Federal government wants to ask homeowners to pay after severe earthquakes
Published: Friday, Dec 8th 2023, 13:20
Updated At: Friday, Dec 8th 2023, 13:20
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After severe earthquakes in Switzerland, all homeowners should contribute to damage coverage. The Federal Council would like to be able to levy an amount of up to 0.7 percent of the building insurance sum in an emergency. That would currently be around 22 billion Swiss francs.
On Friday, the national government submitted a corresponding proposal for a constitutional amendment for consultation. The Federal Council complied with a request from parliament.
The federal government wants to be able to oblige building owners to jointly finance damage to houses after earthquakes. Homeowners affected by a severe quake should thus be compensated quickly. By legally regulating the financing, the federal government wants to facilitate rapid reconstruction.
According to the Federal Council, severe earthquakes are among the rarest but greatest risks to which Switzerland is exposed. Based on past experience and the results of recent research, the Federal Council states in its report on the proposal that there is a relevant earthquake risk in practically the entire populated area of Switzerland.
Only 15 percent of buildings insured
Model calculations by the Swiss Seismological Service have shown that a repeat of the catastrophic Basel earthquake in 1356 with a magnitude of 6.6 in Switzerland would result in around 3,000 deaths and damage to buildings amounting to around CHF 45 billion. The greatest financial losses due to damage would therefore be expected in the cantons of Bern, Valais, Zurich, Vaud and Basel-Stadt.
There is currently no nationwide compulsory earthquake insurance in Switzerland. Currently, around 15 percent of buildings are insured against earthquake damage.
The Federal Council also stated that private provision has not yet led to comprehensive protection against earthquake risks. In the event of a major earthquake, there would therefore be a risk of loss of livelihood for many of those affected and reconstruction would be considerably delayed.
According to the Federal Council and Parliament, the financing of damage to private buildings should be the responsibility of homeowners and not the public sector. "In the event of a severe earthquake, the latter would already be confronted with major financial burdens anyway," argued the government.
Insurance idea fails several times
The idea for a Switzerland-wide insurance solution against earthquakes failed several times. In 2021, Parliament obliged the Federal Council to create the basis for financing building damage in the event of an earthquake by means of a contingent liability.
A minority in parliament rejected the proposal, arguing that it is already possible for all homeowners to take out earthquake insurance. The responsibility should remain with private individuals. The Federal Council also had fundamental reservations about this. It said that compulsory earthquake insurance had not been acceptable for 25 years.
The Federal Council sees several advantages in the system now being promoted. In contrast to an insurance solution, there would be no premium payments, it said. Furthermore, homeowners would only have to pay if damage was actually caused by an earthquake.
More power for the federal government in prevention
The maximum compensation amount of around 22 billion Swiss francs that the government is seeking corresponds to the amount of damage expected in the event of an earthquake with a return period of 500 years.
The federal government is also to be given more powers, for example in terms of prevention. Protection against earthquakes is actually the responsibility of the cantons. With a new constitutional article, the federal government wants to issue regulations, for example on buildings to protect people and property in the event of an earthquake.
The consultation on the planned constitutional amendment will last until March 22, 2024, but the Federal Council intends to wait before formulating the implementing provisions at legislative level. According to its own statements, it first wants to await the outcome of the consultation and the parliamentary debate as well as a referendum on the constitutional amendment.
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