Probabilistic assessment of earthquake insurance rates for buildings - Seismic Risk Analysis and Management of Civil Infrastructure Systems - page 797

In Turkey, the State used to have a legal obligation (Disaster Law, No.
7269) to fund the costs of reconstructing buildings after an earthquake. This
responsibility of the State brought an unplanned burden on the national
economy and on the already limited central budget in the case of cata-
strophic seismic events. The two major earthquakes in Turkey on 17 August
and 12 November 1999, which both occurred in or near urban settlements,
caused widespread destruction of the building stock. Immediately after
these two extremely destructive earthquakes the Government of Turkey
has decided to enforce earthquake insurance on a nation-wide basis through
the TCIP. The original aim of TCIP was to provide a multi-peril coverage,
but currently it provides only compulsory earthquake insurance coverage.
The idea of a nation-wide obligatory earthquake insurance enforcement
was fi rst put forward in 1978 by the Ministry of Reconstruction and Settle-
ment. Although the main aim was to reduce government's fi scal exposure,
it was also intended to encourage risk mitigation and safer construction
practices. To achieve these purposes, all registered residential dwellings that
are located within municipality boundaries were required to purchase the
compulsory earthquake insurance coverage. Initially funded by the World
Bank, TCIP was founded in August 2000 and the TCIP program became
effective since then. With its 4.0 million policies as of September 2012, TCIP
has a potential to become the largest earthquake insurance underwriting
company in the world.
29.4.2 Basic properties of the compulsory earthquake
insurance scheme
In general terms, the compulsory earthquake insurance is an insurance
product oriented towards dwellings within the boundaries of municipalities.
The guarantee for compensation is provided by TCIP, while the marketing
authority is given to 30 authorized insurance companies and their 22500
agencies. Only material damage to buildings is covered since the subject
matter of insurance is limited to the building in the policy. Any damage to
persons and contents is not covered. The period of circulation of the com-
pulsory earthquake insurance is one year. Polices must be renewed prior to
its expiry every year. Private dwellings located in villages, public buildings,
buildings entirely used for commercial and industrial purposes, and build-
ings under construction are left outside the scope of the scheme.
The amount of annual premium shows variations in relation to the size
of dwelling, type of construction (steel/ reinforced concrete, masonry and
others), and the seismic zone (fi ve zones) and ranges from 0.44‰ to 5.5‰.
For a dwelling of 100 m 2 the maximum annual premium may reach up to
US$ 110 depending on the type of construction and the seismic zone,
whereas the minimum value is set to US $25 (www.dask.gov.tr, 2012). A