Insurance industry participants say it was too early to assess the losses from the recent earthquakes in Turkey and Syria, but some are trying to sketch a rough outline of possible damages.
The U.S. Geological Survey said there could be at least $1 billion in economic losses. Insurance-ratings firm AM Best expects that there will be a “significant variance” between economic and insured losses from the two earthquakes, according to a note Wednesday.
A little more than half the country has insurance for residential housing through the Turkish Catastrophe Insurance Pool, analysts estimate. The TCIP was established in the wake of the 1999 Turkish earthquake to cover residential buildings. According to its 2021 annual report, the TCIP could, as of then, pay out 46 billion Turkish lira, equivalent to $2.4 billion, per single earthquake event; analysts say it is likely the two recent earthquakes will be counted as one.
Robert Muir-Wood, chief research officer at Moody’s RMS, said there could be up to 1 million claims for the recent earthquakes. Based on previous claims data, he estimates claims could be worth a total of 15 billion Turkish lira, which would fit comfortably under what TCIP could cover in 2021.
Mr. Muir-Wood said that inflation would have significantly increased the average claims size as well as the likely capacity of the TCIP.
Another factor that will add to the uncertainty: There are buildings still standing that will later be condemned for structural weakness and need to be demolished. This will create a much bigger bill for insurers, Mr. Muir-Wood said.
Munich Re and Swiss Re are among the reinsurers involved with the TCIP. Munich Re on Wednesday said it was still unclear which of the destroyed buildings were insured under the TCIP, and said it was too early to garner reliable estimates of losses. Swiss Re declined to comment.