Risk modeller EQECAT has published an estimate of the insured losses resulting from the recent M7.2 earthquake in Turkey. EQECAT put the range of insured losses at between $100m and $200m and the total economic loss estimate in the low single-digit billions USD. EQECAT are also the modelling agent on the Ianus Capital catastrophe bond deal. So what does this mean for the Ianus Capital cat bond which provides the Turkish Catastrophe Insurance Pool (TCIP) with a layer of reinsurance cover?
The TCIP has low penetration and take up for its insurance policies across Turkey, EQECAT estimate the national average take up at 20% and say that this is much lower in the Van region where the earthquake struck. We reported the other day that the TCIP’s exposure to the Van region is thought to be as low as 0.15%.
Given the low penetration and exposure to the region where the bulk of these losses have come from and it’s said that the TCIP’s reinsurance treaty cover only starts to pay out at €175m, it seems unlikely that Ianus Capital will attach and investors face any loss from this event. Looking through the original offering documents from Ianus Capital it seems hard to believe that this quake in this particular region of Turkey will cause sufficient loss to trigger the attachment point on the index for this cat bond.
We’ll update you if we hear any more news regarding this earthquake and the Ianus Capital catastrophe bond.