Terrorism Effects on Pakistan insurance Industry
Upcoming SlideShare
Loading in...5
×
 

Terrorism Effects on Pakistan insurance Industry

on

  • 2,242 views

 

Statistics

Views

Total Views
2,242
Views on SlideShare
2,180
Embed Views
62

Actions

Likes
0
Downloads
35
Comments
0

4 Embeds 62

http://ubjstaging.knowledgeplatform.com 24
http://192.168.0.88 18
http://local.ubj.com 15
http://192.168.0.96 5

Accessibility

Upload Details

Uploaded via as Microsoft Word

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Terrorism Effects on Pakistan insurance Industry Terrorism Effects on Pakistan insurance Industry Document Transcript

  • Table of Contents Abstract: .................................................................................................................................................... 3 Introduction: ............................................................................................................................................. 3What is an earthquake? ................................................................................................................................ 3What causes earthquakes and where do they happen? .............................................................................. 3Why does the earth shake when there is an earthquake? ........................................................................... 4 History: ...................................................................................................................................................... 5Pakistan: A home to Earthquake! ................................................................................................................. 5Historic Earthquakes in Pakistan:.................................................................................................................. 6Modern day Earthquakes in Pakistan: .......................................................................................................... 7 1935 Balochistan Earthquake ............................................................................................................... 8 1945 “Would-be-Pakistan” tsunami ..................................................................................................... 8 1974 Hunza Earthquake ........................................................................................................................ 9 2005 Kashmir Earthquake ..................................................................................................................... 9 AFFECTED HOUSEHOLDS STANDARDS OF LIVING BEFORE AND AFTER THE EARTHQUAKE (2005)(%) ............................................................................................................................................................ 11 2011 Pakistan Earthquake .................................................................................................................. 11 From the shores of Arabian sea to the great heights of K-2 : Earthquake threat persist! ................. 12 Earthquake & Insurance Industry: .......................................................................................................... 13Definition: ................................................................................................................................................... 13Why we need Insurance?............................................................................................................................ 13Potential Environmental Risks .................................................................................................................... 13Overview of the Insurance Sector............................................................................................................... 13 Life Insurance Business – Claims and Premiums ................................................................................ 14 Premiums and Claims of Non Life Insurance ...................................................................................... 15 Non Life Insurance Profitability........................................................................................................... 15 Life Insurance Profitability .................................................................................................................. 16 Demand for insurance cover:.............................................................................................................. 16Some Unde rlying Risk Factors .................................................................................................................... 16 Material and Methods ............................................................................................................................ 17Statistical Data: ........................................................................................................................................... 17Earthquake in Pakistan & its Impacts on Insurance Page 1
  • Average earthquake frequency for various depth ranges: ................................................................. 17 Average earthquake frequency for various magnitudes: ................................................................... 17HYPOTHESIS ................................................................................................................................................ 18RESEARCH RESULTS..................................................................................................................................... 18 Results ................................................................................................................................................. 18 FINDINGS................................................................................................................................................. 19 Conclusions: ............................................................................................................................................ 19 Recommendation:................................................................................................................................... 20Precautions for Earthquake ........................................................................................................................ 20 Reference: ............................................................................................................................................... 21Earthquake in Pakistan & its Impacts on Insurance Page 2
  • Abstract:The study focuses on “How earthquake affect Insurance Businees in Pakistan”. For the purposeof collection of data we used internet and collected data through websites, research articlesand economic survey of Pakistan and some other sources and also through our personalobservation. The results have shown that Demand, Claims and Profit are three significantfactors which are affected by Earthquakes. The study was faced by certain limitations, whichinclude time constraints and resources constraints, which limit this research to only insuranceindustry of Pakistan.The present study found support for an independent variable withEarthquake. Significant negative correlations have been found for the Profit, and Positive forDemand For Insurance and Insurance Claims. Therefore, organizations need to focus on how todevelop better plans to reduce the risk. If insurance companies fail to adopt proper measuresagainst such risks, it will cause adverse underwriting results which ultimately affect the profitsof insurance copanies and they will force to suffer loss.Introduction:What is an earthquake?An earthquake is what happens when two blocks ofthe earth suddenly slip past one another.The surfacewhere they slip is called the fault or fault plane. Thelocation below theearth’ssurface where the earthquakestarts is called the hypocenter, and the locationdirectlyabove it on the surface of the earth is calledthe epicenter.Sometimes an earthquake has foreshocks. These aresmaller earthquakes that happen in thesame place asthe larger earthquake that follows. Scientists can’t tellthat an earthquake is aforeshock until the largerearthquake happens. The largest, main earthquake is called themainshock. Mainshocks always have aftershocks that follow. These are smaller earthquakesthat occur afterwards in the same place as the mainshock. Depending on the size of themainshock, aftershocks can continue for weeks, months, and even years after the mainshock!What causes earthquakes and where do they happen?The earth has four major layers: the inner core, outer core, mantle and crust (right). The crustand the top of the mantle make up a thin skin on the surface of our planet. But this skin is notall in one piece - it is made up of many pieces like a puzzle covering the surface of the earth(next page - top). Not only that, but these puzzle pieces keep slowly moving around, sliding pastone another and bumping into each other. We call these puzzle pieces tectonic plates, and theedges of the plates are called the plate boundaries.The plate boundaries are made up of manyfaults, and most of the earthquakes around the world occur on these faults. Since the edges ofthe plates are rough, they get stuck while the rest of the plate keeps moving. Finally, when theplate has moved far enough, the edges unstick on one of the faults and there is an earthquake.Earthquake in Pakistan & its Impacts on Insurance Page 3
  • Why does the earth shake when there is an earthquake?While the edges of faults are stuck together, and the rest of the block is moving, the energythat would normally cause the blocks to slide past one another is being stored up! When theforce of the moving blocks finally overcomes the friction of the jagged edges of the fault and itunsticks, all that stored up energy is released! The energy radiates(moves) outward from,thefault in all directions in the form of seismic waves like ripples on a pond. The seismic wavesshake the earth as they move through it, and when the waves reach the earth’s surface, theyshake the ground and anything on it, like our houses and us!Earthquake in Pakistan & its Impacts on Insurance Page 4
  • History:The Islamic Republic of Pakistan has faced a lot in its 64 year life, both in terms of man-made aswell as natural disasters. Pakistan faces a severe threat from natural disaster but which disasteris the worst for Pakistan? Well, its earthquake. History has shown us that Pakistan is indeedsituated near highly active fault line that could put risk to more than 170 million people living inthe country. What are the precautions needed to avoid earthquake?Pakistan: A home to Earthquake!Earthquake activity in Pakistan is mainly concentrated in the north and western sections of thecountry, along the boundary of the Indian plate and the Iranian and Afghan micro-plates. TheChaman Fault runs along Pakistan’s western frontier with Afghanistan from Kalat, in thenorthern Makran range, past Quetta and then on to Kabul, Afghanistan. A fault also runs alongthe Makran coast and is believed to be of the same nature as the West Coast fault along thecoast of Maharashtra, India. An active subduction zone exists off the Makran coast.This zone forms the boundary between the Arabian and the Iranian micro-plate, where theformer subducts or dives beneath the latter. Thrust zones run along the Kirthar, Sulaiman andSalt ranges. There are four faults in and around Karachi and other parts of deltaic Indus, andMakran coast. The first is the Allah Bund fault that passes through Shahbundar, Jah, PakistanSteel Mills, and runs through eastern parts of the city and ends near Cape Monz. This fault, infact, has caused extensive damage in the past many centuries in the deltaic areas. Thedestruction of Bhanbhor in the 13th century and damage to Shahbundar in 1896 were causedby this fault. The other one emanates from the Rann of Kutchh. The third one is the Pubb faultwhich ends into Arabian sea near Makran coast and the last one is located in the lower Dadudistrict near Surajani and falls in the vicinity of Karachi. Tsunamis or tidal waves have alsoaffected the coast of Pakistan. The worst case was in 1945 when an earthquake of magnitude 8struck the Makran coast, waves as high as 12 meters were reported. Earthquake prone areas in PakistanEarthquake in Pakistan & its Impacts on Insurance Page 5
  • Historic Earthquakes in Pakistan:From the year 893 A.D till 1929, a total of 11 earthquakes have rocked the modern-dayPakistan. Following is a chart that shows the list of historic earthquakes in Pakistan since 893;Earthquakes in PakistanEarthquakes are the deadliest disaster in PakistanNumber of Historic EarthquakesYear Magnitude Deaths Areas affected Shah Bandar (coastal Sindh)893 8 150,000 Shah Bandar (coastal Sindh)May 2, 1668 7.6 50,000 Allahbund (Sindh-GujaratJune 16, 1819 7.5 3,200 border) Lahore, PunjabSeptember 24, 1827 7.8 1,000 Kahan, BalochistanJanuary 24, 1857 8 - Peshawar, KhyberJanuary 22, 1865 6 - Jhalawan, Balochistan1883 - - Jhalawan, Balochistan1889 8 - Qilla Abduallah,December 20, 1892 6.8 - Balochistan Sibbi, BalochistanOctober 21, 1909 7 100 BalochistanFebruary 1, 1929 7.1 -Earthquake in Pakistan & its Impacts on Insurance Page 6
  • Modern day Earthquakes in Pakistan:From the year 1931 till 2011, Pakistan has seen many major earthquake including a tsunami in1945, two years before independence. Following is a chart that shows the list of historicearthquakes in Pakistan since 1931 till 2011; Earthquakes in Pakistan Earthquakes are the deadliest disaster in Pakistan Number of Modern Earthquakes Year Magnitude Deaths Areas affected Sharigh valley, August 24, 1931 7 - Balochistan Mach, Balochistan August 27, 1931 7.4 - province May 31, 1935 7.7 60,000 Districts of Balochistan Makran-Sindh coastal November 27, 1945 7.9 or 8 (tsunami) 4,000 areas Districts of the Khyber province December 28, 1974 6.2 5,300 Parts of Khyber and Azad Kashmir October 8, 2005 7.8 80,000 Quetta, Balochistan October 29, 2008 6.4 216 January 18, 2011 7.2 2 BalochistanCoastal area of Sindh is in active seismic zone. There is geological fault from Ahmedabad andBhuj and Ormara along Makran coast and another geological fault from Ormara to Gulistanabout 80 kms west of Quetta to Jalalabad and then turning eastwards under Himalayan foothills through Kohistan towards Haryana in India and beyond, it is called Karakoramfault. Another one is located Abbottabad, Mansehra, Kohistan and Swat district. The 2005earthquake was more intensive than 1974 earthquake, which had created havoc in Pattan,Duba, Palas and other villages.The first causes earthquakes along the northern Gujarat, Kutch, Rann of Kutch and affects Sindhcoast and Karachi. In 1945 earthquake with epicentre in Makran between Pasni and Gawadar,Karachi also got shocks and some islands along Baluchistan coast disappeared and new onesemerged. The 2003 earthquake destroyed many houses in Ahmedabad, destroyed almost theEarthquake in Pakistan & its Impacts on Insurance Page 7
  • whole town of Bhuj and affected coastal area of Sindh including damage to some buildings inNagar Parker, Islamkot, Mithi, Diplo and Badin and bridges on roads south of Badin.1935 Balochistan EarthquakeCamps can be seen during the post-1935 earthquakeAt 3:02 am PST at Quetta, a powerful earthquake rocked the city and surrounding areas. Theearthquake had a magnitude of 7.7 and anywhere between 30,000 and 60,000 people diedfrom the impact. This ranks as one of the deadliest earthquakes that hit South Asia. The naturaldisaster ranks as the 23rd most deadly earthquake worldwide to date. In the aftermath ofthe 2005 Kashmir earthquake, the experts cited the earthquake as being amongst the fourdeadliest earthquakes the South Asian region has seen; the others being the Kashmirearthquake in 2005, Pasni earthquake in 1945 and Kangra earthquake in 1905.This earthquake is the worst natural disaster in Pre-Pakistan era.1945 “Would-be-Pakistan” tsunami1945 tsunami left a widespread destructionOn 28 November 1945 at 1:56 am (local time), a massive earthquake, off Pakistan’sMakran Coast generated a destructive tsunami in the Northern Arabian Sea and the IndianOcean. Its epicenter was at 24.5 N 63.0 E., in the northern Arabian Sea, about 100 km south ofKarachi and about 87 km SSW of Churi (Balochistan), Pakistan. The earthquake was of 8.1magnitude, major quake. A total of 4,000 people were killed.Earthquake in Pakistan & its Impacts on Insurance Page 8
  • 1974 Hunza EarthquakeHunza earthquake in 1974This Earthquake was a magnitude of 6.2 and hit Hunza, Hazara and Swat districts of northernPakistan on December 28, 1974. The quake had a shallow focal depth and was followed bynumerous aftershocks. An official estimate of the number killed was 5,300 with approximately17,000 injured. A total of 97,000 were reported affected by the tremor. Most of the destructionwas centred around the village of Pattan, located about 100 miles north of the capital city ofIslamabad. The village was almost completely destroyed. Landslides and rock falls contributedto the damage.2005 Kashmir EarthquakeView of Islamabad after the 2005 earthquakeAt 8:50 a.m. on October 8, 2005, a 7.6 magnitude earthquake struck northern Pakistan causingserious damage in the North West Frontier (NWFP) and Azad Jammu and Kashmir (AJK)provinces. Over 4000 villages were affected, 73,000 people killed, 79,000 injured and 3.3 millionpeople rendered homeless. Over 470,000 houses were completely destroyed, nearly 65% of thehospitals in the area were destroyed or badly damaged and an estimated 10,000 schoolbuildings were affected. As in many emergencies, the most vulnerable segment of thepopulation was among the hardest hit: the elderly, women whose husbands were killed ordisabled, and an estimated 1.6-2.2 million children. Compounding the destruction of the initialearthquake were a series of strong aftershocks that continued for weeks. In addition to theestimated $5 billion in property damage, there was significant loss of livelihoods throughdestruction of arable land, crops and livestock, businesses, and jobs. Despite the resilience ofthe population, the impact of the disaster was overwhelming and devastating.Earthquake in Pakistan & its Impacts on Insurance Page 9
  • The timing and geography of the earthquake – which occured at the onset of the harsh winterand in remote, mountainous terrain – caused serious concern about the vulnerability of theaffected populations and their ability to survive. The local, regional and international aidcommunities mobilized immediately, and supplies began to pour into the region. As in previousdisasters of this scale, the relief effort was fragmented, with many different players providing amyriad of services. The Government of Pakistan established the Federal Relief Commission(FRC) and the Earthquake Rehabilitation and Reconstruction Authority (ERRA) to serve as aliaison between the government, international and national organizations involved in relief andrehabilitation. Relief and recovery committees were formulated as focal points at the districtlevel.One year later, it is still not clear whether the Pakistan relief effort was considered a success,whether there was adequate relief to meet the needs of the affected populations, and whatsome of the remaining issues continue to be. In order to understand these dynamics, FritzInstitute conducted a survey of affected households to assess their perceptions of the damage,loss, and humanitarian assistance provided. The research builds on similar surveys Fritz Instituteconducted after the South Asia Tsunami and Hurricane Katrina.1 It is hoped that this ongoingresearch of beneficiary perceptions provides insight to donors, policy makers, governments andhumanitarian agencies about the factors that influence the effectiveness and impact ofhumanitarian assistance. Aftermath of Kashmir Earthquake: Common scene during Quakes!Earthquake in Pakistan & its Impacts on Insurance Page 10
  • AFFECTED HOUSEHOLDS STANDARDS OF LIVING BEFORE AND AFTER THEEARTHQUAKE (2005)(%)2011 Pakistan EarthquakeAn earthquake of magnitude of 7.2 rocked south-western Pakistan. The United StatesGeological Survey reported the earthquake took place on January 19 at 01:23 am PST. Thedepth of the earthquake was reported to be 84 kilometres. US seismologist, Don Blakeman,said the earthquake depth was revised to be deeper than originally thought – potentiallylimiting the effects.Overall the earthquake was felt in India, Iran, Bahrain, Afghanistan, Oman, Qatar and UnitedArab Emirites. 2 women died due to this earthquake in Pakistan due to heart attack.Earthquake in Pakistan & its Impacts on Insurance Page 11
  • From the shores of Arabian sea to the great heights of K-2 : Earthquake threatpersist! Threat from Tsunami will always hanut KarachiWhile Karachi lies close to a major fault line, it is situated on or close to four minor faults. Thefirst is called the Allah Bund fault and it passes through the coastal town of Shah Bundar, thearea around Pakistan Steel Mills and runs through eastern parts of the city ending near CapeMonz. Another fault lies in the Rann of Kutch near Sindh’s southeastern border with India. Thethird is called the Pubb fault which lies near the Mekran coast west of the city while a fourth islocated in Dadu district on the northern boundary of Karachi. Some scientists say that thegeographical location of Karachi is such that a natural curve is formed near the sea-shore, as aresult, the possibility for a tsunami generated in Indian Ocean to hit the Karachi site is quiteremote. . Karachi is sometimes regarded as safe from earthquake while sometimes it is theopposite.Islamabad, the capital city of Pakistan sits on 5 major fault lines running through the city, all ofwhich are capable of producing large earthquakes.The officials said that when the 1960′s government had planned to declare Islamabad thefederal capital, its seismic zoning was conducted. Geologists had warned the then governmentthat Islamabad was prone to high intensity earthquakes because it was situated in an activeearthquake zone. The officials said that it was not advisable to construct high-rise buildings inIslamabad. They said that no building structure higher than two stories should be allowed in thefederal capital, as the earth crust in Islamabad could not sustain the weight of high-risebuildings. So Islamabad should be on alert for earthquakes.Earthquake in Pakistan & its Impacts on Insurance Page 12
  • Earthquake & Insurance Industry:Definition: Covers a building and its contents, but includes a large percentage deductible on each. A special policy or endorsement exists because earthquakes are not covered by standard homeowners or most business policies.Why we need Insurance? Insurance is a form of risk management, used to hedge against the risk of a contingent loss. It involves the transfer of the risk of potential loss from one entity to another, in exchange for a risk premium. Given this role, the Insurance sector fosters financial stability by enabling economic agents to undertake various transactions with the facility of transfer and dispersion of risks. As a crucial component of the financial system, life insurance plans are an important source of savings and long-term institutional investments essential for the development and growth of bond markets. The role of life insurance as a financial intermediary is particularly important in countries like Pakistan with low levels of financial penetration.Potential Environmental Risks There is a need to assess the damages caused by the earthquake on the environment, such as the impact on agriculture and pasture land; trees and forests; wetlands, springs and irrigation systems; water quality; ecosystems and biodiversity; protected areas, cultural heritage etc.But major on Insurance sector. These damages need to be valuated in economic terms. Additional environmental damages will occur in the aftermath of the earthquake. Some of them may only be visible after a year or later.Overview of the Insurance Sector The insurance industry has enjoyed robust growth in the last few years, driven by favorable economic conditions, expansion of the financial sector as a whole, privatization of large state owned entities and foreign investments. But factors such as the earthquake in 2005 and emergence of macroeconomic instability since late 2007, turmoil in global financial markets and dislocation of the domestic equity market along with the deteriorating security situation, posed substantial challenges to the performance of the insurance sector in CY08. In response, the insurance industry showed its resilience in that it was able to absorb aEarthquake in Pakistan & its Impacts on Insurance Page 13
  • sudden and unexpected shock of meeting insurance claims of more than Rs. 6.0 billion arising from the riots caused by the assassination of former Prime Minister Benazir Bhutto on 27th December, CY07. At the close of CY08, the asset base of the insurance sector stood at Rs. 341.4 billion, up 5.0 percent in comparison with CY07. The share of insurance assets in the total assets of the financial sector is 4.5 percent and the sector assets constitute 3.3 percent of GDP.Life Insurance Business – Claims and PremiumsThe life insurance industry witnessed a growth of 20 percent in gross premiums in CY09 (Figure6.5), as against 26 percent in CY08. This growth in premiums can be attributed to the increasedoutreach of life insurance business in recent years, in response to the growing demand for lifeinsurance products on account of relatively improved awareness and their dual role as a long-term savings instrument. Furthermore, with the launch of two new life insurance companiesand Bancassurance distribution channel, such an increase in premiums is indicative ofsubstantial untapped market potential.Earthquake in Pakistan & its Impacts on Insurance Page 14
  • Premiums and Claims of Non Life InsuranceNon Life Insurance ProfitabilityThe underwriting practices of the non-life business witnessed no significant change in CY09.However, investment income that contributed to a loss of Rs. 4.7 billion in CY08 on account ofsluggish equity market performance, yielded profits of Rs. 4.8 billion in CY09 as shown in Figure6.9. Similarly, the overall profitability of the insurance sector recovered from a loss of Rs. 4.1billion in CY08 to Rs. 5.9 billion in CY09. The rationale for the significant increase in profits ismainly due to rising investment income coupled with low impairment of investments in capitalmarket instruments for CY09.Earthquake in Pakistan & its Impacts on Insurance Page 15
  • Life Insurance ProfitabilityDemand for insurance cover:There is increase in demand for insurance cover both Life and Non_Life .Demand for Lifeinsurance is increasing due to natural disasters such as earthquakes and floods.Also ther isincrease in demand of property insurance.Insurers also take into account different aspects likeclaim ratios,inflation rate and demand for a particular cover.They are likely to charge morepremium due to such reasons.Some Unde rlying Risk FactorsThere are a number of underlying risk factors that increase vulnerability and contribute to theseverity of disasters inPakistan. These include:• Poor construction practices and limited enforcement of existing building codes• Weak early warning systems• Lack of awareness and education on disasters and response• Limited capacity and coordination between various government disaster response agencies• Disaster susceptibility of large number of impoverished communitiesEarthquake in Pakistan & its Impacts on Insurance Page 16
  • Material and MethodsThe duration of seismic data, used in this study, is 1961 to 2011. The seismic data is provided byPakistan Meteorological Department (PMD). The study has been made by calculating andcomparing the decadal and eight year averages of earthquake frequency. To study themagnitude wise variations, Mb parameter (body wave magnitude) has been selected. Thedecadal variations for various magnitude ranges of 3-3.9, 4-4.9 and 5-5.9 have been studied. Noearthquakes for the magnitudes of <3 and 5.9< have been reported by PMD in the shelf area ofPakistan during period 1961 to 2008. Depth wise study has been made by dividing it into twodepth ranges of 0-40km and 41-80km. The earthquake frequency for the depthStatistical Data:Average earthquake frequency for various depth ranges:Average earthquake frequency for various magnitudes:Earthquake in Pakistan & its Impacts on Insurance Page 17
  • HYPOTHESISEarthquake VS Demand for insurance Cover ● Earthquke does not affect demand for Insurance Cover. ● Earthquke does affect demand for Insurance Cover.Earthquake VS Insurance Claims ● Earthquke does not affect Insurance Claims. ● Earthquke does affect Insurance Claims.Earthquake VS Profit of Insurance Companies ● Earthquke does not affect Insurance Companies profit. ● Earthquke does affect Insurance Companies profitRESEARCH RESULTSEarthquake VS Demand for insurance Cover ● Earthquke does not affect demand for Insurance Cover. REJECTED ● Earthquke does affect demand for Insurance Cover. ACEPETEDEarthquake VS Insurance Claims ● Earthquke does not affect Insurance Claims. REJECTED ● Earthquke does affect Insurance Claims. ACEPETEDEarthquake VS Profit of Insurance Companies ● Earthquke does not affect Insurance Companies profit. REJECTED ● Earthquke does affect Insurance Companies profit ACEPETEDResultsThe results show that there is a negative correlation of Earthquake with Profit of InsuranceCompany & positive correlation with Demand for Insurance Cover and ClaimsEarthquake in Pakistan & its Impacts on Insurance Page 18
  • FINDINGSAn analysis of the research conducted on the “Earthquake and its impact on insurance sector”.How earthquake affect the Insurance Business in Pakistan. Variables included in our hypothesiswere Demand for Cover. Profit Of Insurance and Insurance Claims. We find that there is directrelationship between Earthquake and Demand and Claim and indirect relationship betweenearthquake and Profit of insurance companies.Conclusions: Pakistan’s continental shelf shows an increasing trend in earthquake frequency which can be correlated to the directly affected on insurance Industry in Pakistan rising the earthquake frequency in same duration caused by extensive change of global warming. The increase in earthquake frequency probably lies in the magnitude 3-3.9 and in depth range from 0 to 40 km after analysing the major earthquack desaster 2005. Insurance industry facing many problems due to increasing earthquacke frequency. More claims are made by the customers, Profit is decreasing and reserves are insuffient to pay claims. Companies are trying to minimize the risk by implementing different stratagies such as arrangement with reinsurance and ristricting dangerious areas like Balakot. However a positive trend is also seen peoples are now more desire to purchace insurance policies to prevent their lossesEarthquake in Pakistan & its Impacts on Insurance Page 19
  • Recommendation:Precautions for EarthquakeEarthquake is an unexpected event which cannot be predicted in advance. Hence, the only wayto save yourself, is with adequate preventive measures. Here is an earthquake safety checklistthat will help you in your preparation work in this regard: The first step of earthquake safety precautions is to be sure that the building in which you are living, meets the earthquake construction requirements. Arrange all the cupboards of your house in such an order that the heavy items are stored in the lower racks. Thus you can ensure that those heavy items will not be thrown off like projectiles at the time of an earthquake. Secure the cupboard doors with latches, so that they do not open during an earthquake and prevent things kept inside them from falling off. Objects in your house like refrigerator, bookcases, air conditioners should be fastened to the wall properly, so that they can withstand maximum tremors. Keep hanging objects like lamps, mirrors, picture frames, hanging plants away from beds. Also make sure they are anchored properly, to prevent their fall. Fire may erupt inside the house after an earthquake. Hence, the fire extinguishers on each floor of the building should be strategically located, so that one can easily access them as and when they are required. Always keep an earthquake survival kit ready with you. At least one member of the family should have good knowledge of first aid measures which will help if someone gets a bad injury. This is important because the medical emergency services often gets overloaded after this kind of natural disaster. Even many of the medical equipment may not be in working condition after the incident. One of the most vital aspect is earthquake safety for kids. For this, you have to train them about the do’s and don’ts during an earthquake. Talk to them about how it feels when earthquake happens so that they can recognize it early. Teach them how they can seek protection by going under a desk or a table. Lets take a look at the earthquake activity in Pakistan!Earthquake in Pakistan & its Impacts on Insurance Page 20
  • Reference: ● http://pakistanweatherportal.com/2011/07/30/history-of-earthquakes-in-pakistan- in-detail/ ● http://www.compuquotes.com/insurance-definition-earthquake-insurance.html ● www.thegreenfrognews.com/Downloads/Earthquakes.pdf ● http://www.ourvmc.org/files/what_is_earthquake_678_wsp.pdf ● http://www.adb.org/Documents/Papers/ADB-Working-Paper-Series/ADB-WP07- Earthquake-Risk-Catastrophe-Insurance.pdf ● http://ejbiotechnology.ucv.cl/iaformato/research_articles.html ● http://www.eurojournals.com/ajsr.htm ● International Research Journal of Finance and Economics ISSN 1450-2887 Issue 61 (2011) © EuroJournals Publishing, Inc. 2011 http://www.eurojournals.com/finance.htmEarthquake in Pakistan & its Impacts on Insurance Page 21