Thu, Oct 28, 1999 page17

• Insurers face NT$21bn quake loss

  LOSSES As the industry adds up its damage bill, demand for quake insurance has not been as robust as expected

  • By Stanley Chou / STAFF REPORTER
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  Non-life insurance policy losses as a result of the 921 earthquake are expected to reach NT$21 billion industrywide, according to the Non-Life Insurance Association of the Republic of China (2?I?蔆|).

  The large sum has caused many non-life insurers to be more reluctant to accept quake-related insurance applications, especially from new clients.

  However, because the government's stance on insurance policies has been ambiguous since the temblor, the demand for earthquake insurance policies has not accelerated as expected.

  Analysts warn that if the government does not establish a clear policy on quake insurance, the public will be exposed to a great deal of risk when the next catastrophe strikes.

  More than a month has elapsed since the 921 quake, and total insurance claims have exceeded NT$15 billion, according to executives of non-life insurers. And the damage bill is still mounting.

  "We estimate that total claims from the quake should be close to NT$21 billion," said Sha Ker-shing (沙克?), secretary general of the association. "Although more than 90 percent of the loss will be transferred to foreign reinsurance companies, a NT$1 to 2 billion loss to local non-life insurers is a heavy blow anyway."

  The heavy losses of local non-life insurers and foreign reinsurance companies has left the industry in an awkward position. Most non-life insurers have been reluctant to accept new quake policy applications.

  "We just don't take any earthquake insurance customers," said an executive of Zurich Insurance Co.

  "We don't accept new customers for quake-related policies. Only old customers who continue their previous policy will be accepted," said Lee Zong-yeuh (李宗岳), vice chairman of Tong Tai Insurance Co (東泰2ㄙ?/CHINESE>).

  Some firms have implemented a policy of refusing applications because of where a customer lives.

  "We don't take customers from the central area of the island, where the quake struck twice recently," said an executive of Mingtai Fire and Marine Insurance Co (明台2ㄙ?/CHINESE>). "Only northern and southern areas will be accepted. We aren't accepting new corporate customers. For those who purchase new quake-related policies, the premium will be higher and the coverage will be discounted."

  Some non-life insurers had expected a rush on quake policies after last month's devastating temblor. But the demand has been dampened by high premium costs and the government's indecisive attitude on the issue, industry analysts said.

  "There have been quite a few inquiries about purchasing quake-related policies since the big quake, but after they heard that the premium is twice or even three times more than fire insurance policies, they don't call us anymore," said Jeremy Kan (?仲明), a manager of Allianz President general Insurance (2?@|w聯).

  "Although we are one of the few local insurers that offer quake-related insurance to any customer with no add-on premium, the demand has not increased significantly as we expected," Kan said.

  Industry insiders said one reason the public doesn't purchase quake policies is because of the government's policy of compensating victims of natural disasters.

  "In Germany, the government does not compensate the general public's loss for earthquakes or other natural disasters," said an executive of Munich Re Co, the world's largest reinsurance company.

  Before the 921 quake, just 1 percent of all insurance policies covered earthquakes.
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