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A high-intensity earthquake measuring 7.8 on the Richter scale devastated parts of Turkey and Syria on 6th February 2023. More than 33,000 people have died and innumerable losses on the economic front. Not just overall economic losses, it is very difficult to predict the economic losses which could have been covered with insurance, as on ground situation becomes clear. This earthquake has caused an estimated insurable economic loss of more than $ 4 bn, impacting the insurance sector.
Many structures and buildings in the region have been completely destroyed, with a good size of the population residing in temporary shelters or buildings prone to earthquake tremors. The Turkish Catastrophe Insurance Pool (TCIP) covers only residential buildings in the urban region, excluding commercial properties and loss of life.
Despite mandatory earthquake insurance cover, many residential properties are not insured, due to affordability. Presently, around 10.8 mn (53.90%) of about 20 mn residential properties in Turkey are covered for earthquake risk.
With insurable economic losses from the Turkey-Syria earthquake touching $ 4 bn or even more, the reinsurance part of TCIP could provide a little over $ 2 bn protection.
Further, local and international commercial insurers which provide insurance to industrial clients, for damaged factories and infrastructure like airports and ports are also majorly reinsured. The extent of claims is estimated to be insignificant for the global reinsurance market.