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🏚️ '''Compulsory earthquake insurance''' refers to government-mandated [[Definition:Insurance | insurance]] coverage against [[Definition:Earthquake | earthquake]] damage, typically applied to residential properties in seismically active regions where voluntary take-up rates have historically proven insufficient to protect homeowners and the broader economy from catastrophic loss. Unlike voluntary [[Definition:Property insurance | property insurance]] markets, where consumers choose whether and how much coverage to purchase, compulsory earthquake schemes require property owners — or in some models, all residential insurance purchasers — to obtain a minimum level of seismic protection, often backed by a public or quasi-public entity that pools and manages the [[Definition:Catastrophe risk | catastrophic risk]] centrally.

⚙️ Turkey's Compulsory Earthquake Insurance program, administered by the Turkish Catastrophe Insurance Pool (TCIP or DASK), provides one of the clearest examples: following the devastating 1999 Marmara earthquakes, the government mandated earthquake coverage for all registered residential buildings in urban areas, with the pool acting as the primary [[Definition:Insurance carrier | carrier]] and transferring excess risk to international [[Definition:Reinsurance | reinsurers]] and [[Definition:Capital markets | capital markets]] through [[Definition:Catastrophe bond | catastrophe bonds]]. Japan's earthquake insurance system operates differently — residential earthquake coverage is available only as an endorsement to a fire insurance policy, with the [[Definition:Japan Earthquake Reinsurance Company | Japan Earthquake Reinsurance Company]] (JER) and the national government sharing the risk above certain thresholds. New Zealand's EQCover scheme, administered by the Toka Tū Ake EQC, automatically attaches earthquake and [[Definition:Natural disaster | natural disaster]] coverage to every residential fire insurance policy, funded by a levy. Each model reflects local seismic exposure, insurance market maturity, and political preferences about the balance between private and public [[Definition:Risk transfer | risk transfer]].

🌏 These programs matter because earthquakes represent a class of [[Definition:Natural catastrophe | natural catastrophe]] risk where the [[Definition:Protection gap | protection gap]] — the difference between economic losses and insured losses — can be enormous without regulatory intervention. Voluntary earthquake insurance suffers from well-documented behavioral barriers: [[Definition:Adverse selection | adverse selection]], low perceived probability, and premium sensitivity among homeowners. By making coverage compulsory, governments ensure a broader [[Definition:Risk pool | risk pool]], more stable [[Definition:Premium | premium]] bases, and faster post-event economic recovery. For the global [[Definition:Reinsurance | reinsurance]] industry and [[Definition:Insurance-linked securities (ILS) | ILS]] market, sovereign-backed earthquake pools are major cedents, and their purchasing decisions influence [[Definition:Catastrophe reinsurance | catastrophe reinsurance]] pricing and [[Definition:Capacity | capacity]] dynamics worldwide. The design and performance of these schemes also serve as templates when other seismically exposed countries — from Indonesia to Chile — consider their own approaches to closing the earthquake protection gap.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Catastrophe risk]]
* [[Definition:Protection gap]]
* [[Definition:Catastrophe bond]]
* [[Definition:Reinsurance]]
* [[Definition:Natural catastrophe]]
* [[Definition:Government insurance program]]
{{Div col end}}

Definition:Compulsory earthquake insurance - Revision history

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