Analysis of Compulsory Earthquake Insurance Indicators for 2023 Kahramanmaraş Earthquakes Using Linear Regression and System Simulation

Abstract

Purpose - In this study, the relationship between the number of policies and the insurance rate for the February 6, 2023 Kahramanmaraş Earthquakes and the claim payment amounts that can be made by the Turkish Catastrophe Insurance Pool (TCIP) after the earthquake is examined. It is aimed to establish a significant regression model between the Compulsory Earthquake Insurance (CEI) coverage rate and the claim payments that can be made after the earthquake. Design/methodology/approach - In this study, linear regression model and system simulation are used together. The proposed model is created using the linear regression method. The amount of claim that can be paid after the earthquake under different scenarios is analyzed with the system simulation. Findings - The findings of the study show that the more the insurance rate increases, the more claims can be paid. An increase of 1 unit in the number of CEI policies allows for an increase of 2033 units in the claim payment. In other words, one additional CEI policy issued for TCIP allows for 2033 TL more claims to be paid. According to the results of the scenario analysis, it is concluded that if the total number of CEI policies had been approximately 20 million by the end of 2022, that is, if the insurance coverage rate had been 100%, the claim payment to be made by TCIP would have increased by 53%, reaching approximately 52 billion TL. Discussion - Türkiye is a country with a very high risk of earthquakes. Our country last experienced this reality with the February 6 Kahramanmaraş Earthquakes. In the coming years, devastating earthquakes of different magnitudes are expected in different regions, especially the Great Marmara Earthquake, which is expected to take place in Istanbul. The economic loss caused by these earthquakes can only be overcome through insurance and reinsurance, apart from the aid provided by the state. For this reason, especially CEI insurance rates should reach around 100%, and there should be a significant increase in Home and Fire insurances to be made outside of CEI.