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Insured losses from the earthquake that hit Turkey and Syria are estimated at $1 billion while total economic, or insurable, losses may reach as high as $4 billion, according to a note 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 losses will be borne by global reinsurers without ratings implications, Fitch said. “…the amount ceded is likely to be insignificant in the context of the global reinsurance market, with no implications for reinsurers’ ratings.”
The earthquake and a series of aftershocks struck southern and central Turkey and western Syria on Feb. 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 asserted.
The Turkish Catastrophe Insurance Pool was created after the Izmit earthquake of 1999 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.
The TCIP is heavily reinsured, Fitch said, estimating that the reinsurance tower provides protection of just over $2 billion, following the January 2023 reinsurance renewals, with an attachment point of around $300 million.
While earthquake insurance coverage is mandatory in Turkey, there may be little enforcement in practice, leaving many residential properties not insured.
Insurance coverage in the affected parts of Syria is likely to be similarly low, particularly given the economic effects of the country’s civil war, Fitch said.