In conjunction with the 20th anniversary of Middle East Insurance Review, we present a year-long series of retrospective stories, highlighting each month a momentous event during the past two decades which has shaped the MENA insurance landscape. In our second retrospective piece, we look at the magnitude-7.8 Kahramanmaras Earthquake that struck Turkiye and Syria on 6 February 2023 and the impact it continues to have on the insurance industry.
The Kahramanmaras Earthquake stands out as the largest ever CAT loss for the Turkish insurance market and the largest non-US event loss in 2023. It was a watershed moment for the insurance and reinsurance sectors. Three years on, the industry has transitioned from immediate crisis management to systemic structural reform.
The Insurance Association of Turkiye (TSB) and the Turkish Catastrophe Insurance Pool (TCIP), gave their assessment of the impact of the disaster in its annual reports for the years 2023 to 2025 and at various briefings. In particular, the TSB released a report in 2024, titled “Kahramanmaras earthquake and its implications”.
Impact
A summary of the impact of the disaster is as follows:
Catastrophe insurance data provider PERILS disclosed in August 2024 its final loss estimate for property market losses related to the earthquake. Based on claims data collected from insurers, the final figure was TRY116.9bn ($6.2bn at February 2023 rates).
The industry paid out approximately TRY211.5bn in total claims (all branches, including life) during 2023.
At that time, the death toll was placed at over 62,000, including in Syria.
Residential property coverage is managed via the TCIP which processed 630,000 claims arising from the Kahramanmaras earthquake. It paid approximately TRY40bn for damages. This compared to 114,000 claims and TRY1,4bn paid out in total from its founding in 2000 up to just before the quake.
Within six months, TCIP settled all documented claims. The Pool highlighted problems in the claim process arising from underinsurance stemming from inaccurate data on the floor area of residential properties.It also found under-declaration of insured surface areas. Compensation paid was also deemed insufficient because of reconstruction costs pushed up by inflation.
For losses suffered by businesses, the burden was on private insurers. A significant portion of private insurance payouts was attributed to “Business Interruption” (BI) and “Loss of Profit”, rather than just physical damage.
Also notable is the fact that $98bn or 95% of the $103bn of total damage resulting from the Kahramanmaras earthquake was covered by the state.
The earthquake struck during an already hard reinsurance market. The 2024 and 2025 January renewals were among the most difficult for Turkish insurers. Reinsurers slashed proportional capacity and shifted to excess-of-loss treaties, significantly increasing costs for Turkish insurers.
The TSB highlighted that the insurance industry fulfilled its protection mission and maintained high solvency and rapid payout cycle despite the catastrophic scale.
Structural and Regulatory Reforms
Several actions have been taken in the wake of the February 2023 quake.
Earthquake models were updated as previous models had underestimated the potential for such high-intensity shaking across the East Anatolian Fault. “As local know-how and experiences are important in the field of disasters, alternative models that work together with existing modelling methods have been implemented,” said the TSB.
The maximum coverage for Turkiye’s mandatory earthquake insurance under TCIP was TRY640,000 at the time of the disaster. It was increased to TRY1,272,000 from 1 January 2024. To prevent underinsurance, TCIP introduced automatic monthly valuation adjustments linked to inflation—a major issue where payouts in the Turkish lira were insufficient to cover soaring reconstruction costs. At present, the maximum coverage amount exceeds TRY2m.
Also to ensure adequate insurance, efforts were made to integrate insurance companies into the public database and to receive sq m data of dwellings through this system. A compulsory minimum unit sq m value has been set for civil risks.
The government worked in earnest to transition TCIP from a “Compulsory Earthquake Insurance” to a “Compulsory Disaster Insurance” model, expanding coverage to include floods, landslides, and wildfires.
The government expanded construction insurance to ensure the uninterrupted execution of urban transformation projects. It also established a professional liability insurance system for individuals and organisations involved in the building inspection process in order to ensure construction quality by incorporating the insurance sector in the process.
Earthquake insurance, which is provided as additional coverage to property damage and engineering branches in Turkiye, is subject to a tariff approved by the insurance regulator. Following the disaster, the limit for commercial and industrial risks was increased from TRY400m to TRY2bn. In line with this, all insurance value limits subject to the tariff were increased by 400%.
After 2004, the legal infrastructure for urban transformation was put in place and the urban transformation process gained momentum. Within this framework, 3.2m houses were renovated across the country.
Insurance penetration
Although TCIP quake insurance is compulsory, the earthquake insurance penetration rate in the 11 provinces hit by the earthquake stood at 49% at the time of the disaster. The average national penetration rate was 52% before the disaster.
On a sanguine note, according to the TSB, the earthquake “increased risk perception and sensitivity towards natural disasters”. This was borne out in the TSB’s 2023 Annual Report, which showed a 6.5% increase in compulsory earthquake policies between 2022 and 2023.
The latest data from TCIP, available as of August 2025, show that approximately 11.5m of the 20.3m households across Turkiye had compulsory earthquake insurance, representing an insurance coverage rate of 57.4%. M