Earthquake Insurance in Turkey History of the Turkish Catastrophe Insurance Pool

by Gurenko, Eugene N.; Lester, Rodney R.; Mahul, Olivier; Oguz Gonulal, Serap

• ISBN13: 9780821365830
• ISBN10: 0821365835
• Format: Paperback
• Copyright: 2006-05-24
• Publisher: World Bank Publications

Summary

The persistent potential for large scale natural disasters has become a real concern for the Turkish government since the late 1990s, which ultimately led to the establishment of the Turkish Catastrophe Insurance Pool (TCIP). Among the main rationale of the creation of the TCIP were a grave government fiscal exposure to natural disasters and a disproportionately low level of catastrophe insurance penetration for such a disaster-prone country. Since the commencement of this program in 2000, the TCIP has provided coverage to more than 2 million households, being by far the largest insurance program in the country. In four years, the TCIP has managed to become one of the most trusted brand names in the Turkish insurance industry, and one of the largest catastrophe insurance pools in the world. Its success has also brought an international recognition, inspiring more than a dozen of countries world wide. The TCIP experience has also been a watershed for the World Bank as it has led to a rethinking of the roles of ex ante risk management relative to ex post donor support. This book presents the main technical imperatives and challenges in the development and the implementation of the TCIP and shows how a public-private partnership may be the way forward in the financing of natural disasters. If offers valuable advise and guidelines to policymakers involved in the development of catastrophe insurance programs.

Table of Contents

Acknowledgments	ix
Introduction	xi
Abbreviations	xv
1. The Making of the Turkish Catastrophe Insurance Pool: Risk Reality and Risk Perception	1	(20)
Turkey's Exposure to Earthquakes	1	(5)
Role of the Government	6	(3)
Role of the World Bank	9	(2)
Turkish Public Relations and Communications Campaign	11	(1)
Turkish Insurance Industry	12	(3)
Marmara Earthquake	15	(2)
Marmara Earthquake Emergency Reconstruction Project	17	(4)
2. Objectives and Design: Political Economy and Technical Imperatives	21	(22)
Enabling Legal Framework	23	(1)
Institutional Structure	24	(7)
Earthquake Insurance Coverage Terms and Conditions	31	(5)
Risk Financing Strategy	36	(7)
3. Operational Logistics and Corporate Financial Framework: Key Challenges	43	(32)
Economic Environment and the 2001 Financial Crisis	43	(1)
Legal Framework	44	(2)
Corporate Governance	46	(4)
Insurance Operations	50	(18)
Consumer Demand for Earthquake Insurance	68	(7)
4. Future Challenges: Threats and Opportunities	75	(12)
Insurance Penetration	75	(5)
Risk Management Challenges	80	(2)
Potential Ways Forward	82	(5)
Appendixes
1. English Translation of Governmental Decree Law No. 587 on Compulsory Earthquake Insurance as Published in Official Gazette No. 23919 (December 27, 1999)	87	(10)
2. International Experience with Catastrophe Funds	97	(12)
Bibliography	109	(4)
Index	113