Turkey was rattled by a powerful earthquake this past Sunday, which caused widespread damage in many populated areas. AIR Worldwide, a global risk modeling firm, has released initial estimates of the extent of the damage. According to the agency, the damage is modest when compared to previous quakes that have struck the region. Nonetheless, AIR notes that the quake has claimed more than 200 lives, but government officials say that the ultimate total could be as high as 1,000.
AIR notes that most urban residencies and commercial buildings are reinforced against earthquakes. This allows many major buildings to withstand the impact of Sunday’s magnitude 7.2 quake. Buildings and homes in rural regions suffered some damage, however, as they are not subject to the same construction requirements as those found in urban areas. As a result, thousands of people have been displaced by the natural disaster.
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The exact cost of the disaster is not yet known, but the event is likely to cause turmoil in Turkey’s insurance market. According to AIR, the irregularities between reinforced properties and those without appropriate fortifications may be a red flag for insurers. Given the nation’s history with quakes, the lack of appropriate regulations concerning both insurance and construction create a sense of unease with insurers as they are unwilling to accommodate undue risk. This may ultimately mean that insurance prices in the nation will rise, or that some property insurers will flee the nation altogether, much the same way insurers fled New Zealand in the wake of an earthquake earlier in the year.