The images of biblical destruction from massive earthquakes in Turkey and Syria are primarily a humanitarian blow, but they also remind us of the magnitude of the economic damage that a catastrophic event can cause.

Our country, despite being one of the most seismic regions in Europe as well as the world, is vulnerable to risks such as earthquakes and floods, but also to natural disasters in general, which have intensified due to the climate. changes such as fires and heat waves. According to the Association of Insurance Companies of Greece, despite the very high level of property ownership in Greece (up to 70%), there are about 1 million insured houses, which is only 16% of the total number of buildings, which, according to ELSTAT, are about 6.5 million according to the whole country. This is one of the lowest rates in Europe, and combined with the fact that Greece is the EU member state with the highest per capita economic loss (nearly three times the EU average) in disaster-related spending disasters and climate, it becomes clear how unprepared our country is for the increasing risk of natural disasters. According to Eurostat, damage from heat waves, floods and hurricanes in 2020 in our country amounted to 91 euros per person, compared to 27 euros per person in the EU, followed by France with 62 euros and Ireland with 42 euros. Unlike other European countries. which suffer mainly from heat waves or floods and have introduced compulsory insurance for their buildings (compulsory systems have been introduced in France, Germany, Belgium, the Netherlands, Portugal, Spain and also in Romania), Greece is far from the compulsory insurance model, despite the fact that it combines all risks – and an earthquake is the most unpredictable threat.

The increase and intensity of these phenomena even led to an excessive burden on the state budget for the payment of compensation, the amount of which is disproportionately large for the costs of insurance companies. The damage claimed by insurance companies is estimated to be only 15% of the damage recorded by the competent government authorities, and a recent statement by Climate Change Minister Christos Stylianides that “the burden of laying on the state the cost of compensating for two catastrophic events , such as the earthquake in Crete in 2020 and the fires on the island of Evia in 2021, is 500 million euros and corresponds to 20% of ENFIA’s annual income.

The low level of insurance, as stressed by EAEE President Alexandros Sarrigueorgiou, “does not keep pace with the intensity of natural disasters that have occurred in our country in recent years, whether due to extensive drought and fires or due to heavy rainfall and floods or even earthquakes due to for the particularly seismic situation of the country”. It has been proven that the state’s subsequent handling of the financial consequences of a natural disaster, in the form in which it operates today, is neither sufficient nor effective both for it and for citizens. The current regime is characterized by partial coverage, uncertainty in the amount of compensation in the form of gratuitous state aid, unplanned budgetary pressure, delay and unfair distribution of costs to citizens.

Compulsory building insurance systems have been introduced in France, Germany, Belgium, the Netherlands, Portugal, Spain and Romania.

According to the EAEE, although climate-related natural disasters (floods and wildfires) have a clear increase in recent years, with floods being the most frequent occurrence and causing the majority of claims against insurance companies, earthquake events demonstrate stability in terms of frequency of occurrence, with one major incident occurring each year on average. In terms of severity, a forest fire is the cause of the strongest natural disaster, and the average damage from a forest fire is much higher than from other cases, but this, in addition to the severity of the phenomenon, is also due to the fact that in our country in recent years there have been no strong earthquakes in large urban centers, and the occurrence of such phenomena is mainly observed in island regions. Based on models adopted by insurance companies, the possibility of a major earthquake is predicted with… “certainty” every 100 years, and the damage is estimated at an unimaginable amount of 5.3 to 6.8 billion euros.

As Mr. Sarrigheorgiou points out, “the costs of these disasters, which are still partly covered by the state itself, can be transferred to the insurance market if the government creates incentives for citizens to insure their homes, with the corresponding premium being a tax deduction.” Most countries , based on the relevant history of the Union, to some extent prone to natural disasters, regulate the financing of damage in advance, having a comprehensive system for the consideration and financing of disaster damage.While there are many different forms of public-private partnership in the world, they all emphasize different, but complementary other roles of the state and the market.

“Expanding the coverage of private insurance against extreme natural events could reduce the burden on the state by increasing the participation of the private sector,” notes the OECD in its recent economic study on Greece, proposing the introduction of compulsory insurance against extreme natural events. of all buildings as a means of adapting to the risks of climate change.

Earthquake insurance is particularly economical and certainly affordable for the vast majority of property owners in our country, notes “K” Secretary General of the Chamber of Professionals, insurance agent Dimitris Gavalakis, explaining that “for a 25-year-old house of 100 square meters, the annual cost does not exceed 180 euros. The specific cost refers to an insurance capital of 130,000, given that the current cost of the renovation of the building is 1,300 euros per square meter. The specific price also includes fire insurance, as earthquake insurance is necessarily offered in combination with the basic fire insurance.”

Taking into account the effect of insurance contracts and the pricing procedure, it becomes clear, emphasizes Mr. Gavalakis, that “when insuring a much larger part of the houses in our country and, of course, with universal insurance, premiums will have a noticeable decrease.” He points out, finally, that “today, houses with a building permit after 1960 (the year of the first anti-seismic code) are insured.” Old houses can be insured if a static study has been carried out and similar interventions have been made.”

Numbers

45 catastrophic events (earthquake, rainstorm, snowfall, forest fire) occurred in Greece
in the period 1993-2022
41 885 is the damage claimed by the insurance companies.
530 million the amount of the claim.