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Natural Hazards, UnNatural Disasters: The Economics of Effective Prevention
above TCIP’s limit of $62,500. The premium averages $46 monthly now and varies by location (five risk zones) and construction (three types: steel & concrete; masonry; and others). Discounts are also offered for the installation of quake-resistant features. The TCIP, an entity under the Treasury, is structured to be independent of politics with a seven-member managing board drawn from academia and the public and private sectors. It sells the policies through agents and 24 private insurance companies, may pay any claims directly and quickly (without waiting for the government budget to be approved), and transfers the risks abroad through reinsurance retaining only the risk that the World Bank contingency capital facility could cover.
References Escaleras, M., N. Anbarci, and C. Register. 2007. “Public Sector Corruption and Major Earthquakes: A Potentially Deadly Interaction.” Public Choice 132 (1–2): 209–30. Gurenko, E., R. Lester, O. Mahul, and S. O. Gonulal. 2006. Earthquake Insurance in Turkey: History of the Turkish Catastrophe Insurance Pool. Washington, DC: World Bank, International Bank for Reconstruction and Development. Japan International Cooperation Agency. 2002. “Study on Disaster Prevention/Mitigation Basic Plan in Istanbul.” Tokyo.
Chapter 3 Notes 1. The benefits of housing protection against disasters do not always outweigh the costs: protecting windows and doors within a masonry house is not cost-effective in less hurricane-exposed communities of St. Lucia. 2. The most frequently invoked explanations for not adopting preventive measures were: too expensive (57 percent); “we trust in our building” (54 percent); God’s will (41 percent); and no use (33 percent). Others included lack of time (29 percent); and lack of knowledge about what to do or being a renter (25 percent). 3. It should be kept in mind, however, that there are many limiting assumptions of the analyses—most of which are conservative in the sense of lowering the benefit-cost ratios. 4. Propensity scores were used to match buildings, and the matching was done non-parametrically to avoid errors associated with a misspecified functional form.