Myanmar’s recent earthquake along the Sagaing Fault underscores the pressing need for greater insurance coverage in the region, according to Howden Re. The earthquake, which occurred along one of Asia’s most active fault systems, has exposed a significant protection gap in emerging markets.
Andy Souter, Head of Asia Pacific at Howden Re, called the disaster a “major human tragedy” and emphasized the urgent need for more insurance capital in countries like Myanmar, where the insurance penetration rate remains low.
The Sagaing Fault, stretching more than 1,200 km, has a history of powerful earthquakes, including magnitude 7.3+ events in 1931 and 1946. Studies of the fault suggest the presence of a seismic gap, raising concerns about the possibility of a future magnitude 7.9 earthquake near the site of the current rupture.
Although the full extent of the damage remains unclear, the earthquake’s epicenter was located in Myanmar, and experts predict significant destruction. Many buildings in the affected areas are not constructed to withstand seismic events, further exacerbating the impact.
While neighboring Thailand’s earthquake risk is generally considered low compared to typhoon and flood threats, recent models indicate that seismic events, though rare, are still a real possibility. In urban centers like Bangkok, which is home to high-value properties, the potential for rapid financial losses is significant.
Earthquake coverage in Thailand is usually included as part of overall property insurance policies, with deductibles akin to those for fire-related incidents. However, Myrto Papaspiliou, Head of International Catastrophe Model Research at Howden Re, pointed out that only 10 of Thailand’s 76 provinces are designated as earthquake risk zones, primarily in the northwest. Despite this, Bangkok’s deep alluvial soil can amplify shaking from distant earthquakes, as evidenced by the 2014 Chiang Rai earthquake and the 2004 Sumatra earthquake.
This recent disaster serves as a stark reminder of the need for increased insurance coverage across Southeast Asia, where vulnerability to natural disasters remains high, and protection gaps persist.
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