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Governmental Solutions for Earthquake Exposure Non - US

Explore governmental earthquake solutions worldwide, including Japan, New Zealand, Costa Rica, Norway, Spain, and Turkey. Learn about risk sharing schemes, reinsurance programs, and operational structures. Discover how these countries handle earthquake exposure.

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Governmental Solutions for Earthquake Exposure Non - US

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  1. Governmental Solutions forEarthquake ExposureNon - US Douglas J. Collins, Tillinghast-Towers Perrin CAS Cat Risk Seminar - October 17, 2000

  2. Number of Significant Earthquakes 1950-1999

  3. Governmental EQ Solutions: Non - US • Earthquake-only Facilities • Japan • New Zealand • Multi-Peril Facilities • Costa Rica • Norway • Spain • Facilities under discussion • Turkey

  4. Japan Earthquake Reinsurance Company (JER) • Established in 1966 • Mandatory reinsurance of primary carriers • primary is voluntary with low take-up • Coverage for: • Dwellings and contents • Earthquake, volcanic eruption, tsunami • ACV with AOI = 30% to 50% of fire limit • Defined payouts - total loss, half loss, partial loss • Aggregate loss up to 4,100 billion Yen ($41B) • Government funds up to 85% • Rates • 0.5% to 4.3% of insured value

  5. JER - 1999 Risk Sharing Scheme • Up to 75B Yen • 100% private insurers • Over 75B Yen up to 820B Yen • 50% private, 50% government • Over 820B Yen up to 4,100B Yen • 5% private, 95% government • Payments pro-rated if loss greater than 4,100B Yen

  6. New Zealand Earthquake Commission (EQC) • Established in 1944 • Provides primary insurance • Coverage for: • Dwellings, contents and land • Earthquake, volcanic eruption, tsunami, landslip, hydrothermal activity and fire following (and land damage due to flood) • Replacement cost up to NZ$120K • Deductible 1% of claim • Funded aggregate limit of NZ$4.8B (US$2.4B), plus government guarantee • Rates: 5% of homeowners premium

  7. Multi-peril Facilities • Instituto Nacional de Seguros de Costa Rica (INS) • State-owned monopolistic insurer for P/C, L/H • Offers earthquake coverage • Norsk Naturskadepool • Compulsory Norwegian reinsurance pool for natural perils including earthquake, flood, windstorm, avalanche, volcanic eruption, tidal wave (Occ limit NOK 2.8B, approx $300M) • Consorcio de Compensacion de Seguros (Spain) • State guaranteed organization providing insurance coverage for natural and other catastrophes

  8. Turkish Catastrophic Insurance Pool (TCIP) • Government of Turkey requested assistance by the World Bank • Response to 8/99 Marmara earthquake • Estimated economic cost $13.5B (6.6% of GNP) • Mandatory EQ coverage to dwellings • Operational structure dependent on Turkish insurance industry • Implementation of design is ongoing

  9. Fund Administrative Issues • Mitigation/research • Disaster recovery • Funding • Government committment

  10. Sources of Information • Resources at Tillinghast-Towers Perrin • New Zealand EQC web page (www.eqc.govt.nz) • Best’s Insurance Reports International • Guy Carpenter report, “The World Catastrophe Reinsurance Market 2000” • National Geophysical Data Center (www.ngdc.noaa.gov)

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