Compulsory earthquake insurance, what are the risks? - Analysis/Differentiated premium may be a burden for the poorest segments of society
Mandatory insurance of homes against earthquakes and floods can be an instrument that offers real protection for citizens, but on the other hand it can create a new financial burden for citizens with lower incomes.
According to an analysis conducted by ALTAX, referring to the latest version of the draft drafted by the Ministry of Finance, it is stated that basing the premium on the level of risk is an economically sound, but socially delicate principle.
According to the analysis, areas more exposed to earthquakes or floods, which often coincide with lower incomes and weaker buildings, will be entitled to higher premiums. This actuarial logic is technically correct, but without a solidarity component (targeted subsidies or restrictions for the most vulnerable) it can produce territorial and social differentiations that make the scheme unacceptable for a large part of the population. And at this point, the analysis emphasizes that actuarial justice should not sacrifice social justice.
It is also underlined that the long-term sustainability of this compulsory insurance depends on several key decisions. For this reason, it is recommended that fairness and proportionality of the premium should be achieved by combining real risk with solidarity mechanisms, so that the scheme does not become a regressive tax on poor families. Client protection and transparency, it is said, require independent auditing, rapid assessment processes and full information, to avoid abuses and loss of trust.
Fiscal stability, meanwhile, requires that the fund remain dedicated exclusively to compensation, reinsurance and operations, without the risk of redistribution for the overall budget deficit, as foreseen in the framework of the Organic Budget Law. In the event of a major catastrophe, indirect pressure remains real and may require strong initial capitalization and international reinsurance.
The analysis concludes that the reform has great potential to protect thousands of families from natural disasters and promote safer construction. But to make this a reality, it must above all be fair, transparent and fiscally sustainable. This approach, according to ALTAX, ensures that mandatory housing insurance will serve as a shield for all, and not as an additional burden on the most vulnerable.
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