While the government has put forth a compensation package to help citizens cover losses from Tuesday's devastating earthquake, some insurance specialists said yesterday that a public-funded insurance program would be more effective in the long term than ad hoc relief measures.
With thousands of houses and buildings left in ruins, observers worry that risk management is extremely weak on the island, where fewer than 2 percent of customers buy extra earthquake insurance when they take out a home fire insurance policy.
In Taiwan, consumers are often required to purchase fire insurance when they apply for a mortgage. Few homebuyers, however, have an interest in purchasing extra earthquake insurance, which is sold at relatively high rates.
In 1997, only 1.08 percent of customers bought earthquake insurance in addition to fire insurance when buying real estate.
An official with the insurance department under the Ministry of Finance said the public could learn a lesson from Tuesday's quake, which has caused more than 2,000 deaths and billions of NT dollars in economic losses so far.
"We can predict that there will be more people willing to buy earthquake insurance after the disaster," said Chen Tsai-huai (
Chen said that before the catastrophe, people viewed earthquakes as "unlikely," even though Taiwan happens to be a quake-prone island.
"An earthquake is a disaster that can cause such enormous damage in a short time, so it's natural for insurers to set high rates to reduce their risks. But the important issue is whether the government should play an active role in financing insurance programs for catastrophes such as earthquake and floods," Chen said.
In some countries or areas with frequent natural disasters, it is public policy that catastrophe insurance should automatically be a part of fire insurance policies. For instance, in California, which is susceptible to earthquakes, state law mandates that any company offering fire insurance must also offer earthquake insurance.
With an increasing amount of economic losses being incurred in recent years due to natural disasters, there is a growing trend in many countries for property owners to be required -- either through direct government regulation or mortgage stipulations -- to purchase earthquake insurance.
The government's mandating of such coverage is arguably unconstitutional in the case of some nations and is generally unpopular with voters.
There is, however, a precedent for requiring insurance coverage against a particular hazard as part of the collateral for a mortgage loan. The US' National Flood Insurance Program legislation requires that all federally backed, insured or regulated loans on property in flood-prone areas be covered by a flood insurance policy.
Similarly, most mortgage loans require property owners to maintain insurance that covers losses to the mortgaged property which are caused by the kinds of events insured in standard homeowners policies.
Huang Chung-tsung (
"It's widely known the island is a high-risk area for earthquakes. So it is worrisome that neither the government nor the general public have taken the risk seriously and worked on plans of risk management," Huang said.
"Only when something devastating happens, as it did recently, does the public realize the importance of risk management," Huang said.
Huang said he believes "the government will work to reassess its insurance policies."
He said that earthquake insurance -- currently a component of commercial insurance policies -- is essential to long-run risk control and thus should become one of the government's insurance programs, which now include national health insurance and third-party insurance.
Japan has deployed long-range missiles in a southwestern region near China, the Japanese defense minister said yesterday, at a time when ties with Beijing are at their lowest in recent years. The missiles were installed in Kumamoto in the southern region of Kyushu, as Japan is attempting to shore up its military capacity as China steps up naval activity in the East China Sea. “Standoff defense capabilities enable us to counter the threat of enemy forces attempting to invade our country ... while ensuring the safety of our personnel,” Japanese Minister of Defense Shinjiro Koizumi said. “This is an extremely important initiative for
Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) today accepted an invitation from Chinese President Xi Jinping (習近平) to lead a delegation to China next month, saying she hopes to promote the peaceful development of cross-strait relations and bring stability to the Taiwan Strait. “I am grateful and happy to accept this invitation,” Cheng said in a statement from the KMT chairperson’s office. Cheng said she hopes both sides can work together to promote the peaceful development of cross-strait relations, enhance exchange and cooperation, bring stability to the Taiwan Strait and improve people’s livelihoods. At today's news conference, Cheng said any efforts to
MORE POPULAR: Taiwan Pass sales increased by 59 percent during the first quarter compared with the same period last year, the Tourism Administration said The Tourism Administration yesterday said that it has streamlined the Taiwan Pass, with two versions available for purchase beginning today. The tourism agency has made the pass available to international tourists since 2024, allowing them to access the high-speed rail, Taiwan Railway Corp services, four MRT systems and four Taiwan Tourist Shuttles. Previously, five types of Taiwan Pass were available, but some tourists have said that the offerings were too complicated. The agency said only two types of Taiwan Pass would be available, starting from a three-day pass with the high-speed rail and a three-day pass with Taiwan Railway Corp. The former costs NT$2,800
The nation’s fastest supercomputer, Nano 4 (晶創26), is scheduled to be launched in the third quarter, and would be used to train large language models in finance and national defense sectors, the National Center for High-Performance Computing (NCHC) said. The supercomputer, which would operate at about 86.05 petaflops, is being tested at a new cloud computing center in the Southern Taiwan Science Park in Tainan. The exterior of the server cabinet features chip circuitry patterns overlaid with a map of Taiwan, highlighting the nation’s central position in the semiconductor industry. The center also houses Taiwania 2, Taiwania 3, Forerunner 1 and
RSS