Global reinsurers will “ultimately be borne” with the insured losses. Insurance losses relating to the series of earthquakes in Turkey and Syria are expected to be in the $5 billion, although assessors say it is too early to place a precise figure on the estimated amount.
According to Fitch Ratings, the death toll has passed 33,000, with the number continuing to rise. Early estimates predict economic losses will pass $10 billion.
Despite reinsurers being expected to cover considerable portions of the losses, Fitch says the amount ceded will hold no implications for the global reinsurance market.
The deterioration of economic conditions in Türkiye meaningfully increased the asset and underwriting risks of many (re)insurers in 2022.
Insurable losses are hard to estimate as the situation is evolving, but they appear likely to exceed $2 billion and could reach $4 billion or more.
However, insured losses could be much lower, perhaps around $1 billion, due to low insurance coverage in the affected regions.
The Turkish Catastrophe Insurance Pool (TCIP), which Turk Reasurans A.S currently operates, is expected to provide coverage to 45-65% of residents in affected regions who took part in compulsory earthquake insurance schemes.
Although the cover is legally required, it is loosely enforced, with many choosing not to be insured. The policy does not cover human losses, liability claims or indirect losses, such as business interruption.
AM Best says despite assistance from international partners, local reinsurers will continue to face an extremely challenging operating environment, characterised by significant inflation and a weakening currency.
The TCIP’s latest annual report retained a lower reinsurance limit of TRY 5 billion ($0.38 billion) while the maximum limit stood to TRY 36.9 billion ($2.81 billion), up from the previous year.
