Insurance companies ask the Gov for Seismic Fund of 8Bn€

  • ECO News
  • 18 June 2019

João Galamba de Oliveira, President of APS, stressed the need to create an 8Bn€ Seismic Fund. The government is yet to respond.

After Istanbul, Turkey, Lisbon is the European city with the highest seismic risk, as an increasing number of seismic activity has been registered in Portugal. That is why João Galamba de Oliveira, President of the Portuguese Association of Insurance Companies (APS), stressed to ECO the need to create a Seismic Fund. The sector has presented a proposal to the government in order to create a fund of 8Bn€. However, the proposal has not yet received an answer.

The proposal aims at covering potential damages in habitational buildings in the occurrence of a large-scale earthquake in the country, presented to former Minister of Infrastructures, Pedro Marques. With Pedro Marques’ election to the European Parliament, the new Minister Pedro Nuno Santos has not yet provided an answer to the proposal.

In 2010, the topic was publicly debated, but the deteriorating economic context led the project to be put aside. Besides APS, José Almaça, President of the Portuguese Authority for Insurances and Pension Funds (ASF), and Deco (Portuguese Association of Consumers) have been stressing the urgent need to create such fund, given the imminent seismic risk in Portugal.

In a presentation to members of the National Authority for Civil Protection to which ECO had access, APS warns to the increasing records of intense seismic activity in Portugal, stressing that Insurers are “unwavering in their purpose of contributing to a structured and responsible solution to this problem”.

“Despite the country having zones with higher and lower risk, the virtual possibility of a seism happening with moderate or high intensity will seriously conditionate the whole country”, Galamba de Oliveira mentions.

Only 16% of the houses are protected against seisms

APS states that there are about 6M houses in Portugal. However, only 3.2M of those are covered with a multirisk or fire insurance and just 900,000 are covered with seism insurance. Many of these seism insurances are legally mandatory due to being contracted under the horizontal property regime. But not every bank demands seism insurance when borrowing money for mortgages.

The Association concludes that “the existing protection is clearly insufficient and it is a real problem for all citizens that in their majority will not have the means to rebuild their houses in such an event”.

APS also reminds that the banking system will be severely affected by not having proper reassurances in the occurrence of such a catastrophic event.