The Turkish Catastrophe Insurance Pool (TCIP) has started studies on a plan to double the maximum disaster insurance coverage to TRY1.28m ($61,850) from TRY640,000 at present for a residential property.
The pool will increase premium rates when the coverage amount is raised, but a plan is being worked out for the state to absorb the premium hike with the Ministry of Treasury and Finance for one year.
The increase will follow a move made in November 2022 that doubled the compensation payable by TCIP. That increase was made in the wake of complaints about the inadequate amounts of claims paid under the compulsory earthquake insurance scheme of the TCIP.
TCIP fixes the maximum sum insured under the earthquake insurance scheme which applies to residential housing, taking into account the rate of increase in building costs every year. TCIP coverage limits are updated as necessary.
Under the change effected in November 2022, the sum insured per square metre of residential space covered by the compulsory earthquake insurance scheme jumped from TRY1,508 to TRY3,016, and the maximum sum insured was set at TRY640,000 for 2023, twice the amount previously.
However, due to runaway inflation and escalating construction costs in Turkiye in the period since November 2022, the current sum insured still falls short of providing sufficient protection.
Türk Reinsurance, the technical operator of TCIP, stepped in and started working with the Insurance and Private Pension Regulation and Supervision Agency to raise the coverage per sq m of space to TRY6,000 from TRY3,016.
TCIP has been paying claims for housing damaged or destroyed in the massive 6 February earthquake. The pool announced that as of 22 May 2023, 539,476 claims had been received and the compensation paid up to then has approached TRY25bn. The issue most frequently voiced by quake-hit claimants is that they deem the compensation sum paid by TCIP as too low despite the hike in the sum insured in November 2022. M