The earthquake that struck off the coast of Turkey on October 30th and devastated some areas including the Izmir region is estimated to have only cost the insurance and reinsurance industry EUR 55 million, according to an estimate from PERILS AG.
The earthquake cause significant property damage around the Izmir region, downing buildings and damaging hundreds more, while some 114 people have been reported to have died from the quake.
Interestingly, PERILS, the Zurich based provider of insurance and reinsurance market loss information, explains the Izmir earthquake as a magnitude 6.9 event, despite the fact the USGS has reviewed the event as a magnitude 7.0.
PERILS cites the Kandilli Observatory as the source of that magnitude data. For the insurance and reinsurance industry as a whole, it is much more typical to cite the USGS magnitudes and this is the one that would typically be used in any parametric triggers that were exposed.
But in reporting on the local market, PERILS has elected to use the local recording station data.
Also interesting is the fact PERILS has reported on the Izmir earthquake at all, given the company operates a threshold of EUR 200 million for capturing industry loss information for earthquakes that affect Turkey.
That figure had always been too high to be really useful to the local insurance marketplace, so in this case and given the severe impacts of the earthquake, the company has dropped its reporting threshold and will provide industry loss updates for the end of October earthquake.
This is now the largest earthquake insured loss event in over 20 years, PERILS notes.
“Non-structural damage affected a total of 14 Turkish provinces. Severe damage up to the total collapse of buildings occurred in Izmir City and was mainly the consequence of poor building quality and local ground shaking amplification,” PERILS explained.
PERILS said that the Turkish insurance industry is successfully managing the impacts of the earthquake, thanks to a high-level of quake readiness.
PERILS explained that its initial estimate of the insured property market loss from the Izmir earthquake is TRY 532 million (EUR 55m at an exchange rate on 30th Oct 2020).
“While a total of 14 Turkish provinces were affected, the majority of the insurance losses occurred in the province of Izmir, in particular Izmir City, Turkey’s third largest city. Losses also incurred in the Motor and Marine Hull lines of business, the latter driven by a small tsunami triggered by the earthquake. These represent however a minor part of the industry event loss and are not included in the PERILS loss estimate,” the company said.
It’s been reported that some 57% of property in the Izmir region was covered by insurance that included quake damage cover, but still the eventual insurance and reinsurance market loss is much smaller than the economic toll, again demonstrating a significant protection gap.