Insured losses from the earthquake that struck Turkey and Syria are estimated at $1 billion while total economic, or insurable, losses could reach as high as $4 billion, according to a statement from Fitch Ratings Inc. on Thursday.
Fitch noted that “low insurance coverage in the affected regions” was a factor in determining the estimates.
The bulk of the losses will be borne by global reinsurers with no rating implications, Fitch said. “…the amount ceded is likely to be insignificant in the context of the global reinsurance market, with no implications for reinsurer ratings.”
The earthquake and a series of aftershocks struck southern and central Turkey and western Syria on February 6 with a maximum magnitude of at least 7.8, according to Fitch. More than 22,000 people have been killed and tens of thousands injured.
Insurance coverage is likely to be low in most of the affected parts of Turkey and Syria, Fitch argued.
The Turkish Catastrophe Insurance Pool was created after the 1999 Izmit earthquake to cover earthquake damage to residential buildings in urban areas, but it does not cover human losses, liability claims or indirect losses, such as business interruption, Fitch said.
TCIP is heavily reinsured, Fitch said, and estimated that the reinsurance tower provides protection of just over $2 billion, after the January 2023 reinsurance renewals, with a connection point of about $300 million.
Although earthquake insurance is mandatory in Turkey, there may be little enforcement in practice, leaving many residential properties uninsured.
Insurance coverage in the affected parts of Syria is likely to be similarly low, especially given the economic impact of the country’s civil war, Fitch said.