A recent earthquake that hit Taiwan on March 31 is unlikely to create significant losses for the nation's insurance sector, Taiwan Ratings Corp (
"Because most residential buildings on the island were uninsured or insured at low values for the risk of earthquake, the aggregate losses ... are expected to be modest compared with the aggregate losses incurred in other catastrophic events in Taiwan in recent years," the statement said.
Quake-prone Taiwan is hit by thousands of tremors a year, but most are centered deep under the sea. However, a magnitude 7.6 earthquake in September 1999 killed more than 2,300 people and destroyed more than 40,000 homes.
The largest commercial losses of the March 31 quake are likely to result form damage to the Taipei International Financial Center (台北國際金融中心) building, the statement said. The quake, which measured 6.8 on the Richter scale, shook loose two massive construction cranes perched atop the 56th floor of the planned 101-story skyscraper, killing five.
"However, the net losses likely to be incurred by individual property and casualty insurance companies are not expected to be serious due to the comparatively low retention level in the sector," the statement said.
"The losses for the life insurance sector are also expected to be small as the number of reported deaths in the March 31 quake was low" compared with that destructive earthquake in September 1999, it added.
Taiwan started implementation of a mandatory earthquake insurance system on April 1 -- just one day after the March 31 quake -- and it is now mandatory for companies offering residential fire insurance policies to include earthquake cover in such policies. Consequently, "the domestic fire insurance market is expected to grow significantly in the months ahead," Taiwan Ratings said.
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