Balıkesir Earthquake and Catastrophe Bonds: Common Worldwide, Why Not in Turkey?

Today’s earthquake in Balıkesir once again reminded us of an undeniable truth: earthquakes not only cause loss of life but also lead to severe economic damage.After every tremor, we ask ourselves, “How safe are our buildings?” But there is another equally important question: “How strong is our post-disaster financing?”

Around the world, there is an effective method for this: Catastrophe Bonds (Cat Bonds).

What Are Catastrophe Bonds?

Catastrophe bonds are a type of bond through which investors provide financing against major disasters such as earthquakes, hurricanes, or floods.

• The investor purchases the bond and earns interest over a set period.

• If a disaster meeting the defined conditions occurs, part or all of the principal is used directly for disaster recovery.

Since the 1990s, this system has been widely used in high-risk regions such as the US, Japan, and the Caribbean, providing rapid liquidity in the aftermath of disasters.

A Proven Model Worldwide

• Japan issues Cat Bonds to fund post-earthquake reconstruction projects.

• Caribbean nations have established a regional catastrophe bond pool for hurricanes.

• Mexico accessed billions of dollars within days after the 2017 earthquake thanks to its Cat Bond program.

In these countries, the system benefits both investors and governments.

Why Not in Turkey?

Despite being located in a high seismic risk zone, Turkey has not yet actively utilized catastrophe bonds. Yet such a system could:

• Strengthen DASK (Natural Disaster Insurance Institution) funds,

• Provide municipalities with resources for urban transformation projects,

• Enable immediate disaster relief and infrastructure repairs after earthquakes.

This could help the country recover from the economic shock of earthquakes more quickly.

The recent Balıkesir earthquake is a reminder to bring this discussion to the forefront. In a country that lives with the reality of earthquakes, modern financial solutions such as catastrophe bonds should no longer be overlooked.It works worldwide—why not here? With the right legal framework, transparent management, and international investor support, Turkey could adopt this system and strengthen both its economic and social resilience.