(1)Coverage of Residential Earthquake Basic Insurance
　　

◎ The following perils are covered by basic residential earthquake:

1. Earthquakes

2. Fire or explosion caused by an earthquake

3. Landslide, land subsidence, land movement, fissure, or rupture caused by an earthquake.

4. Tsunami, sea surge or flood caused by an earthquake.

 

If two or more of the above-mentioned perils occur within above 168 hours of each other, they shall be treated as one earthquake incident.

◎ The operations of residential earthquake insurance are limited to the following:

1. Operations related to automatic coverage under "residential fire and earthquake basic insurance"
　　　 policies approved by the authorities.

2. Operations related to one-year basic earthquake insurance for holders of long-term residential fire
　　　 insurance policies with effective riders.

3. Operations related to earthquake basic insurance coverage under residential fire insurance, comprehensive

　residential insurance, and residential earthquake insurance policies self-developed by the non-life insurers.

 

Insured Amount

The insured amount for basic residential earthquake insurance is calculated based on the replacement cost of the residence. The replacement cost is the total construction cost of the building as listed under the "Table of Residential Construction Costs in the Taiwan Area by Type" published by the Non-Life Insurance Association of the R.O.C. at the time the policy was taken out. However, the insured amount may not exceed NT$1.2 million.

If adjustments are made to the construction costs under the "Table of Residential Construction Costs in the Taiwan Area by Type," the policyholder may, in reference to the adjustment and with written approval of the insurer, adjust the coverage amount up to a maximum adjusted insured amount of NT$1.20 million.

 

Premium

The annual flat premium is NT$1,350 based on an insured amount of NT$1.20 million.

 

Claims Standards

In addition to the insured amount for total loss of residence, additional coverage of NT$180,000 per dwelling will be provided for contingent living expense in the event of the total destruction of the insured dwelling. Total loss refers to cases meeting any of the following circumstances:

1. The government has issued a notification or order for residence demolishing or directly demolished
　　　 the residence.

2. It is determined by assessment of a qualified loss adjustor or appraisal by the Architects Association or
　　　 a professional association for building structure, civil engineering or geoscience in Taiwan that the
　　　 residence is uninhabitable or the repair cost would equal or exceed 50% of the replacement cost.

 

A qualified loss adjustor refers to a non-life insurance claim adjustor or insurance surveyor that has undergone the "Earthquake Building Damage Assessor" training program held by the agency designated by the authorities, and who has obtained a certification of training qualification.

 

(2)Residential Earthquake Insurance Risk Spreading Mechanism and Introduction

1.Chart of the Residential Earthquake Insurance Risk Spreading Mechanism

2.Risk Spreading Mechanism:

A.Tier 1: NT$2.80 billion, undertaken by the Co-insurance Pool.

B.Tier 2: NT$67.2 billion, undertaken by the TREIF and transferred to various risk takers.

*This (Note: "This" is preferable if that specific tier is referred to.) tier of overseas reinsurance
placement had issued catastrophe bonds (US$100 million)

 

3.Handling of Risk Assumed by the TREIF:

(1) Under NT$17.2 billion, assumed by the TREIF

(2) Over NT$17.2 billion to NT$37.2 billion, assumed by the domestic/overseas reinsurance markets
　　　 or capital markets

(3) Over NT$37.2 billion to NT$53.2 billion, assumed by the TREIF

(4) Over NT$53.2 billion to NT$67.2 billion, assumed by the government

 

4.Each tier of risk limit is calculated on the basis of the insurance loss for each earthquake incident.

　If the total amount of the insured loss from the same earthquake incident exceeds the total amount of Risk

　Spreading Mechanism, the claim amount paid to the policyholder shall be on a pro rata basis

　proportionally reduced.

 

5.The TREIF may regularly review and propose that the authorities duly adjust the risk limits for each

　tier in view of the underwriting and claims situation of the residential earthquake insurance.