Low earthquake insurance penetration globally: Swiss Re

A new Swiss Re study reveals low earthquake insurance penetration globally, even in countries with high seismic risk.
“Seismic events caused economic losses of over $276 billion in 2010-11, yet highly earthquake-prone countries remain underinsured,” says the Swiss Re report, Lessons from recent major earthquakes.
“The insurance industry will pay an estimated 80% of the overall cost of the February 2011 earthquake in New Zealand, but no more than 17% for the disastrous event in Japan in March 2011,” the report notes. “Earthquake insurance penetration, in fact, is highest in New Zealand, and is very low in Japan, particularly for commercial properties.”
In New Zealand, commercial earthquake insurance premiums represent 0.09% of the country’s GDP. Residential earthquake premiums in New Zealand are 0.07% of the country’s GDP.
Commercial earthquake insurance premiums in Japan are only 0.01% of the country’s GDP, whereas residential earthquake premiums are 0.03% of the country’s GDP.
In California, by contrast, commercial earthquake insurance premiums are 0.03% of the country’s GDP, and residential earthquake premiums are 0.05% of the state’s GDP.
“The low frequency of earthquake events, compared to other natural catastrophes, tends to shape the perception that earthquake risk is much lower than it actually is, even in places where there have been very deadly and damaging occurrences, like California,” says Lucia Bevere, senior catastrophe data analyst at Swiss Re Economic Research & Consulting and co-author of the publication.
“Without insurance coverage, post-disaster reparations come from government funds and ultimately must be borne by taxpayers,” Swiss Re adds.