Taiwan earthquake exposes wide gap in home insurance coverage

Taiwan earthquake exposes wide gap in home insurance coverage | Insurance Business Asia

Catastrophe & Flood

Taiwan earthquake exposes wide gap in home insurance coverage

Country’s ageing residential buildings emphasised

Catastrophe & Flood

By
Roxanne Libatique

In the wake of a recent 7.2 magnitude earthquake striking Taiwan’s east coast, leading to nine fatalities and injuries to more than 900 individuals as of writing, the focus has sharply turned to the adequacy of home insurance coverage against seismic events within the island nation.

According to real estate firm H&B Realty Co, as reported by Taipei Times, the incident has brought to light the concerning fact that a significant proportion of the housing stock – nearly 70% of which is older than 25 years – lacks comprehensive earthquake insurance, with only about a third of homes covered.

This revelation is particularly alarming in light of the aging nature of Taiwan’s residential buildings, many of which may not meet current earthquake-resistant standards. In urban centres such as Taipei, where buildings average 37.6 years in age, the need for urban renewal and retrofitting to enhance seismic resilience is evident.

“The government should accelerate urban renewal projects to improve building safety nationwide, as most buildings in Taiwan are not quake resistant,” H&B Realty Co said, as reported by Taipei Times.

Post-1999 construction standards, instituted in the aftermath of a devastating earthquake that hit central Taiwan, have led to safer building practices. Nonetheless, a considerable number of the older buildings remain unprotected against the potential financial ruin brought about by earthquakes.

Earthquake insurance in Taiwan

H&B Realty Co noted that the penetration rate of earthquake insurance in Taiwan stands at a modest 34.4%, covering liabilities up to NT$5.9 trillion (US$184.05 billion). This level of coverage leaves a vast majority of properties exposed to significant risk, underscoring a critical gap in disaster preparedness.

Among the various municipalities, Taoyuan and Hsinchu are noted for having the highest rates of earthquake insurance coverage, attributable in part to lending criteria that necessitate both earthquake and fire insurance for mortgage eligibility.

Despite this, the challenge persists in convincing all homeowners of the importance of securing their investments against earthquakes. The reluctance is particularly pronounced among those who have no mortgage obligations, who often forego this essential protection.