Catastrophe risk modelling firm Moody’s RMS has said today that it anticipates the earthquakes that struck Turkey on Monday 6th February are likely to cause over US $25 billion in economic losses and over $5 billion in losses for the insurance and reinsurance market.
It’s the highest loss estimate so far, both on the economic and insured scale and important to note that this estimate is only based on the Mw7.8 and Mw7.5 earthquakes that struck southern Turkey on Monday, February 6th, so it does not include other aftershocks and more recent damaging quakes that struck the country.
The insured loss estimate, of over US $5 billion, includes impacts to private insurers as well as to the Turkish Catastrophe Insurance Pool (TCIP), Moody’s RMS explained.
The loss estimates reflect damage in Turkey only, to property and contents, and business interruption, across residential, commercial, and industrial lines in Turkey, but do not include any post-event loss amplification or losses to non-modeled exposures such as transport and utility infrastructure.
Nilesh Shome, Vice President of Earthquake Model Development at Moody’s RMS commented, “The earthquakes ruptured geometrically complex faults with multiple branches and were part of an active sequence that included over 400 events of Mw4 or greater. It is very unusual for an earthquake to trigger another event of such a magnitude as the Mw7.5 earthquake. The two largest earthquakes generated significant ground motions, and many areas were impacted by both events.”
Laura Barksby, Product Manager, Moody’s RMS, added, “The events highlighted the devastation that can arise when large magnitude events coincide with vulnerable building stock. We continue to learn from each significant earthquake, and the events in Turkey act as a wake-up call for other earthquake-prone regions, particularly concerning the true quality of the building stock.”
For comparison, risk modeller Karen Clark & Company estimated the insurance and reinsurance market loss from the Turkey earthquakes at US $2.4 billion.
Verisk Extreme Event Solutions, formerly AIR Worldwide, said the insurance and reinsurance industry faces a bill of above US $1 billion.
Fitch Ratings said the industry loss would be above $1 billion as well, expecting it to largely fall to reinsurance.
– Turkey earthquake unlikely to impact cat bond performance: Plenum.
– Twelve Capital says private ILS exposure to Turkey quake “very limited”.
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