Earthquake insurance for Greece: comparative analysis and pricing issues

Abstract

PurposeThe present article serves two main goals. First, the proposed scheme for Greece is being involved in a benchmarking analysis. Second, an expansion of previous quantitative models is undertaken in order to estimate risk‐based premiums for the proposed national insurance scheme.Design/methodology/approachThe benchmarking analysis of the proposed scheme is undertaken in comparison to the best practices of the catastrophe insurance systems operating in most member‐states of the EU. Risk modelling is employed to calculate risk‐based premiums.FindingsThe benchmarking analysis leads to conclusions which may be useful for the stage of actual implementation of such a program in Greece. Risk‐based premiums for the proposed national insurance scheme are estimated for all CRESTA zones of the country.Research limitations/implicationsUncertainty of estimated catastrophe losses is a limitation of the research.Practical implicationsThe paper provides a detailed description of the proposed earthquake insurance scheme.Social implicationsThe Greek Government should evaluate the proposal for the establishment of a national insurance program for earthquake damages.Originality/valueThe paper's originality/value consists of the construction of a unique data bank of the residential stock of Greece, and a comprehensive proposal for earthquake insurance, based on the best practices of national Cat insurance schemes.