Insurance catastrophe models are failing to factor in a little-known class of earthquake despite it being linked to two thirds of industry losses from seismic events in the last decade, according to a new study by MS Amlin.
Researchers at the Lloyd’s insurer found so called “supershear” earthquakes accounted for 66% of insured losses from earthquakes since 2016 – equivalent to $13.2 billion - yet are absent from seismic hazard models, building design codes and insurance catastrophe models.
The paper, published in the Journal of Catastrophe Risk and Resilience, warns this blindspot could have significant implications for capital and pricing decisions, particularly in major earthquake zones such as California – leading to calls for urgent action to be taken by risk carriers and catastrophe model vendors.
Supershear earthquakes occur when rupture along a fault travels faster than usual creating a shockwave similar to a jet aircraft’s sonic boom. The result can be far stronger ground shaking, alongside a “double punch” effect caused by successive seismic waves.
According to the paper, supershear earthquakes can produce “unusual torsional forces” on buildings, particularly taller structures, while also creating stronger shaking that travels further away from the fault.
While supershear earthquakes were once considered rare, they are being identified more frequently as seismic technology improves. Around 36% of major strike slip earthquakes globally since 2010 have involved supershear rupture.
Luke Wedmore, Senior Research Analyst at MS Amlin, who co-authored the study alongside William Sturgeon, Research Analyst, said: “There are still lots of things we don’t know about supershear earthquakes, but the evidence now suggests they are more common - and potentially far more damaging - than previously understood.
“The sonic boom produced by these ruptures can cause more intense and widespread damage – yet the impact is significantly underestimated in models used for capital and pricing decisions for earthquake risks.”
The researchers pointed to the magnitude 7.7 Myanmar earthquake in 2025 - identified as a supershear event - which produced a surface rupture stretching 475km, around 230km longer than estimates would have predicted. This materially increases the area exposed to shaking, the paper said.
The findings carry particular relevance for California, the world’s largest earthquake insurance market, where the San Andreas Fault is vulnerable to supershear. The 1906 San Francisco earthquake has since been identified as a supershear event.
Wedmore said: “Given the higher shaking intensities caused by supershear earthquakes, there is a significant chance that earthquake risk in California is markedly underestimated. With California potentially experiencing its longest major earthquake drought in 1,000 years, now is a critical moment for the industry to address this blindspot.”
MS Amlin modelled the impacts of supershear effects on representative insurance and reinsurance portfolios, finding that losses at a 200-year return period increased by 5% to 10%. At 500-year return periods, losses jumped between 30% and 60%.
Wedmore urged insurers to move quickly to ensure supershear risks are captured before the next generation of catastrophe models is finalised.
Wedmore added: “We have already updated our catastrophe models and view-of-risk to incorporate supershear effects and better understand the potential impacts on our portfolios.
“As the scientific evidence continues to strengthen, the wider industry must urgently do the same to incorporate supershear ruptures and their consequences.
“With major model vendors preparing to update US earthquake models following revisions to the national seismic hazard framework, a narrow window is open for the industry to close this gap.”
Insurers and catastrophe model vendors could begin addressing the issue immediately through stress tests and enhanced sensitivity scenarios to assess the risk in the short term, the paper said.
Among the steps proposed were identifying long strike-slip faults capable of supershear rupture and testing alternative shaking patterns within catastrophe models.
“The next steps need to involve collaboration between scientists, engineers, risk practitioners and the (re)insurance industry to advance the science and simultaneously produce practical solutions, regulations and guidance,” the paper said.
Supershear Earthquakes – An insurance blind spot, by MS Amlin researchers Luke Wedmore and William Sturgeon, is published in the Journal of Catastrophe Risk and Resilience.
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