Though Bulgaria is situated in a seismically active region, less than 10% of homes in the country are insured against earthquakes.
By Svetla Dimitrova for Southeast European Times in Sofia -- 20/06/12
Neighbours Bulgaria, Turkey and Romania have all suffered catastrophic quakes. [Reuters]
The recurring debate about making home insurance mandatory flared again with the 5.8 magnitude earthquake that rocked the town of Pernik, about 30km southwest of Sofia, last month.
The May 22nd tremor, the strongest near the capital since 1858, damaged 56 municipal buildings in Pernik and neighbouring villages, along with scores of homes.
About ten days after the quake and its hundreds of aftershocks, Bulgarian Regional Development Minister Lilyana Pavlova called for legislative changes to make home insurance compulsory. Currently, insurance is required for state and municipal properties only.
Nearly 98% of all properties in the country are privately owned, making Bulgaria unique in that sense, according to Pavlova. "As owners, we must take care of our … property," she said in a June 2nd interview with Sofia-based private Darik Radio. Pavlova wants all homes insured. At this point, only those who financed their mortgage through a bank had to get insurance, as is the case in Croatia and Albania.
Sofia-based lawyer Maya Zlateva agreed, in principle.
"I'd be the first to insure my property, but not until the legislative framework covering that system has been improved to guarantee that the interests of both sides are equally protected, not only those of the insurance companies," she told SETimes. "Most of them now only care about how to make you purchase a policy. But when an insurance event occurs, they are reluctant to pay."
Avgustina Assenova, 40, a jobless Sofia resident, supported Pavlova's idea.
"Yes, I have insured my home, including against earthquakes," she told SETimes. "With the little pay I used to get, I wouldn't be able to cover the cost of any significant damage myself. Obviously, the state cannot afford to help everyone in the event of a major calamity, either."
Bulgaria has been struck by 11 quakes measuring at least 6.0 on the Richter scale since the second half of the 19th century. A tremor on September 18th 1858 in Sofia, more than 30 years before systematic monitoring began in Bulgaria, is described as the most devastating, and is believed to have measured around 9 on the Richter scale.
According to official statistics, there were a total of nearly 3.9 million dwellings in Bulgaria in 2011. Yet insurers estimate that less than 10% of them are covered by homeowner's policies for damage caused by a host of natural disasters, such as flooding and torrential rains, but not earthquakes.
"Earthquakes were listed among the natural disasters during communist times," Anelia Angelova, manager of the Viara insurance brokerage in Sofia, told SETimes. "That's why many people still believe that when they buy a homeowner's policy, they have insured their property against earthquakes too. But, that's a separate policy now."
Citing Financial Supervision Commission data, the Sofia-based private television station bTV reported recently that only 8.5% of all properties in Bulgaria are currently insured against earthquakes.
The Pernik quake reportedly also prompted a discussion within the cabinet about the possible creation of a disaster insurance pool, similar to those in neighbouring Romania and Turkey, where quakes are common.
Turkey's Catastrophe Insurance Pool was established after the 7.6 magnitude earthquake that struck western Turkey on August 17th 1999, killing more than 17,000 people. Parliament passed legislation making earthquake insurance compulsory for all registered residential buildings within municipality boundaries, yet enforcement is spotty at best.
Romania's Catastrophe Insurance Scheme, established in 2008, also made insuring dwellings against earthquakes, landslides or flooding mandatory.