GHAFORY-ASHTIANY_Iran EQ Insurance_IDRC 2014_Wednesday (1)

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5th International Disaster and Risk Conference IDRC 2014 Integrative Risk Management - The role of science, technology & practice 24-28 August 2014 in Davos, Switzerland

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GHAFORY-ASHTIANY_Iran EQ Insurance_IDRC 2014_Wednesday (1)

  1. 1. IIEES Global Risk Forum, IDRC 2014 Davos, Switzerland 24-28 August 2014 Earthquake Insurance in Iran Mohsen Ghafory-Ashtiany Professor: International Institute of Earthquake Engineering and Seismology Affiliated Faculty: Disaster Management Research Institute of Shakhes Pajooh President: Iranian Earthquake Engineering Association Chairman: Strong Ground Motion, Hazard and Risk Commission of IASPEI Kiarash Naser-Asadi Associate Prof. of Zanjan University SP Insurance Risk Management Institute
  2. 2. IIEES Insurance in Iran • Low Insurance penetration rate: 2.1% in 2011 • 69% of Insurance Income and 81% of paid losses belong to Automobile and Health Insurance.
  3. 3. IIEES • Due to low penetration rate of Insurance in Iran, in practice the risk transfer process from insurance has moved to the responsibility of the Government. • Government had and are being acting as “Free Insurer” of the those who failed to follow the building codes and construction regulation and those who impose risk to the society. • The Municipalities and construction authorities by not full enforcement of the codes have accepted the Government to be the “free insurer” of the building code violators. • These facts have caused that people do not show interest on earthquake insurance and insure their properties. Disaster Insurance in Iran
  4. 4. IIEES Event Date M Human Loss Economic Loss MRials Reconstruction Cost, MRilas Insurance Share (%) Death Injured Manjil June 90 7.1 14300 29,654 757 1250 0.04 Bojnoord Feb. 97 6.1 90 260 173 269 0.5 Ardebil March 97 5.5 980 2600 255 368 0.6 Ghaen- Birjand May 97 7.3 1567 3500 492 466 0.4 Avaj July 2002 6.2 230 1466 627 745 1.9 Bam Dec 2003 6.5 31828 17500 43,000 300,000 1.3 Neka Flood July 99 - 62 351 352 461 1.27 Ahar EQ. Aug 2012 6.3 870 1200 0.9 Human and Economic Losses and share of Insurance
  5. 5. IIEES Type Building Typology Level of Earthquake Hazard 1 2 3 4 5 1 Adobe and Traditional 1.0 1.1 1.2 1.5 1.8 2 Confined Masonry 0.8 0.9 1.0 1.4 1.6 3 Pre-code Steel Structure 0.6 0.7 0.8 1.1 1.4 4 Pre-code Reinforced Concrete 0.4 0.5 0.6 0.8 1.0 5 Code Based Buildings Design and Construction (Post 1991) 0.2 0.3 0.4 0.6 0.8 Iran Earthquake Insurance Index for Buildings Iran Central Insurance Agency, Ashtiany 1991
  6. 6. IIEESIIEES 5. Development of an effective system for financial recovery and compensation through insurance, financial incentives, and .... 6. Reducing the risk of future developments of urban and rural area and increasing the safety level..... by full implementation of building codes and enforcement of insurance and ... 7. Substantial risk reduction of existing structures with the main objective of saving human life, especially the schools, hospitals, public buildings, lifelines and infrastructures; as well as providing special loan and using insurance system as incentive for the strengthening of the private buildings.
  7. 7. IIEES Post Strategy Actions:  Building the insurance culture  Improve and update the existing earthquake insurance rate and zoning  Expansion of the use of risk modeling for Industry and important structures and Infrastructures, instead of fixed rate or black box rating.  Providing Disaster Insurance for all home owners.  Mandatory Insurance for building construction with bank financing.
  8. 8. IIEES • Evaluation of the mean and variance of annual loss of common buildings in Iran and use the results to define the base for the earthquake insurance premium index • Other factors should be calculated based on the company’s interest and policy
  9. 9. IIEES Seismic Hazard Zonation Based on the Maximum PGA of each sub-province
  10. 10. IIEES ProvinceTotalNo. of Urban% UrbanNo. of Rural% Rural ‫مرکزی‬34499724515671.069984328.94 ‫گیالن‬61659334505855.9627153444.04 ‫مازندران‬74008940147654.2533861345.75 ‫شرقی‬ ‫آدربایجان‬79234355032569.4624202130.54 ‫غربی‬ ‫آذربایجان‬57807737654865.1420152734.86 ‫کرمانشاه‬38947527155469.7211792230.28 ‫خوزستان‬75444355199573.1720244926.83 ‫فارس‬88886556706363.8032180136.20 ‫کرمان‬51765231629161.1020135938.90 ‫رضوی‬ ‫خراسان‬129633190424969.7539208030.25 ‫اصفهان‬111891194068584.0717822315.93 ‫بلوچستان‬ ‫و‬ ‫سیستان‬37131517892348.1919239151.81 ‫کردستان‬30935818740260.5812195639.42 ‫همدان‬36947222962662.1513984537.85 ‫بختیاری‬ ‫چهارمحال‬1675889309555.557449444.45 ‫لرستان‬32270721062265.2711208434.73 ‫ایالم‬991586398364.533517435.47 ‫بویراحمد‬ ‫و‬ ‫کهگلیویه‬1152655593648.535933051.47 ‫بوشهر‬17200211734668.225465631.78 ‫زنجان‬20142911899359.078243640.93 ‫سمنان‬14619110994075.203625324.80 ‫یزد‬25113120149080.234964319.77 ‫هرمزگان‬26620513614351.1413006148.86 ‫تهران‬3605089334316192.732619297.27 ‫اردبیل‬25391215416560.729974639.28 ‫قم‬25292523791194.06150145.94 ‫قزوین‬26986519041470.567944729.44 ‫گلستان‬33558317703752.7615854747.25 ‫شمالی‬ ‫خراسان‬1693748479750.068457849.94 ‫جنوبی‬ ‫خراسان‬1435817049349.107308650.90 Total158599261143187772442804228 Urban and Rural Building Distribution, 2011
  11. 11. IIEES VulnerabilityAgeArea ProvinceSafeVulnerable6565-7980-85< 100m2> 100m2 ‫مرکزی‬2904131595611497216875361270211193133804 ‫گیالن‬77261539332194270295631126695480716135877 ‫مازندران‬105821634268231616346466162011493467246622 ‫شرقی‬ ‫آدربایجان‬89434702909270418373270148657479638312705 ‫غربی‬ ‫آذربایجان‬38954539123145321309155123605329649248428 ‫کرمانشاه‬2751236196312256019694469973240426149049 ‫خوزستان‬47351707092221490387029145922391666362777 ‫فارس‬80553808312286397428641173826351529537336 ‫کرمان‬63890453762149893241133126624286059231593 ‫رضوی‬ ‫خراسان‬1109201185411386697638504271127868862427469 ‫اصفهان‬159741959170377278509732231900436145682766 ‫بلوچستان‬ ‫و‬ ‫سیستان‬123743589417789622179271627253672117643 ‫کردستان‬217192876391000461498205949622443684922 ‫همدان‬2687734259513278917026366421219070150402 ‫بختیاری‬ ‫چهارمحال‬1792714966150852819653477256536111052 ‫لرستان‬277032950049445015994568313167686155021 ‫ایالم‬7123920351767256993244954564353515 ‫بویراحمد‬ ‫و‬ ‫کهگلیویه‬133071019582742259899279425500160264 ‫بوشهر‬225001495024436581373462689307278930 ‫زنجان‬1698618444371265886924147113200369426 ‫سمنان‬180221281695162266327282457381172380 ‫یزد‬6833244298946091031935333584635166496 ‫هرمزگان‬19297246908847061312005030118104985156 ‫تهران‬7957172809372104936116584158973142633101971988 ‫اردبیل‬31603222309710601248195802716589088022 ‫قم‬18743234182795421290834430516587487051 ‫قزوین‬48924220941740321320746375819671173154 ‫گلستان‬296193059649627316415075163223396112187 ‫شمالی‬ ‫خراسان‬954915982558105827042856211859850776 ‫جنوبی‬ ‫خراسان‬67441368375727665585207218286060721 Total19820451387788148342557623550340214697423946117532 Building Taxonomy based on Vulnerability, Age and Area; 2011
  12. 12. IIEES Number of StoriesBuilding YearTaxonomyNo 1-3 Before 1991 Steel 1 4-72 >83 1-3 1991-2003 4 4-75 >86 1-3 After 2003 7 4-78 >89 1-3 Before 1991 Concrete 10 4-711 >812 1-3 1991-2003 13 4-714 >815 1-3 After 2003 16 4-717 >818 1-3 AllSemi-steel 19 4-720 >821 AllBefore 1991 Confined masonry 22 All1991-200323 AllAfter 200324 1 and 2 AllUnreinforced masonry and adobe 25 >326 AllAllWooden27 AllBefore 1991 Light weight steel 28 All1991-200329 AllAfter 200330
  13. 13. IIEES Masonry Adobe 1.7% Unreinforced <33% Reinforced Steel Semi steel Structure 41% Moment Frame 23.7% Steel Braced Frame Frame with Concrete Shear Wall Moment Frame with Steel Bracing Moment Frame with Concrete Shear Wall Reinforced Concrete Moment Frame 0.6%Moment Frame with Concrete Shear Wall Concrete Bearing Wall Density of Construction Mashhad Building Taxonomy
  14. 14. IIEES Fragility functions • Fragility functions are adopted from existing sources for all buildings including: – Mansouri - Ashtinay (2007) – Ashtiany-Zereshki (2010) – Moghadam, Nateghi, and others – Tavakoli (1998) – JICA Tehran Project – HAZUS
  15. 15. IIEES Mean Annual Loss of Steel Structures Type 3: >8 stories Before 1991 Type 6: >8 stories 1991-2003 Type 9: >8 stories After 2003
  16. 16. IIEES Mean Annual Loss of RC Structures Type 12: >8 stories Before 1991 Type 15: >8 stories 1991-2003 Type 18: >8 stories After 2003
  17. 17. IIEES Hazard zone Number of storyBuilding yearTaxonomyNo 54321 24222017151-3 Before 1991 Steel 1 27252320174-72 2927252119>83 151110971-3 1991-2003 4 13109864-75 1411.510.597>86 654321-3 After 2003 7 764.53.534-78 87654>89 23211916141-3 Before 1991 Concrete 10 25232118154-711 2725232017>812 161312118.51-3 1991-2003 13 129.58.57.56.54-714 1310.59.58.57>815 6.55.54.53.52.51-3 After 2003 16 7.56.55434-717 8.57.56.054.5>818 25232118161-2 AllSemi-steel 19 29262420183-520 2119171412AllBefore 1991 Confined masonry 21 171412108All1991-200322 1210975AllAfter 200323 35322522181 and 2All UR masonry and Adobe 24 Wood 65432AllAll25 Insurance Risk Index for Common Buildings in Iran
  18. 18. IIEES
  19. 19. IIEES Hazard Exposure Vulnerability Risk in Billion Rials ProbabilityofLossExceedance Mean Intensity MeanDamageRatio (%) Risk (Economic Loss)
  20. 20. IIEES 1. To recover limited economic loss on the Residential and Commercial Buildings due to Natural Disasters (Earthquake, Flood, Tornado, Thunder, Snowfall, Liquefaction and Tsunami, etc), all buildings should have the Basic Disaster Insurance, effectively from March 2015. 2. The coverage limit for Basic Disaster Insurance shall be established based on the hazard and vulnerability of buildings, defined by Central Insurance Authority in coordination with the Disaster Management Organization (DMO), Ministry of Housing and Urban Development. 3. The insurer for the Basic Disaster Insurance is the Iran Insurance Company. 4. Iran Insurance Company should establish special account for this collected premium from all building owners. Iran Mandatory Basic Disaster Insurance
  21. 21. IIEES 4. Basic monthly premium in the first year shall be 10,000Rs in villages, 15,000Rs in small towns and 20,000Rs in large cities. This amount will charged on the electric bill. The premium shall increase within next 10 years in way that the building owners share of the actual premium become 100% and DMO become 0%. 5. Central Insurance Organization shall provide Reinsurance coverage. DMO shall allocate 15% of its annual budget for this program. 6. From the effective day of this law, DMO will not be responsible for the reconstruction of the damaged buildings due to disasters. 7. Private Insurance co. shall provide the complementary insurance coverage for those who requires more than basic coverage. 8. 1% of the collected premium shall be allocated for public awareness program and promotion of insurance culture. Iran Mandatory Basic Disaster Insurance
  22. 22. IIEES Parliament concern has required more information and justification on the:  Financial benefits to households,  Catrisk policy terms based on risk pricing and homeowner affordability,  Protecting the Insurance company;  Improving insurance penetration,  Risk-based premium rate,  etc Iran Natural Disaster Insurance Pool, INDIP
  23. 23. IIEES Concluding Remarks:  Earthquake Risk Reduction has almost become an integral part of the development process; and insurance is an integral part of the Iran DRR Strategy  Fare, just, reliable and affordable insurance rating and policy is the key factor in expansion of insurance coverage and providing economic Resilience.  Enhancing disaster insurance culture through education both at the level of insurance industry, financial and public sectors.  Implementation of mandatory Disaster Insurance program can be resulted to the promotion of wider application of disaster insurance in other sectors.  Allowing market-driven rating will push the insurance company to Catastrophe Risk Modeling rather depending on fixed rate basis.

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