Government may share future quake burden with insurers

Finance Minister Paul Chiu (邱正雄) hinted yesterday that the government may be willing to share future earthquake losses with the banking and insurance industries.

Responding to reports that many companies are not issuing new quake policies because of a glut in the international reinsurance market, Chiu told a meeting of the KMT's central committee yesterday that future losses could be shared, depending on the scale.

He suggested that future quake losses under a certain amount should be borne by banks, insurance and reinsurance companies. But if the total loss exceeded that set amount (NT$800 billion, for example), the government would cover the excess and issue government bonds to finance the payment.

However, Chiu's suggestion drew doubtful responses from analysts.

It is a politically-orientated proposal, aimed at winning next March's presidential election," said a senior foreign insurance company executive. He also said "since the government has already created a huge budget deficit in recent years, this idea would be a fiscal disaster if a quake bigger than 921 hit Taiwan."