The Kahramanmaras earthquake, that occurred on 6 February 2023, has highlighted the importance of urgent cash needs, according to the Secretary General of the Turkish Disaster Insurance Institution (DASK), Mr Balkir Demirkan.
“It was seen that people's immediate primary need was not home repairs, but cash to sustain their lives,” he told Insurance Gazette, saying that the government clearly understands this. “Therefore, 'emergency needs coverage' was added to DASK’s insurance policies.”
Emergency needs insurance
Offering emergency needs insurance is a new practice, Mr Demirkan said, adding, “There are almost no examples of it in the world. It exists as parametric payments by private insurance pools. This kind of mechanism is not common in state protection pools. Private insurance companies can make cash payments; but this is very limited in state protection.”
He explained that in traditional insurance, there are three methods of compensation. The first is the insurance company repairs the damage; the second is the insured has the repairs done and claims on the insurer; and the third is insurance compensation payment of an amount determined by an expert. In all three methods, the expert is involved in the process.
He said, “In emergency needs coverage, the expert triggers the process the moment they determine there is damage. In cases where the expert capacity is insufficient in very large-scale disasters like the one in Kahramanmaras, a parametric damage payment structure is adopted. This is a necessary transition. This new structure was created by institutionalising the experience gained from the Kahramanmaras disaster and transforming it into a written coverage structure.”