REVIEW OF NECESSARY POLICIES ACROSS COUNTRIES TO IMPLEMENT HAZARD INSURANCE AND RISK REDUCTION AS COMPLEMENTARY SRATEGIES

A. Taylan, City and Regional Planning, SELÇUK UNIVERSITY, Konya, Turkey

Abstract

Although hazard insurance is prescribed by the new international disaster policy as a financial risk sharing mechanism, there is evidence that hazard insurance can also be used for disaster risk reduction (DRR). Despite, developing and implementing insurance and DRR strategies as complementary can be difficult in medium-low income countries (MLICs) depending on higher vulnerability of physical environment, lower capacity of insurers, lack of accessibility and affordability to insurance products and lack of insurance culture. That is, insurers have confronted catastrophic losses in recent decades even in high income countries (HICs), where the insurance industry is well-developed. Nonetheless, the suggestion of the World-Bank to establish national and/or regional catastrophe insurance pools (CIPs) could lead to develop DRR strategies in MLICs. Beginning with the Turkish Catastrophe Insurance Pool (TCIP) in Turkey, similar pools
have been established in Taiwan, Indonesia, Romania and Caribbean region. However, almost any efforts are observed in their contribution to DRR, whereas risk transfer to global reinsurance markets is emphasized. Then, success of these CIPs in risk sharing and transfer is also precarious, because their efficiency requires DRR in insured values. On the other side, ensuring DRR collectively and social equality principles necessitate strategies beyond market, but dealt with the enhancement of community and household capacities. These strategies that are discussed in this paper include: multi-hazard urban risk maps, urban risk mitigation plans, designing risk-rated premiums, subsidized premiums, contractual methods, land-use planning tools to offer incentives or mandate DRR and inspection, long-term credits as linked to hazard insurance, access of poor’s to land and safer housing and infrastructure, legitimization of informal settlements through DRR, and financial resources for local authorities. Therefore, this paper will compare countries in implementing these strategies based on the progress reports prepared for the Hyogo Framework for Action. Then, this paper will conclude with a model that attempts to integrate CIPs into DRR and distributes the priority of strategies and responsibilities to international, national and local levels.

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