DESIGN OF FINANCIAL OPPORTUNITIES AGAINST DISASTERS IN THE CONTEXT URBAN RISK MANAGEMENT IN TURKEY

With respect to the definition of disaster as the breaking down the order, which causes confusion and chaos, dealing with disasters is beyond the conventional ways of disaster management and urban planning. It requires application of risk management strategies and policies in urban areas in the context of urban risk management (URM). As the general framework, URM, it assumes that urban planning is the most suitable framework to manage earthquake risks due to its power and ability to change the built-environment depending on its legal sources, close relationships to local governments, land use planning instruments, and strategic planning methodology. Risk related land-use decisions may be evacuation, renovation, rehabilitation, regeneration and retrofitting of the buildings depending on the earthquake risk level and considering the city as a whole with its socio-economic characteristics. Moreover, strategic planning methodology, which regards all involved stakeholders.

On the other hand, TCIP (Turkish Catastrophic Insurance Pool), which is established after 1999 earthquakes to finance disaster losses in residential areas using insurance techniques, is one of the potential stakeholders of URM, because it deals with the earthquake risk in residential urban areas. Besides of its role in disaster management as a financial instrument in sharing and transferring the risks, the participation of TCIP in the risk reduction stage of URM may lead TCIP to overcome confronting with the problems arising from the characteristics of the earthquake insurance as moral hazard, adverse selection and the non-marketability of insurance. Because of the uncompleted process of TCIP, in fact, it is not actually obligatory. For this reason, although it aims to increase the low penetration ratio with an obligatory implementation, the insurance purchase ratio is nearly 15 % since 1999.

Hence, TCIP may develop a coinsurance methodology and deductibles from insurance premiums, which may lead TCIP to be an incentive instrument in encouraging homeowners for mitigating risks. Moreover, TCIP can be a financial source contributing to another fund that may serve insured homeowners and the central and local governments for risk mitigation. Thus, a likely cooperation between urban planning and TCIP can be achieved for the development of risk reduction policies to implement land use decisions with other urban planning instruments. Because those policies, which may create a risk reduction culture in society, should be developed for residential areas in cities, they should consider the Households’ decision process for purchasing insurance and taking preventive measures for risk reduction.

The presentation proposes the design of possible urban planning and insurance policies that may create a risk reduction culture between Households against earthquake disaster in urban areas in Turkey. Those policies may be developed with cooperation of urban planning and TCIP in the context of an URM approach. Therefore, to develop suitable and implemental risk reduction policies and culture, there is required to search the factors influencing the decision process of Households for purchasing insurance and taking preventive measures.