Turkey: Addressing private risks – the Turkey Catastrophe Insurance Pool (TCIP)
The Turkish Catastrophe Insurance Pool (TCIP) is a compulsory public-private earthquake insurance scheme established in 2000 in response to the devastating 1999 Marmara earthquake, which killed 15,000 people and placed enormous fiscal strain on the Turkish government. Turkey is one of the most earthquake-exposed countries in the world, with around 70% of its population and 75% of its industrial facilities at risk from large-scale seismic events.
The TCIP seeks to provide affordable earthquake insurance to homeowners — particularly those in urban residential areas — and to reduce the fiscal exposure of the Turkish government by accumulating reserves for future disasters, pooling risk across the country, and transferring excess risk to international reinsurance and capital markets. The scheme is modelled on the California Earthquake Authority and the New Zealand Earthquake Commission, adapted to Turkey’s local context. Proof of participation is compulsory for land registry transactions such as property sales. The TCIP is managed as a private insurance entity under the strategic guidance of the Turkish Treasury, with private sector insurance companies distributing policies through a state-of-the-art internet-based underwriting system. Premium rates are actuarially sound, averaging around US$62 per homeowner annually, and vary by construction type and location. The pool retains the first US$80 million in losses through its reserves and transfers excess risk to international reinsurance markets, with the government providing backstop coverage beyond the pool’s overall claims-paying capacity — currently sufficient to withstand a 1-in-350-year earthquake.
The number of earthquake policies sold grew from 600,000 in 1999 to 3.5 million by 2010, with coverage reaching approximately 23% of dwellings nationwide and 40% in the highest-risk areas. Uptake outside of Istanbul, Ankara, and the western coast has been hampered by lower risk awareness and lower household income levels, highlighting the critical role of sustained public education and communication campaigns in achieving broader market penetration.
Further information: www.tcip.gov.tr