PERILS has updated its fourth loss estimate for the Kahramanmaras Earthquake Sequence of 6 February 2023 which affected large parts of south-central Turkey and neighbouring Syria.
Based on claims data collected from affected insurance companies, PERILS’ fourth estimate of the insured property market loss for the Kahramanmaras Earthquake Sequence is TRY 117 billion (approx. USD 6.2bn at February 2023 exchange rates).
The figure compares to the previous PERILS estimate of TRY 92.8 billion issued six months after the event. In line with the PERILS coverage definition for Turkey, the numbers include losses from the property line of business.
The estimated insurance claims bill from the sequence of earthquakes that hit Turkey and Syria earlier in February appears to be growing as more is learned about the extent of the damage it caused, according to S&P Global Market Intelligence.
Losses from other lines of business as well as losses from Syria are not included.
The loss information in this fourth report provides a breakdown of property losses by province (low-resolution CRESTA Zones), with the data further divided by residential and commercial lines, and loss amounts split into buildings, contents and business interruption losses.
The Kahramanmaras Earthquake Sequence of 6 February 2023, industry loss footprint
The Kahramanmaras Earthquake Sequence consisted of a series of three major earthquakes measuring Mw 7.8, Mw 7.5 and Mw 6.7, all occurring within a nine-hour period on 6 February 2023. They caused immense devastation and human suffering with an estimated 62,000 people killed and 3 million people displaced.
The economic cost of the disaster was estimated by the Turkish overnment at TRY 1.6 trillion for direct physical damage and a further TRY 350bn for indirect economic costs. In terms of insured losses, it was the costliest catastrophe event in Turkey’s history.
Luzi Hitz, Product Manager at PERILS, commented: “Earthquake insurance is a challenge in many earthquake-prone countries. Take-up rates are often low, often driven by people’s conflicting financial priorities, affordability and a fatalistic attitude towards earthquakes”.
Economic losses in Turkey are likely to top $25 billion compared with earlier predictions of about $20 billion.
The insured loss for Turkey could exceed $5 billion, risk modeling company RMS estimated, after earlier estimates had converged around the $2 billion mark.
The quakes have killed 42,510 people in Turkey, according to the latest update from the country’s Disaster and Emergency Management Presidency, and RMS said over 335,000 buildings had been reported damaged.
The United States Geological Survey now estimates that the initial magnitude 7.8 earthquake will trigger economic losses of 1% to 10% of Turkey’s GDP, up from an earlier estimate of 0% to 6%.
These factors contribute to the significant protection gap often observed after large earthquake disasters. In order to facilitate the more widespread availability of earthquake insurance solutions, it is imperative that we elevate understanding of the risk. In this sense, every disaster is also a chance to learn and improve, and this is where we hope our industry loss data can contribute.
He continued: “In our daily work as an insurance data collector and aggregator, it is important to acknowledge the tragedies that underpin these numbers. The Kahramanmaras Earthquake Sequence was by far the deadliest and most devastating event in 2023. One year on, the impact of this tragedy is still being felt, and it will take years to rebuild what has been destroyed. Our sympathies go out anew to those affected in the Republic of Türkiye and the Syrian Arab Republic.”
