379 $18,007
Headworks/MCCs $141,654 $525,$49 $101,662 $105,335
Sub 81 $220P822 $84,720 $16,379 $16,971
Warehouse $75,228 $279,260 $530989 $55!940
Sub 73 $46,999 $174,469 $33,730 $34,949
Standby Power Bldg $36,117 $134,074 $25,921 $2.6,557
B&G Building $20,514 $76,151 $14,722 $15,254
SCB $748,374 $20778,114 $537,091 $556,497
Sub 34 $9,919 $36,820 $7,118 $7,376
Aeration Tank/UV Channel $544,503 $21021,302 $390,777 $4047897
Sub 33 $11,367 $42,198 $8,158 $8,453
Sub 32 $30851 $14,295 $2,754 $2,863
UV Building and UV Banks $136,622 $507,169 $98,051 $101,593
Sub 17 $23,861 $88,577 $17,125 $171743
Emg Switchgear Bldg $17,658 $65,550 $12,673 $13,131
IMHOFF PLACE WAREHOUSE $2.3,401 $86,871 $161795 $17,402
Filter Plant Forebay $154,21.7 $572,483 $110,678 $114,677
�1
Sub 82 $40,843 $151,615 $29,312 $30,371
Filter Plants Filters, e Gallery 110 $408,r4657
p flf Pi� Y $ 1[333 $ 8,958 $81.,822
Sub 40 $97,635 $362,443 $73,071 $72,603
Clea rwell $273,065 $1,0131671 $195,972 $203,053
MCC 48 $8,829 $32.,775 $61336 $6,565
Emg Solids Handling Bldg $10,227 $37,965 $7,340 $7,605
Lab $42,677 $158,425 $33,628 $31.,735
Damage Factors: Slight=25% Moderate=50Extensive=75% Complete=100
Risk-Weighted Exposure =Probability of Damage x Cast of[damage
TABLE 4
Concord Green Valley (M6.8) #Loc Deductible Potential Value of EES Coverage
per Site
Site 5%or$50k ea. Slight Moderate Extensive Complete
5tructurelContents
Collections System operations 2 $522,692 $370,588 $402,473 - -
Acacia Pump Station 1 $13,312 - - - _
Bates Blvd. Pump Station 1 $12,076 - - - -
Buchanan Field North Pump Station 1 $12,696 - - - -
Buchanan Field South Pump Station 1 $12,696 - - - -
Clyde Pump Station 1 $8,544 - - - -
Concord Industrial Pump Station 1 $18,823 - - - -
Fairview Pump Station 1 $41,253 - $112,579 - -
FlushlCleen Pump Station 1 $24,f787 - - - -
Lower Orinda Pump Station 1 $76,879 - - - -
Maltby Pump Station 1 $41,942 - $178,756 - -
Martinez Pump Station 7 $700,000 - - $5571262
.Moraga Pump Station 2 $200,000 - - - -
Orinda Crossroads Pump Station 2 $258,122 - - - -
San Ramon Pump Station 1 $454,541 - - - -
Sleepy Hollow Pump Station 1 $100,000 - - - -
Via Roble Pump Station 1 $100,000 - - - -
$8,316,538 $88,477.721 $6.675,459 $944,869
13
Concord Green Valley (M6.8) #Loc Deductible Potential Value of EQ Coverage
per site
Martinez Campus 5%or$50k ea.
a pus structure contents Slight Moderate Extensive Complete
HOB 1 $256,533 $395,318
Plant Ops/PBB 1 $1,240,227 $1,911,189
Primary Sed Tanks 1 $267,762 $412,621
Chem Feed Bldg/MCC22 1 $103,558 $159,582
MRC 1 $110,831 $170,790
Sub 16 1 $100,000
Headworks/MCCs 1 $206,,946 $318,903
Sub 81 1 $100,000
Warehouse 1 $109,902 $169,358
Sub 73 1 $100,000 $74,469
Standby Power Bldg 1 $104,000 $34,074
B&G Building 1 $100,000
SCB 1 $1,093,315 $1,684,799
Sub 34 1 $100,000
Aeration Tank/UV Channel 1 $795,475 $1,225,827
Sub 33 1 $100"000
Sub 32 1 $100,000
UV Building and UV Banks 1 $199,594 $307,575
Sub 17 1 $100,000
Emg Switchgear Bldg 1 $100,000
IMHOFF PLACE WAREHOUSE 1 $100,000
Filter Plant Forebay 1 $225,298 $347,185
Sub 82 1 $100,000 $51,616
Filter Plant Ops, Filters, Pipe Gallery 1 $160,750 $247,,716
Sub 40 1 $142,638 $219,805
Clearwell 1 $398,926 $614,745
MCC 48 1 $100,000
Emg Solids Handling Bldg 1 $100,000
ELa b 1 $1001000 $58,425
$0 $8,403,998 $0 $0
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