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Consequences of Financial Vulnerability and Insurance Loading for the Affordability of Earthquake Insurance Systems: Evidence from Iran

Author

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  • Naghmeh Pakdel-Lahiji

    (Department of Civil Engineering, Science and Research Branch, Islamic Azad University, Tehran, Iran. E-mails: Naghmeh.pakdel@gmail.com; sadeghi.m@srbiau.ac.ir)

  • Stefan Hochrainer-Stigler

    (IIASA—International Institute for Applied Systems Analysis, Laxenburg, A-2361, Austria.)

  • Mohsen Ghafory-Ashtiany

    (Department of Special Structures, International Institute of Earthquake Engineering and Seismology, 19537, Tehran, Iran.)

  • Mehdi Sadeghi

    (Department of Civil Engineering, Science and Research Branch, Islamic Azad University, Tehran, Iran. E-mails: Naghmeh.pakdel@gmail.com; sadeghi.m@srbiau.ac.ir)

Abstract

Many governments provide financial assistance for reconstruction of damaged housing units after a disaster in order to prevent vulnerable households from falling into poverty traps or entering low growth cycles. To lessen these risks and the overall financial burden on the public sector after extreme events, private insurance schemes provide one viable solution. In this paper, the possible effects of such solutions are assessed for District 1 of Shiraz, Iran, based on recent probabilistic earthquake risk modelling. The work explicitly focuses on the financial vulnerability of different household groups as well as possible increases in premiums due to uncertainties in the underlying risk model through the use of loading factors. The results are compared with current non-probabilistic-based premiums that are used by most insurance companies in Iran, and recommendations are given as to which schemes may fit best or could be affordable for society to manage future earthquake risks.

Suggested Citation

  • Naghmeh Pakdel-Lahiji & Stefan Hochrainer-Stigler & Mohsen Ghafory-Ashtiany & Mehdi Sadeghi, 2015. "Consequences of Financial Vulnerability and Insurance Loading for the Affordability of Earthquake Insurance Systems: Evidence from Iran," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 40(2), pages 295-315, April.
    • Handle: RePEc:pal:gpprii:v:40:y:2015:i:2:p:295-315
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    Citations

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    Cited by:

    1. Athanasios Gkimprixis & John Douglas & Enrico Tubaldi, 2021. "Seismic risk management through insurance and its sensitivity to uncertainty in the hazard model," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 108(2), pages 1629-1657, September.
    2. Mehdi Sadeghi & Mohsen Ghafory-Ashtiany & Naghmeh Pakdel-Lahiji, 2015. "Developing seismic vulnerability curves for typical Iranian buildings," Journal of Risk and Reliability, , vol. 229(6), pages 627-640, December.

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