Reinsurance News

CoreLogic estimates insurable damage from Turkey earthquakes at $5bn

23rd February 2023 - Author: Kane Wells

CoreLogic, a global provider of property information, analytics, and data-enabled solutions, has estimated that the devastating earthquakes that recently struck Turkey will cause insurable damage of $5 billion.

corelogic-logoOn February 6, an earthquake with a magnitude of 7.8 occurred near Pazarcık in Kahramanmaraş, triggering another earthquake with a magnitude of 7.5 with an epicentre in Elbistan.

Just two weeks after this sequence of powerful earthquakes at the Turkey and Syria border, a magnitude 6.3 earthquake impacted areas west of Aleppo, Syria, on February 20.

For the sequence of earthquakes beginning on February 6, CoreLogic has estimated industry insurable losses in Turkey could exceed $4 billion.

For the more recent February 20 event, CoreLogic estimates that insurable losses in Turkey will be up to $1 billion.

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This includes damages to buildings and contents for Turkey’s residential, commercial, industrial and agricultural structures.

CoreLogic states that its insurable loss estimate includes damage to the building stock in Turkey that is considered insurable and, therefore, does not account for earthquake insurance take-up rates or deductibles.

The insurable loss estimate includes damages to buildings and contents for residential, commercial, industrial and agricultural structures in Turkey.

It excludes any loss from damage to infrastructure such as road and rail networks; water and electric power systems; oil and gas pipelines.

Additional living expenses, business interruption and contingent business interruption are also excluded. Demand surge is also not included.

Analysts at Karen Clark & Company (KCC) have estimated that total property insurance and reinsurance industry losses from the earthquakes will total $2.4 billion, with economic losses pegged at close to $20 billion.

These estimates do not include losses within Syria and are based on the KCC Turkey Earthquake Reference Model.

Catastrophe risk modeller Moody’s RMS anticipates that economic losses from the two earthquakes will surpass $25 billion, with insurance and reinsurance industry losses expected to exceed $5 billion, in line with CoreLogic.

Meanwhile, Verisk’s Extreme Event Solutions recently published a report noting that just ~5% of the $20bn+ in economic losses from the earthquakes will fall to re/insurers.

At the time of the report, Bill Churney, President of Extreme Event Solutions, said, “The sizable difference between insured and economic losses—the protection gap—represents the cost of catastrophes to society, much of which is ultimately borne by governments. Increasing insurance penetration can ease much of the burden.

“There are solutions available that can enhance global resilience efforts including, emergency management, hazard mitigation, public disaster financing, risk pooling, and other government-led risk- and loss-mitigation initiatives.”

According to available information from the Turkish Disaster and Emergency Management Presidency (AFAD), 42,310 people have lost their lives in Kahramanmaraş, Gaziantep, Şanlıurfa, Diyarbakır, Adana, Adıyaman, Osmaniye, Hatay, Kilis and Malatya and Elazığ.

448,010 people have been evacuated from the earthquake zone.

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