How do we cope with the economical losses of disasters?

Transcription

1 How do we cope with the economical losses of disasters? Berna Burçak Başbuğ Middle East Technical University Disaster Management and Implementation Center 26/September/2007-Chennai 1

2 Outline Economic impacts of natural disasters Turkish Catastrophe Insurance Pool 2

3 Financial disaster risk management: Preparing the country to cope with the economical losses of the country due to natural disasters 3

4 Economic impacts of disasters Disaster impacts on the economy Direct Indirect Secondary - Life losses - Building losses - Communication, transportation - Wage and production - GDP - Import/export 4

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6 Global losses are increasing Source: Munich Re

7 Global Direct Losses ( ) Economic Losses (USD 896 billion) Austral. 2% N. America 38% Asia 45% S. America 1% Europe 13% Africa 1% Source: Munich Re (2000) 7

8 Developing countries with over 1 billion USD natural disaster losses over the period IIASA chart by L. Martin 2001 Data sources: Munich Re 1998; Munich Re

9 Impacts of disasters in developed and developing countries Fatalities per event Major natural disasters Direct economic losses as % GDP Major natural disasters High income Middle income Low income Per capita income country groups 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2.5% 5.0% 13.3% High income Middle income Low income Per capita income country groups Source: Munich Re

10 Estimated Direct Losses by Sector in Percent 100% 90% 80% 70% 60% 50% 40% Agriculture Residential Public Commercial/Industrial 30% 20% 10% 0% Northridge '94 Poland '97 Honduras '98 Sources: IIASA (Linneroth-Bayer et al. 2003) 10

11 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Losses reimbursed from insurance and government assistance as a percentage of direct losses 51% 57% 57% 44% 61% 84% Nonreimbursed losses State aid Insured losses Northridge earthquake '94 Kobe earthquake '95 Umbria earthquake '97 Poland floods '97 Easter floods England '98 Sudan floods '98 IIASA: Linneroth-Bayer et al Mantaye

12 The Role of Government in compensation of disaster economic losses Financial implications in post-event time Budget diversion National resources International aid -Special taxes -Cut on some other expenses -The Central Bank -Donors - Low interest / long term credits 12

13 Global models India Micro insurance Philippines Reserve Fund / Crop Insurance / Philippines Catastrophic Insurance Pool The Caribbean Catastrophe Insurance Facility Turkey Turkish Catastrophe Insurance Pool. 13

14 Insurability of disaster risks Insurance can be available if the risks: can be identified and quantified However, insurance may not be available because of little demand adverse selection. Kunreuther (1998) 14

15 1 % of households and 3 % of business premises have disaster insurance in low and middle-income countries This is: 30 % in high-income countries Munich Re (2005) 15

16 TURKEY CASE Top-down Disaster Risk Management. Centralised system - the government is the main body in disaster mitigation/response strategies. Financial mechanisms available to help to cover the economic losses due to disasters: e.g. contingent credit, reserve fund, catastrophe bonds, micro finance/micro insurance. Insurance: One of the financial systems to cope with the effects of the disasters earthquakes triggered the initialisation / application of the mandatory earthquake insurance system in Turkey. 16

17 TCIP In application since 27/September/2000. First public-private insurance system in the World. Modelled on the basis of the California Earthquake Authority and the New Zealand Earthquake Commission. Covers the losses caused by: earthquake itself, firesexplosions and landslides following the earthquake. Only insures the residential buildings within the municipality borders. No insurance is offered for rural areas, business promises or the building contents. 17

18 Operational manager Garanti Insurance By 13 September 2007: paid Euro 10m 9576 policies for 173 earthquakes Total payment capacity in 2007 is more than ~ USD 1.4b. 15 tariffs 5 risk zones * 3 building types (masonry, reinforced concrete, other types). Reinsures its risk to A-level or higher-rated international reinsurance companies 18

19 Regional Figures of the TCIP by 13 September 2007 Region Number of Dwelling Units Number of Insured Penetration Rate Marmara ,3 % Mid-Anatolia ,8 % Aegean ,4 % Mediterranean ,5 % Black Sea ,7 % East Anatolia % South East Anatolia ,9 % TOTAL ,9 % 19

20 TCIP policy distribution by risk zones of 13 September 2007 Risk zone Number of policies Rate (%) 1 st degree ( / )x100 = nd degree rd degree th degree th degree TOTAL

21 TCIP policy distribution by construction year of the buildings Construction period Number of policies Rate (%) 1975 and before and after TOTAL

22 Aim: TCIP awareness TCIP Awareness Target: University students in Ankara 10 universities in Ankara Public + Private METU, Hacettepe, Bilkent, Gazi, Ankara, Başkent, Ufuk, Atılım, TOBB and Çankaya The total number of students: population size of Sample size: 1000 A random sampling by using , face-to-face and mail survey questionnaire techniques 24 questions 22

23 Age Distribution of the Respondents 30,0% 25,0% 20,0% Percent 15,0% 26,22% 10,0% 19,22% 16,25% 5,0% 4,27% 10,2% 9,85% 6,29% 7,71% 0,0% Other Age 23

24 Gender distribution of the respondents Gender female male 40,93% male 59,07% female 24

25 Income distribution of the respondents 50,0% 40,0% 30,0% Percent 20,0% 40,9 % 31,1 % 10,0% 22,7 % 0,0% 4,9 % Under Income Over

26 Type of insurance the respondents have Value Freque ncy ,53% ,06% 18,31% 9,6% 15,25% 0 3,54% 2,64% 3,06% Health House Retirement Automobile Theft Life TCIP Other Insurance 26

27 Does the respondent know about the risk degree zone? 60,0% 50,0% 40,0% Percent 30,0% 54,57% 20,0% 45,43% 10,0% 0,0% No Whether or not Respondent knows the earthquake area s/he belongs to Yes 27

28 Does the respondent know if they have earthquake insurance? Respondent has TCIP yes no do not know 36,94% do not know 34,68% yes 26,25% no 28

29 Where the respondent learnt about the TCIP? ,54 % ,5 % 0 5,94 % 13,91 % 6,68 % 11,69 % 9,74 % TV Radio Newspaper Friends Information Brochure Family Inter net 29

30 Conclusion Sustainable education program on financial disaster risk management WBI online courses teaches TCIP Target younger population / school visits by the TCIP managers More/stronger advertisement in all regions Provide insurance to all parts of the community/ government can help for lower income groups Keep public aware of disaster risk Enlarge the system for all types of disasters Policymakers need to be convinced! 30

31 The World Bank Institute Online Course CD on the Financial Strategies for Managing the Economic Impacts of Natural Disasters 3- References

32 Contact: Thank you! 32