Earthquake

Concept

Earthquake is a natural peril caused by a sudden release of stress energy within the earth, which, depending on its magnitude and proximity to populated areas, can cause significant property damage, bodily injury, and consequential losses such as fire or tsunami.

Insurability and Accumulation Potential

Earthquake risk is characterized by a high degree of spatial accumulation, since a single event can simultaneously affect a large number of insurance contracts within an affected region; insurability therefore depends significantly on the availability of sufficient reinsurance capacity and on precise risk modeling based on catastrophe models.

Regional Differences in Insurance Requirements

In countries with high earthquake exposure such as Japan, New Zealand, or Turkey, state-organized or subsidized earthquake insurance pools sometimes exist, while in countries with lower seismicity such as Germany, earthquake coverage is usually offered as a voluntary, separately agreed additional coverage under natural perils insurance.