Lisbon, Feb. 19, 2025 (Lusa) - The Insurance and Pension Funds Supervisory Authority (ASF) sent the government the proposal for a seismic risk coverage system at the end of 2024, and it is now up to the Finance Ministry to analyse it, the authority told Lusa on Wednesday.
"At the end of 2024, the ASF sent a report to the finance minister with a proposal for a system to cover the risk of seismic phenomena, following the technical work and studies carried out," said an official source from the insurance regulator.
The ASF is now waiting for the Finance Department to analyse it before launching the "public consultation process on the model proposal".
The official source did not divulge details of the proposal sent to the government.
After this public consultation, the ASF will make a final report with a proposal for a law that will create the Portuguese system to cover the risk of seismic phenomena.
In October 2023, the (then Socialist) government asked the ASF for "support for creating a system to cover the risk of seismic phenomena" because Portugal has significant exposure to seismic risk and a lack of relevant protection to cover this risk.
Currently, only 19% of homes in Portugal are insured against earthquakes, according to the Portuguese Association of Insurers (APS), the association that brings together the main insurance companies.
An earthquake measuring 4.7 on the Richter scale was recorded on Monday, with its epicentre around 14 kilometres west-southwest of Seixal in the Setúbal district. Last year, on 26 August, there was a 5.3 earthquake to the west of Sines.
When Lusa questioned APS, APS said that the number of homes insured for seismic risk has only increased "residually" since the August earthquake.
The Portuguese Association of Insurers has also defended the decades-old intention to create a fund for seismic risk.
In 2010, the government (PS, José Sócrates) presented a legislative draft for creating such a fund, but it was not followed up in the wake of the crisis.
Insurers have been calling for seismic risk insurance to be compulsory when fire insurance is already in place. In an interview with Lusa in April 2022, the president of the APS, José Galamba de Oliveira, estimated that this insurance would cost between €25 and €75 per year, depending on the country's region and the type of building.
José Galamba de Oliveira recalled that this is also a concern for the banking sector, as many homes are used as collateral for mortgage loans.
In 2023, APS published a study by Swiss Re indicating that Portugal is the country in Europe most exposed to seismic risk (ahead of Italy). The greatest risk in mainland Portugal is in Lisbon and the Algarve.
The Azores also have high seismic activity.
According to the APS, losses from severe events, such as the Lisbon earthquake of 1755, could reach 20% of the Gross Domestic Product (GDP).
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