As climate change continues to intensify natural disasters globally, a crucial conversation is emerging in the (re)insurance industry: Are we insuring areas that are no longer insurable? And more importantly, are we doing so with the right risk models, data, and governance structures?

This question is relevant to Lebanon — a country now facing a convergence of systemic fragility and elevated natural catastrophe risks, especially earthquakes.

i. Earthquake Risk in Lebanon: Growing and Underprepared

Lebanon's position along the Dead Sea Transform fault system renders it susceptible to seismic activities. Historical data indicates that the country experiences an average of 20 earthquakes annually with magnitudes of 4.0 or higher.

A notable example is the magnitude 6.3 earthquake in 2023, highlighting the persistent threat. According to the United States Geological Survey (USGS) and the European-Mediterranean Seismological Centre (EMSC):

• Lebanon is now considered a high-risk seismic zone due to increased tectonic stress and long periods of seismic silence.
• Seismic hazard modeling for Lebanon is severely outdated or incomplete.

This risk is exacerbated by Lebanon’s fragile infrastructure, lack of enforced building codes, and political paralysis. A major catastrophe could overwhelm both the insurance sector and public relief systems.

ii. Weak Infrastructure, Weak Claims Resilience

Lebanon suffers from:

• Inadequate urban planning and illegal construction in high-risk areas
• Non-compliance with seismic construction standards
• Aging infrastructure (electricity, water, telecoms)
• Low insurance penetration — less than 2% of GDP (Swiss Re Institute, 2023)

These weaknesses leave individuals and insurers exposed, while unregulated real estate expansion creates long-term sustainability issues.

Insurers operating in such conditions face:

• Greater claim volatility
• Rising reinsurance costs
• Difficulty in accurate risk modeling
• Limited capacity for loss prevention

iii. Data Vacuum and the Urgency of Risk Mapping

One of the major barriers to progress is the absence of centralized, publicly available, and legally mandated catastrophe data. Currently:

• Lebanon lacks a national earthquake model or accessible catastrophe risk database.
• Institutions like AUB and CNRS collect seismic/structural data, but access is limited or monetized.
• Private firms or researchers often must purchase data from third parties to build risk models.

This data vacuum hinders:

• Proper underwriting and risk pricing
• Simulation and loss modeling
• Formation of risk pools or collective insurance schemes

iv. Potential Solutions

While building a centralized National Catastrophe Database should be a long-term priority, Lebanon can take more immediate steps, such as:

1. Academic Partnerships: Collaborate with AUB, USJ, and CNRS to co-develop and open access to risk models and data.
2. Catastrophe Risk Pools: Establish regional or domestic pooling mechanisms to spread risk and attract reinsurance (e.g., African Risk Capacity model).
3. Risk Awareness and Education: Organize webinars, workshops, and campaigns to raise literacy among actuaries, engineers, insurers, and public officials.
4. Product Development: Offer micro-catastrophe insurance or parametric policies triggered by seismic data rather than damage assessments.

Though Lebanon is highly exposed, the lack of foundational risk systems creates a unique space for innovation, leadership, and investment in resilience.

By focusing on:

• Data transparency
• Product innovation
• Institutional partnerships
• Public education

Lebanon can transform historically underinsured risks into new opportunities for insurance sector growth and societal protection.