Morocco to Receive $250 Million Insurance Payout After Devastating Earthquake

The Moroccan government should benefit from a parametric insurance premium of $250 million after the disaster that occurred on Friday night to Saturday, reports Insurance Insider, the British website specializing in insurance. In addition to this premium, Morocco should also receive $1 billion from another risk pooling mechanism covering seismic risk in the kingdom. However, it will only be entitled to a partial payment due to its different structure. This parametric regime was negotiated by Gallagher Re, a global reinsurance brokerage and advisory firm. It has also confirmed that it is in discussion with the Moroccan government and reinsurers to establish the calculation of losses following the powerful earthquake.

"We have been engaged with our client, the FSEC, since Friday night’s earthquake. Our team has been working 24/7 since then to produce real-time figures, while the calculation of loss estimates continues early to provide 100% certainty, it is likely that the uninsured regime will be called upon. [...] We are also in contact with reinsurers, as our goal is obviously to ensure that any payment due under the coverage can be delivered to the Moroccan people as quickly as possible to help them recover and rebuild," said Nicolas Moinier, partner at FSEC at Gallagher Re.

The advantage of the parametric solution is to provide rapid coverage to uninsured people in the event of an earthquake, triggered by the Modified Mercalli Index (MMI). More than 20 reinsurers, led by major traditional global reinsurers, are supporting this program that generally aligns with insurers’ ESG goals to cover uninsured risks and bridge the disaster coverage gap.

In 2020, the Solidarity Fund against Catastrophic Events (FSEC) created to compensate uninsured victims of human-caused or natural catastrophic events, including strikes, riots, civil unrest, terrorism, earthquakes, floods and tsunamis, had mandated Gallagher Re to develop this regime, triggered by earthquakes of magnitude greater than 5.0 on the MMI scale.