Probabilistic assessment of earthquake insurance rates for buildings - Seismic Risk Analysis and Management of Civil Infrastructure Systems - page 804

private sector in the process of administration, bureaucratic burdens are
minimized.
• A very large pool is created independent of the national budget. There-
fore to a large extent it is free from political intentions; this is the major
benefi t of the system.
• TCIP has all main components and the potential for substituting for the
government, in compensating post-disaster losses in residential build-
ings through an insurance program.
• Within the context of Turkish experience, it is observed that pooling
natural catastrophe risks increases the take-up-rates signifi cantly if it is
made mandatory (with affordable rates) and improves risk awareness
of the public. The current take-up rate of 26% is quite high compared
with some other countries like India, Philippines, Iran, China, Romania,
and Bulgaria, where the corresponding rates are all less than 5%. Fur-
thermore, pooling natural catastrophe risks enforces standard wordings,
conditions, and tariffs, and establishes a single risk transfer solution for
a whole region or a country, yielding usually low administrative costs.
• In terms of program characteristics, TCIP can form a role model for
countries with similar exposures and economic conditions for the miti-
gation of fi nancial burdens on local authorities as well as stimulating
risk awareness of the public. However, alternative models can be con-
sidered for other countries with respect to spatial extent (one or many
countries) and organizational structure (public-private partnership or a
purely private organization).
29.6 Acknowledgments
Thanks are due to Mr Ismet Gungor, Eureko Insurance, for providing some
of the relevant up-to-date data on TCIP, and to Dr Nazan Kilic and Eng.
Aykut Deniz, former research assistant and graduate student, respectively,
at the Department of Civil Engineering, Middle East Technical University,
for carrying out the numerical computations related to the assessment of
seismic hazard and insurance premium rates.
29.7 References
Akin B, (2008), 'A case study of public/private partnership: the Turkish Catastrophe
Insurance Pool', Middle East Insurance Review , 52-54.
Akkaya A D and Yucemen M S, (2002), 'Stochastic modeling of earthquake occur-
rences and estimation of seismic hazard: a random fi eld approach', Probabilistic
Engineering Mechanics , 17 , 1-13.
Ambraseys N N, (1988), 'Engineering seismology', Earthquake Engineering and
Structural Dynamics , 17 , 1-105.