The Algarve is among the regions of higher seismic risk in Portugal, but only 19% of housing in the country have insurance that covers this type of events, according to the Portuguese Insurers Association (APS). Despite growing concern for exposure to seismic risk, adherence to specific insurance remains residual, even after the earthquakes recorded in recent months.
The Insurance and Pension Funds Supervision Authority (ASF) sent a proposal for the creation of a seismic risk coverage at the end of 2024, now awaiting analysis by the Ministry of Finance.
Algarve and Lisbon are the most seismic risk zones
According to a study released by APS in 2023, conducted by Swiss Re, Portugal is the country in Europe most exposed to seismic risk, surpassing to Italy. The areas of Lisbon, Tagus Valley and Algarve are the most vulnerable on the continent, while the Azores also have a high seismic activity.
José Galamba de Oliveira, president of APS, recalled that the banking sector also sees this situation with concern, as many dwellings are mortgaged in housing credit, increasing the financial risks in case of great earthquake.
Mandatory seismic insurance can be a solution
Insurers argue that seismic risk insurance is mandatory, as is the case with fire insurance. According to José Galamba de Oliveira, seismic insurance would have an estimated cost between 25 to 75 euros annually, depending on the location and the type of construction:
“For an average capital of 150,000 euros of reconstruction cost, we are talking about a prize that can go from 25 euros per year to 75 euros per year. We are talking about two euros a month, ”he explained.
The president of admitted that for some families this amount can be an additional charge, arguing that the government could create a social support system for this type of insurance.
Creation of a seismic background in analysis
The creation of a national fund to cover seismic risks has been discussed for decades, and a first proposal has been presented in 2010, but without follow -up due to the financial crisis. APS and ASF now advocate the implementation of this system, with the objective of reducing the financial vulnerability of families and the country in the face of a great earthquake.
The impact of a severe event, such as the Lisbon earthquake of 1755, could represent losses of up to 20% of Gross Domestic Product (GDP), according to APS.
Measures are urgent for the Algarve
With the Algarve among the most seismic risk zones, low adherence to seismic insurance and the absence of a support fund leave the region highly vulnerable to a large event. Experts warn that urgent measures are necessary, either through the mandatory adoption of insurance or the creation of a national financial protection mechanism.
Decisions of the government and the Ministry of Finance on the ASF proposal are now awaited, which could define the future of protection against seismic risks in Portugal and the Algarve.
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