AM Best has noted that industry-backed solutions are likely to support Morocco’s earthquake relief despite low insurance penetration in the country.
Outlining the key aspects of the event, AM Best noted that the earthquake that occurred on September 8 (magnitude of 6.8) struck the Marrakesh-Safi region in Morocco, with an epicentre located in the Atlas Mountains, a rural area situated around 75 kilometres southwest of the city of Marrakesh (the country’s fourth largest city).
“The quake is one of the most powerful experienced by Morocco, and has resulted in widespread devastation, as well as the loss of thousands of lives,” AM Best said.
According to the latest estimates from the United States Geological Survey, the economic losses could be as high as 8% of the country’s gross domestic product, reaching up to $10 billion.
For the local (re)insurance industry, the rating agency expects the financial impact to be manageable with limited retention by local (re)insurers, partly as a result of adequate cession to the global reinsurance market.
AM Best continued, “The areas most affected by the earthquake are rural, with initial information indicating a low level of insurance penetration.
“However, the impacted population should benefit from indemnity payments from the Moroccan Solidarity Fund for Catastrophic Events, itself covered by a parametric reinsurance arrangement which is expected to be triggered.”
Further damage has also been reported in dense residential areas in Marrakesh, where insurance penetration is expected to be higher and may involve local insurers, although according to initial reports, AM Best expects insurance market losses to be a fraction of economic losses.
