As per a new report from AM Best, after a benign natural catastrophe year in 2023, the magnitude 7.2 earthquake that struck Taiwan is not expected to add significant claims and lead to a capital event for the Taiwan non-life industry.
The recent earthquake is still the island’s largest in 25 years, with officials having reported at least 16 fatalities and more than a thousand injuries, along with significant material damage to residential and commercial property.
However, while it is too early to determine if the losses from this event will exceed losses from the 2016 Meinong magnitude 6.4 earthquake, AM Best has noted that it does not appear likely.
“Unlike the Meinong earthquake, where the epicentre was on the western coast close to the Southern Taiwan Science Park, this latest earthquake’s epicentre was on the east coast,” Am Best explained.
The rating agency also observed that in Taiwan, residential earthquake losses are all ceded to the Taiwan Residential Earthquake Insurance Fund (TREIF), so commercial insurers mainly bear commercial and industrial losses.
More generally, it has been suggested that significant losses for this earthquake could arise from business interruption (BI) coverage, with
As covered by Reinsurance News previously, this is due to the material role the technology and science sectors play in Taiwan’s overall economy (large semiconductor manufacturing companies), combined with large insureds purchasing adequate insurance protection, with the vast majority of these exposures ultimately being ceded to the international reinsurance market.
However, BI claims are not anticipated to reach the Meinong earthquake levels given the greater distance from the science parks.
