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Earthquake Insurance in Turkey : History of the Turkish Catastrophe Insurance Pool

Author

Listed:
  • Eugene Gurenko
  • Rodney Lester
  • Olivier Mahul
  • Serap Oguz Gonulal

Abstract

This publication, Earthquake insurance in Turkey, is an exposition of the dangers faced by Turkey as it is located in one of the most active earthquake (EQ) and volcanic regions in the world on the one hand, and, on the other hand, the efforts that Turkey is making to alleviate the social and fiscal disasters that are caused when these calamities do strike. The persistent potential for large-scale disasters has led to the establishment of the Turkish Catastrophe Insurance Pool (TCIP) in 1999. The main rationale for the creation of TCIP was a very low level of catastrophe insurance penetration among households. The authors stress that the four principal objectives of the program are to (1) provide earthquake insurance coverage at affordable but actuarially sound rates for all registered urban dwellings, (2) limit the government's financial exposure to natural disasters, (3) build long-term catastrophe reserves to finance future earthquake losses, and (4) encourage risk reduction and mitigation practices in residential construction. The book points out that the program has reduced significantly the government's fiscal exposure to EQ risk. In five years, the TCIP transformed itself from an unknown and controversial government-sponsored program to one of the most trusted brand names in the Turkish insurance industry. Moreover, it has led the World Bank to rethink the roles of ex-ante risk management relative to ex-post donor support. In this context, the World Bank supported Turkey's earthquake insurance program to establish and expand national catastrophic risk management and risk transfer capabilities. The authors conclude that the TCIP's success has brought it worldwide recognition. Inspired by the TCIP's example, more than a dozen countries, including China, Colombia, Greece, India, the Islamic Republic of Iran, Italy, the Philippines, Romania, and nine island states of the Caribbean have begun technical and legislative preparation of catastrophe insurance programs.

Suggested Citation

  • Eugene Gurenko & Rodney Lester & Olivier Mahul & Serap Oguz Gonulal, 2006. "Earthquake Insurance in Turkey : History of the Turkish Catastrophe Insurance Pool," World Bank Publications - Books, The World Bank Group, number 7142.
    • Handle: RePEc:wbk:wbpubs:7142
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    References listed on IDEAS

    as
    1. Gurenko, Eugene & Lester, Rodney, 2004. "Rapid onset natural disasters : The role of financing in effective risk management," Policy Research Working Paper Series 3278, The World Bank.
    2. Kunreuther, Howard, 1996. "Mitigating Disaster Losses through Insurance," Journal of Risk and Uncertainty, Springer, vol. 12(2-3), pages 171-187, May.
    3. Kaplow, Louis, 1991. "Incentives and Government Relief for Risk," Journal of Risk and Uncertainty, Springer, vol. 4(2), pages 167-175, April.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Aglaia Petseti & Milton Nektarios, 2012. "Proposal for a National Earthquake Insurance Programme for Greece," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 37(2), pages 377-400, April.
    2. Sommarat Chantarat & Krirk Pannangpetch & Nattapong Puttanapong & Preesan Rakwatin & Thanasin Tanompongphandh, 2015. "Index-Based Risk Financing and Development of Natural Disaster Insurance Programs in Developing Asian Countries," Risk, Governance and Society, in: Daniel P. Aldrich & Sothea Oum & Yasuyuki Sawada (ed.), Resilience and Recovery in Asian Disasters, edition 127, chapter 0, pages 171-200, Springer.
    3. Noy, Ilan & Kusuma, Aditya & Nguyen, Cuong, 2017. "Insuring disasters: A survey of the economics of insurance programs for earthquakes and droughts," Working Paper Series 6408, Victoria University of Wellington, School of Economics and Finance.
    4. Noy, Ilan & Kusuma, Aditya & Nguyen, Cuong, 2017. "Insuring disasters: A survey of the economics of insurance programs for earthquakes and droughts," Working Paper Series 20250, Victoria University of Wellington, School of Economics and Finance.
    5. Darko Blazhevski, 2019. "The Role Of Public Private Partnership In Developing Catastrophe Insurance Market," Economic Review: Journal of Economics and Business, University of Tuzla, Faculty of Economics, vol. 17(2), pages 55-66, November.
    6. Jolanta Kryspin-Watson & John Pollner & Sonja Nieuwejaar, 2008. "Climate Change Adaptation in Europe and Central Asia," World Bank Publications - Reports 25985, The World Bank Group.
    7. Adityawan Sigit & Morihiro Harada, 2024. "Land Cover and Socioeconomic Analysis for Recommended Flood Risk Reduction Strategies in Java Island, Indonesia," Sustainability, MDPI, vol. 16(15), pages 1-22, July.
    8. Mabel Marulanda & Omar Cardona & Miguel Mora & Alex Barbat, 2014. "Design and implementation of a voluntary collective earthquake insurance policy to cover low-income homeowners in a developing country," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 74(3), pages 2071-2088, December.
    9. Sommarat Chantarat, 2015. "Index-based Risk Financing and Development of Natural Disaster Insurance Programs in Developing Countries," PIER Discussion Papers 10., Puey Ungphakorn Institute for Economic Research, revised Nov 2015.
    10. Sommarat Chantarat, 2015. "Index-based Risk Financing and Development of Natural Disaster Insurance Programs in Developing Countries," PIER Discussion Papers 10, Puey Ungphakorn Institute for Economic Research.
    11. Selene Perazzini, 2020. "Public-Private Partnership in the Management of Natural Disasters: A Review," Papers 2006.05845, arXiv.org.
    12. Swenja Surminski & Paul Hudson & Jeroen Aerts & Wouter Botzen & M.Conceição Colaço & Florence Crick & Jill Eldridge & Anna Lorant & António Macedo & Reinhard Mechler & Carlos Neto & Robin Nicolai & Di, 2015. "Novel and improved insurance instruments for risk reduction," GRI Working Papers 188, Grantham Research Institute on Climate Change and the Environment.
    13. E. Subası Duman & S. Ikizler, 2014. "Assessment of liquefaction potential of Erzincan Province and its vicinity, Turkey," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 73(3), pages 1863-1887, September.
    14. Wang, Zifa & Lin, Tun & Walker, George, 2009. "Earthquake Risk and Earthquake Catastrophe Insurance for the People's Republic of China," MPRA Paper 21248, University Library of Munich, Germany.
    15. World Bank Group, 2014. "Safe and Resilient Infrastructure in the Philippines," World Bank Publications - Reports 21732, The World Bank Group.
    16. Qihao He & Michael Faure, 2024. "Strengthening Resilience and Sustainability for Post-Disaster Recovery: A Comparative Law and Economics Analysis on Smart Mixes Between Mechanisms," Sustainability, MDPI, vol. 16(21), pages 1-27, November.

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