Earthquake insurance for businesses gets approval

The Ministry of Finance approved the first earthquake insurance policy for commercial use earlier this week. According to finance ministry officials, this policy has been designed specifically for corporate clients. Zurich Insurance Co was the first insurance company to submit an application for the policy. After the ministry's approval, other insurance companies are likely to follow suit.

After the 921 earthquake struck Taiwan in 1999, demand for earthquake insurance has risen substantially. A number of insurance companies, including President Allianz Insurance Co (統一安聯), have offered earthquake insurance policies for homes since the finance ministry gave its approval early last year. But the first earthquake insurance policy for businesses was not approved until recently.

"This policy concerns total damage. The most important feature of this policy is that corporate clients could buy the policy in isolation, instead of combining fire insurance and earthquake insurance as in the past. This could provide more choices for corporate executives," said Tseng We-ren (曾武仁), an official at the finance ministry's Insurance Department.

"This policy covers commercial buildings including offices, shops, warehouses, factories and other sites for business use. Since it is not combined with fire insurance, the cost of the insurance is lower than traditional comprehensive earthquake insurance policies," Tseng said.

"After an earthquake occurs, if the insured building suffers complete damage completely and is certified by a government agency, the insurance company will have to cover all the losses caused by the earthquake or a fire started by the earthquake, before the policy expires," Tseng said.

Furthermore, the insurance company will have to cover extra costs caused by the earthquake, including expenses for cleaning up the wreckage. But the ceiling for such expenses is limited to 5 percent of the total coverage. Moreover the loss of business caused by the earthquake is also covered by the policy, but the ceiling for such claims is also set at 5 percent of the total coverage.

Concerning the rate of insurance premiums, according to the ministry, it would vary according to the structural strength of the business building, the number of floors and the building's location. For example, if someone wants to insure a 16-floor concrete building, it would cost NT$820 for coverage of every NT$1 million.

Last month, the ministry had just granted approval to Zurich Insurance Co for an insurance policy designed for foreign laborers working in Taiwan. It was also the first insurance policy for foreign laborers.