Only 19% of Homes in Portugal Have Earthquake Insurance

Although the risk of earthquakes in Portugal is often underestimated, the reality is alarming: only 19% of Portuguese homes have earthquake insurance. This figure, recently revealed by sources in the insurance sector, highlights a significant gap in the country’s preparedness for a seismic event, which, despite being less frequent than in other parts of the world, remains a very real threat.

Although seismic activity in Portugal is typically moderate, the country lies in an area of significant seismic risk, particularly in the southern region, where the geological fault of the African tectonic plate is located. This makes Portugal vulnerable to devastating tremors, such as the massive earthquake of 1755 that destroyed Lisbon and caused thousands of deaths. Since then, although the memory of the disaster has faded over time, authorities and seismic experts continue to warn that the likelihood of a similar event occurring in the future, while difficult to predict, still exists.

At present, the landscape of earthquake insurance coverage in Portugal is concerning. The current 19% coverage rate means that the vast majority of the population could face significant financial difficulties if their property were damaged in a potential seismic event. This number is all the more surprising when compared to other countries where, due to a higher earthquake risk, preventive measures are more robust, such as Japan, where earthquake insurance is common and widely accessible.

In Portugal, many residents remain unaware of the vulnerability of their homes to potential earthquakes. The majority of houses were built without proper consideration of mitigating the effects of larger tremors, and this is particularly worrying for older buildings, which do not comply with current seismic resistance standards. Although the construction code has evolved in recent decades to include stricter seismic resistance requirements, many older buildings – which make up a significant portion of the housing stock in the country – still do not meet these standards.

The low uptake of earthquake insurance in Portugal is largely explained by a lack of awareness of seismic risks. According to João Martins, an expert in seismic risk management, “Many Portuguese people still do not understand the extent of the damage an earthquake can cause to their homes, and they also do not know the types of coverage that earthquake insurance offers. Furthermore, there is a mistaken perception that earthquakes are rare and unpredictable events, which leads people to dismiss the potential financial consequences of not being covered.” While most Portuguese people acknowledge the risk of earthquakes, many believe that the likelihood of a major earthquake occurring is remote. This risk perception factor is one of the biggest obstacles to more people taking out insurance that covers earthquake damage.

On the other hand, insurance companies in Portugal also have a role to play in this issue. In many cases, earthquake insurance is offered as an additional coverage, often separate from standard multi-risk policies, which can confuse consumers. Furthermore, in some instances, the premiums for earthquake coverage can be higher than expected, leading a large portion of the population to forgo this additional protection.

Another important factor contributing to the low uptake of earthquake insurance is the lack of incentives from insurance companies. While most major insurance firms in Portugal offer some form of earthquake coverage, the range of options remains limited compared to other regions of the world. Insurers could adopt a more proactive approach in promoting earthquake insurance through awareness campaigns or by adjusting their product offerings to make them more affordable and attractive to consumers.

In addition, the Portuguese earthquake insurance market needs greater diversification and innovation. There are few options that combine comprehensive coverage with affordable prices. For João Martins, change in this area is urgent: “It’s essential that insurance companies adapt to the Portuguese context, offering products that are better suited to the reality of the country. Instead of focusing solely on price, they should look for solutions that meet the needs of families and small businesses, while also helping to raise awareness of seismic risks.”

Experts agree that the key to increasing the uptake of earthquake insurance in Portugal lies in raising public awareness. The government, insurers, and local authorities must work together to implement educational campaigns that explain the benefits of earthquake insurance and the importance of preparation in the event of an emergency. Furthermore, citizens should be encouraged to undertake reinforcement works on their homes to make them more resilient to earthquakes.

“Investing in insurance and improving the safety of our homes is a way to ensure that, if an earthquake does occur, the consequences are minimised,” says Marta Silva, a civil engineer specialising in seismic construction. “It’s an essential step in preventing significant material damage and ensuring quicker recovery after the disaster.”

In a global context of climate change and an increasing frequency of natural disasters, such as the recent earthquakes that have affected the Mediterranean region, the urgency of protecting the Portuguese population from the effects of a potential major earthquake has grown. Authorities and experts are stressing the need for better preparation and adaptation.

According to the Portuguese Institute for Sea and Atmosphere (IPMA), Portugal remains an area with a high seismic risk, particularly in Lisbon, the Algarve, and the Azores. A review of public policies and the creation of incentives for earthquake insurance uptake are necessary steps to ensure the safety and financial stability of citizens.

Ultimately, protecting against earthquakes should not be seen as an unnecessary expense, but as a vital preventive measure to ensure the safety of families and the national economy.