The second time around.

The Great San Francisco Earthquake and Fire of 1906 remains one of the most influential events in insurance history. As a result of that disaster, seismic and engineering research, along with model applications, evolved and led to today's catastrophe modeling. Engineering research also led to better structural designs and building codes.And Alfred M. Best's special report on the losses and claims paying practices of insurers following the earthquake established A.M. Best Co. as the trusted source of financial solvency data.

Insured losses at the time are estimated at $235 million. If a similar earthquake were to occur in the same location today, insured losses likely would reach $30 billion to $40 billion, according to risk management firm Eqecat, and $80 billion to $105 billion, according to Risk Management Solutions. Insured property losses would reach nearly $80 billion, according to AIR Worldwide.

"A Century of Aftershocks," our cover story on page 24, and "All Shook Up" on page 33 explore the possibilities for a similar earthquake to occur today, changes in the region that affect current exposures and risk mitigation practices that may help contain losses.

An active voice in promoting risk mitigation is the California Earthquake Authority, which offers residential earthquake insurance through its member insurance companies. "The CEA funds research into what are the most effective structural mitigation practices," said Nancy Kincaid, director of communications, public policy and mitigation. Most homeowners don't understand mitigation processes, however, so the CEA decided to educate consumers.

The organization's efforts are paying off. "We know from retailers that sales of mitigation products were up 27% in southern California in 2005 and up 120% in the Bay Area," Kincaid said. Also, earthquake base policy sales were up 3.3% in 2005.

"There's never been a better year to motivate people than 2006--the anniversary year," Kincaid said. "People are beginning to pay attention, partly because the devastation they saw on the Gulf Coast made them realize something like that could happen here."

Sally Whitney is editor. You may reach her at [phone], Ext. 5340, by writing to A.M. Best Co., Am-best Road, Oldwick, NJ 08858, or by e-mail at [e-mail]. The e-mail address for Best's Review is [e-mail].