TICE Dispatch

Shattered Lives: Eco impact of Turkey Quake may exceed 1 Billion USD

There is a 78% chance that economic damages will exceed $1 billion. The majority of the economic loss is likely to be unprotected, resulting in relatively small losses to the insurance and perhaps reinsurance industry.

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Team TICE
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Earthquake Hits Turkey Economic Impact

A massive earthquake with a magnitude of 7.7 struck the southern part of Turkey on February 6, 2023 at 0647 hrs (IST). 

Over the next 10 hours, three moderate shocks with a magnitude of 6.0 and above were recorded by the National Centre for Seismology in India. The aftershocks are located within a 150 km radius of the mainshock and about 800 km east of the capital city of Turkey. The possibility of further aftershocks with a magnitude of 4.0 to 5.0 still exists.

The Economic Impact Of Earthquake In Turkey

The earthquake has not only resulted in significant loss of life and damage to infrastructure, but is also expected to have a significant economic impact on the region. 

According to the US Geological Survey (USGS), there is a 78% chance that economic damages will exceed $1 billion. The majority of the economic loss is likely to be unprotected, resulting in relatively small losses to the insurance and perhaps reinsurance industry.

Insurance penetration is rising in Turkey, but it still remains low, with most of the losses expected to be unprotected. The Turkish Catastrophe Insurance Pool (TCIP) is a public institution responsible for providing compulsory earthquake insurance to the public, helping to ensure a minimum level of coverage. 

The TCIP had renewed its reinsurance in November 2021, with Munich Re and Swiss Re having the biggest shares of that reinsurance tower. There is a strong possibility that the TCIP will call on reinsurance support for paying claims from this earthquake should the economic damages reach above $1 billion, as the USGS suggests is likely.

However, despite the significant economic impact, Turkish quake risk remains a minor exposure within a number of outstanding retrocessional catastrophe bond deals. For any of these bonds to be affected, it would likely require an earthquake with an epicentre closer to the largest city of Istanbul.

The earthquake in Southern Turkey is expected to have a significant economic impact on the region, with losses likely to exceed $1 billion. The insurance and reinsurance industry is expected to bear only a small portion of the losses, with the majority expected to be unprotected.

How India Is Extending Its Support To Turkey?

India has mobilized an Army medical team, National Disaster Relief Force (NDRF) personnel, and medical supplies to assist in the relief efforts. 

The Agra-based 60 Para Field Hospital has sent a 99-member medical team equipped with X-ray machines, ventilators, an oxygen generation plant, cardiac monitors, and other essential equipment to establish a 30-bed medical facility. 

India has also dispatched two C-17 Globemaster aircraft of the Indian Air Force to carry the medical team and NDRF personnel. 

Additionally, a C-130 transport aircraft of the IAF is being sent to Damascus with medical supplies. The Indian government has also sent earthquake relief material and trained canines to Turkey to aid in the search and rescue operations.

As India has come forward to help Turkey in difficult times, Turkish Ambassador Firat Sunel has called India as “Dost” in his latest tweet. 

He Tweeted, "Dost" is a common word in Turkish and Hindi... We have a Turkish proverb:  "Dost kara günde belli olur" (a friend in need is a friend indeed).

Thank you very much 🇮🇳"

Earthquake Turkey Economic Impact Turkey Economy
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