In addition, there exists a further insurance pooling scheme covering Moroccan earthquake risk providing up to $1bn in cover, but only a partial payout is expected due to its different structure.
The parametric scheme was brokered by Gallagher Re, which declined to comment on specifics of the pool or payout.
But it confirmed it was in conversation with the Moroccan government and reinsurers to establish the calculation of loss under the scheme in the wake of Friday’s earthquake.
Gallagher Re said it was too early to give 100% certainty, but it is likely that the uninsured scheme will be called upon.
The parametric solution is designed to provide coverage to uninsured people in the event of such an earthquake. It is designed to ensure a quick payout as the trigger is based on the Modified Mercalli Index (MMI).
A panel of more than 20 reinsurers, led by large global (traditional) reinsurers, sits behind the parametric cover. This type of programme typically fits within carrier ESG targets to provide coverage for uninsured risks and to address the disaster coverage gap.
Gallagher Re was appointed by Le Fond de Solidarité contre les Evènements Catastrophiques (FSEC) in 2020 to develop and place the scheme, triggered by quakes above 5.0 magnitude on the MMI scale.
The FSEC was established to provide compensation for uninsured victims of man-made and natural catastrophe events such as strikes, riots and civil commotion (SRCC), terrorism, earthquakes, flood and tsunamis.
It provides compensation for people who suffer bodily injury or had their principal residence rendered uninhabitable as a result of a catastrophic event.
Nicolas Moinier, partner advocate of FSEC at Gallagher Re, said: “We have been engaged with our client, FSEC, since the earthquake struck on Friday night with our team working around the clock ever since to produce figures in real-time as the calculation of loss estimates continues.
“We are also in conversation with reinsurers as our goal will obviously be to ensure any payment due from the cover can be in the hands of the Moroccan people as quickly as possible to help them recover and rebuild.”
Late on Friday, a 6.8 magnitude earthquake struck central Morocco, claiming nearly 2,500 lives and leaving much of central Morocco, including parts of Marrakesh, in ruins.
The earthquake struck roughly 75 km southeast of Marrakesh in the High Atlas Mountain range at a relatively shallow depth of 26 km.
The United States Geological Survey said that earthquakes in the region “are uncommon but not unexpected”.
