As San Francisco prepares to mark the centenary of the quake on Tuesday, major insurers have released reports on the financial compensation paid to the residents of the devastated Californian city.

The quake and the fire that followed it reduced four and a half square miles (11.7 square kilometres) of the city to dust and left nearly 200,000 of its population of 450,000 homeless.

The official death toll was only 478, although the real number was likely to have been well over 1,000.

"It was thought that a high death toll would hamper the rebuilding and re-population of the city," Gladys Hansen, San Francisco City Archivist Emeritus, writes on the city museum's website.

The new reports say that the scale of the destruction, and the widespread sympathy for the victims, meant that the rules of insurance in operation at the time were simply over-ridden.

Barbara Eggenkaemper, head of the company archive of German insurer Allianz, said: "Because of the utter devastation caused, insurance companies were put under such great emotional and political pressure that they felt obliged to pay out on claims, even though damages were not covered by the policies."

The Swiss Re insurer said the payouts totalled 235 million dollars, equivalent to 4.9 billion dollars in today's prices.

The catastrophe wiped out the profits made by the entire insurance industry in the United States over the 47 years preceding the quake, Swiss Re has calculated.

So great was the financial burden that many insurance companies went bust.

After the mammoth payouts, the surviving companies abandoned their policy of each arranging its own clauses and instead agreed to harmonize the conditions of contracts across the industry.

The new norms, thrashed out a landmark meeting in New York in May 1906, remain a point of reference for the insurance industry today.

The San Francisco quake also taught insurers the importance of diversifying their business, both in terms of the sectors they covered and the geographical areas, in order to avoid having to make too many payouts for a single event.

The most enduring legacy of the quake was to completely change the evaluation of risks posed by natural disasters.

Major insurers such as Swiss Re and Munich Re now have teams of specialists in areas such as seismology and meteorology to assess risks.

San Francisco suffered another quake in 1989, and most experts agree it is only a matter of time before the next big one hits.

Swiss Re calculates that a major quake in San Francisco today would cause damage costing around 200 billion dollars, of which 40 to 60 billion would be covered by insurance.

In comparison, the estimated cost of Hurricane Katrina which ravaged the southern United States last year was 125 billion dollars.

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