PERILS releases final assessment of insured losses for 2023 Earthquake in Turkey

PERILS releases final assessment of insured losses for 2023 Earthquake in Turkey | Insurance Business Australia

Catastrophe & Flood

PERILS releases final assessment of insured losses for 2023 Earthquake in Turkey

The incident resulted in the largest financial loss from a disaster in Turkey’s history

Catastrophe & Flood

By
Kenneth Araullo

PERILS has released its fifth and final loss estimate for the Kahramanmaras Earthquake Sequence, which occurred on February 6, 2023, an event which affected large regions of south-central Turkey and neighbouring Syria.

According to data collected from insurance companies, PERILS estimates the insured property market loss at TRY116.9 billion ($6.2 billion based on February 2023 exchange rates). This figure is slightly lower than the previous estimate of TRY 117.0 billion, issued twelve months after the event.

The estimates include losses from the property line of business in Turkey, excluding other lines of business and losses in Syria.

The report details property losses by province, divided into residential and commercial lines, with further breakdowns into buildings, contents, and business interruption losses. The earthquakes, measuring Mw 7.8 and Mw 7.7, occurred along the Eastern Anatolian fault system.

The maximum ground shaking intensity reached MMI XII (Extreme) near the epicentres, and the shaking was felt up to 1,000 kilometres away. The disaster resulted in significant devastation, with an estimated 62,000 fatalities and 3 million displaced individuals. The Turkish government estimated the economic impact at approximately TRY 2 trillion ($105 billion).

The insured losses were notably high, making it the costliest catastrophe in Turkey’s history. The government-run Turkish Catastrophe Insurance Pool (TCIP) covered residential building losses, while private insurers covered commercial lines and TCIP top-up losses.

Luzi Hitz, Product Manager at PERILS, stated that the Kahramanmaras Earthquake Sequence was a significant human tragedy, requiring years to fully address its impact.

“Insurance is only one component of the overall response to such a catastrophe,” Hitz said. “The Turkish insurance industry has been extremely proactive, ensuring efficient claims handling and rapid payment. Post-event reinsurance renewals saw substantial changes but were successfully concluded, while a new mechanism has been implemented to adjust the coverage provided by the Turkish Catastrophe Insurance Pool in line with inflation. This event has clearly been very challenging for the Turkish insurance market but has been met with an incredibly pragmatic, ‘can-do’ response.”

“As the industry loss figure has hardly moved from our fourth loss report and given that affected insurers do not expect further material loss development, this fifth loss report on the Kahramanmaras Earthquake Sequence is our final report,” he said.

What are your thoughts on this story? Please feel free to share your comments below.