Academic Director, The Erhard Insurance Center, Faculty of Management, Graduate School of Business, Tel Aviv University, Ramat Aviv, Israel

The author is a member of the Israeli national committee on earthquake insurance. The views expressed in this paper do not necessarily reflect those of the other members of the committee, or of any official policy on the subject, nor do they necessarily represent those of the institutions with which he is affiliated.

I would like to thank Mr. E. Arieh, who introduced me to the interesting world of seismology and provided helpful comments on this paper. I wish to thank also the Munich-Re Corporation and especially Dr. Berz for sending me their comprehensive publications on the topic, with additional comments and suggestions. All remaining errors in the paper are my responsibility.