Post-war rehabilitation of settlements in the north and south of Israel, national earthquake preparedness - and the connection to the insurance industry
By Itzick Simon, CEO
In April 2023 a report was submitted to the government for approval entitled “Long term rehabilitation of post-disaster zones” – a document of unparalleled importance conceived two years earlier at the initiative of the Bennett-Lapid government to address earthquake recovery, which was based, among other things, on information from earthquake prone areas such as Japan and New Zealand.
The towns and kibbutzim in the western Negev and north of Israel were albeit not destroyed by an earthquake, although the presentation of such a report is the epitome of the phrase “timing is everything”. If it wasn’t clear before 7/10/2023 – there is no doubt that the purpose of urban renewal and reinforcement of buildings is not only to prevent earthquake damage but is also an contributing factor to security, and the quicker these measures are implemented, the better.
I will address these matters in detail in this article. Together with Dr. Benny Brosh, I will also review the follow-up report of the State Comptroller that was recently published concerning the earthquake preparedness (or more precisely lack of preparedness) of five local authorities in the periphery that were used as points of reference and I will also address the role of the Commissioner of Insurance in this regard.
Focusing on long-term rehabilitation?
The report submitted to the government addresses preparedness for earthquake and focuses specifically on the fourth and final stage – long-term recovery. The less dramatic stage is usually preparedness, since contrary to the other three stages – prevention, immediate response and short-term recovery – it does not involve casualties.
In countries where extensive areas are affected by disasters and destruction, the report mentions that the long-term recovery stage can in fact present opportunities. The report cites, as an example, the huge wave of construction in San Francisco that followed the 1906 earthquake, an event that led to urban planning and development with a fresh and more creative approach, the outcome of which is a world-class modern and thriving city.
State Comptroller’s report from January 2024 – “A picture of neglect”
The follow-up report of the State Comptroller published in January 2024 which addresses the preparedness of local authorities for an earthquake, defined the situation simply and plainly as: “A picture of long term neglect”.
The findings of the report focus on five local authorities along the Syria-Africa rift, namely Beit Shean, Hatzor Haglilit, Tiberias, Safed and Kiryat Shmona, although the resounding message from the report applies equally across the country.
Even though a major earthquake in Israel is really only a question of time and even though the preparedness is “a decisive factor in the protection of human life”, the actual results are far from satisfactory.
It seems that the government has not taken any significant action over the last five years since the previous report and it is far from being sufficiently prepared.
The officials and entities who need to take charge, according to the State Comptroller, are the Prime Minister, the Defence Minister, The Construction and Housing Minister, other ministers on the Civilian Preparedness for Emergencies Committee, the National Security Council and the Interministerial Steering Committee for Earthquake Preparedness. The Comptroller states in the report that it is essential to “Formulate a long term plan of action and create a multi-year budget to realise the objectives outlined in the plan. The earlier the better”.
The insurance companies are overlooking their social responsibility
The insurance companies can make a significant social contribution to earthquake preparedness, and it is unfortunate to see that their involvement is minimal to the point of non-existent, even though in practice they will need to foot the substantial costs and colossal impact that an earthquake will have on the insurance industry in Israel.
The insurance companies are not making any significant efforts to apply public or political pressure, express an opinion or attempt to influence the state authorities. They are basically silent, and that is regretful. Furthermore, most insurance companies in Israel avoid writing cover for projects involving reinforcement of buildings, they often present more challenges than solutions and are generally unsupportive of the national task of earthquake preparedness and other hazards.
The Capital Market – The Commissioner of Insurance
Is the issue of inadequate preparedness of the country and the implications of a catastrophe on the insurance industry in particular on the agenda of the Capital Markets Authority and the Commissioner of Insurance? Seemingly not. The Capital Market focuses on analysing the financial preparedness of the state and the individual, even though it should really be taking a more central role in influencing the relevant government ministries.
Based on forecasts and in line with the Financial Preparedness Report of by the National Economic Council in 2010 – a scenario involving colossal losses which could lead to the collapse of some insurance companies, is quite possible.
The actuarial section of the report states:
“It should be emphasised that the following document albeit focuses on the issue of earthquake, however the principles and findings which will be presented hereunder are no less relevant to the task of handling other major catastrophes, with specific reference to war”.
Nonetheless, in a February 2023 meeting of the Finance Committee of the Knesset concerning budgetary preparedness for an earthquake, an official from the Ministry of Finance admitted that: “There is no specific fund in place for an earthquake. The day after an earthquake occurs, budgets from other sources in the state budget will be diverted on an ad-hoc basis. The state does not keep any money aside”.
The local authorities – National Outline Plan 38 is not being implemented in periphery
As expected, and as we have already pointed out, the latest report of the State Comptroller found that implementation of National Outline Plan 38 outside of major urban areas is scarce. The Comptroller stated that the main reason is that National Outline Plan 38 is based on an economic model, and in the periphery where property values are low, there is no real economic incentive to promoting such projects.
Various solutions have been proposed in the past to overcome this challenge, none of which are being implemented to any great extent, if at all. For example:
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Mobilising construction rights – Providing the possibility of transferring construction rights from one building or complex to another location, including, where necessary, to other towns or cities.
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Awareness – Increasing public awareness of the importance of encouraging urban renewal in the periphery.
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Public / government action – The government should encourage urban renewal in the periphery by funding or subsidising major demolition and reconstruction projects.
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Providing incentives to contractors and property developers operating in periphery – Giving incentives to contractors and property developers who are already working in the periphery, such as tax breaks, state guaranteed loans and the like.
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Promoting urban development on public land – With specific reference to plots of land near potential demolition and reconstruction complexes.
One of the top experts in this field is Dr. Benny Brosh, the former Director of the Construction Division in the Standards Institution of Israel who is now the Director of the Engineering and Regulation Division in the Rav-Bariach Group and a lecturer in construction engineering in the Civil Engineering faculty in the University of Ariel.
Dr. Brosh emphasises that whilst the challenges in the periphery are well known, preparedness for an earthquake does not only depend on the proximity to the Syria-Africa rift.
“Everyone talks about the periphery, and that’s what they should be doing”, he explains. “At the same time we cannot overlook the fact that a major earthquake will cause damage all around the country. The Land of Israel has a history of powerful earthquakes, including in cities such as Jerusalem, Safed and Ramle in the centre of the country. In parallel to finding appropriate solutions for the periphery, efforts should be made everywhere in Israel, including in the centre of the country, where there is a population concentration of millions of people”.
Very few buildings have been reinforced by the Ministry of Housing
The Comptroller points out that the Ministry of Housing initiates various diverse plans for structural reinforcement around Israel. For example, there are calls for property developers to become involved in National Outline Plan 38 projects with subsidies from the Ministry of Housing, reinforcement works as part of gentrification projects (placing an emphasis on buildings with a high share of public housing tenants), and calls for residents associations to obtain assistance from the Ministry in encouraging earthquake preparedness by making it compulsory to include reinforcement as part of major apartment block renovation projects.
The comptroller’s report reveals that very little is being done. Out of around 1,200 buildings which were identified by the authorities as being in need of reinforcement, only around 80 of these buildings have actually been reinforced by the Ministry of Housing. An unnamed official stated that if the Ministry of Housing has to take exclusive responsibility for the task, it would take more than 80 years to reinforce all buildings in the periphery that need to be reinforced.
In reply, the State Comptroller recommended that the issue should be given priority, and that an effective dialogue should commence between the Ministry of Housing, the local authorities and the Ministry of Finance.
“The State Comptroller addresses economic issues and that is what he should be doing” says Dr. Brosh “According to a cost assessment report, the cost of reinforcing all of the buildings which were mapped-out by the authorities that participated in the project is albeit somewhere between NIS 1.35 – NIS 2.1 billion, although the actual cost will be much higher if the project is implemented after a powerful earthquake”.
The authorities are not taking any measures to reinforce the buildings that need to be reinforced
In his 2018 report, the State Comptroller mentions that the Home Front Command has mapped-out buildings that need to be reinforced, although the reports are collecting dust. “Even though the local authorities have this information, we did not find any evidence that they are utilising it to advance structural reinforcement projects”.
Another finding of the report is that there are no contingency plans in place for coping with earthquakes. For comparative purposes, the comptroller takes the example of the Vancouver Municipality in Canada, which prepared a detailed plan for earthquake preparedness, including specific and in-depth reference to various aspects such as fire protection systems, water and sewage systems, access routes, reinforcing bridges, emergency transportation lanes and more.
In Israel, in the five authorities that participated in the study, the situation is completely different. As of the date of the report, not a single local authority had prepared a contingency plan, neither were any budgetary resources allocated to finance, service and maintain the buildings that were identified as being in need of reinforcement.
“The lack of an emergency contingency plan is extremely serious” emphasises Dr. Brosh, “If there is no plan in place, then things will certainly not be handled properly at the moment of truth. The immediate implication is that there will be a high number of casualties, prolonged periods of suffering and extreme harsh living conditions for extensive sections of the population”.
Some public buildings are themselves hazardous
Another worrying issue that arises from the report is that in the five authorities in the study, many of the public buildings of the local authorities themselves were constructed before 1980 and are not compliant with the earthquake code. Moreover, the report reveals that around 70% of school buildings have not been reinforced i.e. around 40 school buildings are at risk of collapsing on pupils and teachers in the event of an earthquake.
“A school which is not earthquake resistant is much more hazardous that a school building in a border area which does not have a bomb shelter” warns Dr. Brosh. In the Beit Shean Municipality, for example, the comptroller states that 9 out of the 10 schools in the town are not earthquake resistant, and in Safed – 10 out of 12. This data is very concerning.
It is important to point out that back in 2010 a government decision was taken whereby the entire budget for reinforcing schools shall come from the Ministry of Education and the Ministry of Finance. In other words, not from the budget of the local authority. Nonetheless, the local authority is responsible for furthering projects and taking action to reinforce school buildings in the area under its jurisdiction.
The State Comptroller recommends that the local authorities that were involved in the review should start to pull their fingers out. Amongst other things they were advised to prioritise new applications for reinforcing schools which have not yet been reinforced, cooperate with the Ministry of Education, obtain the budgets needed and give these projects priority in the planning institutions.
“The Ministry of Education provides the budget to reinforce educational buildings, and the local authorities should take advantage of it to improve preparedness of the residents and thereby increase their safety and security” the report states.
To conclude
This article highlights only a few issues arising from the report from the State Comptroller, which to our understanding are of significant importance. An in-depth review sheds light on many other issues which should be a “wake up call” for those responsible for urban renewal in Israel: The Government of Israel and its ministers, the local authorities, individual home owners and last but not least the insurance companies, who cannot turn a blind eye to the situation.
Urban renewal is also the key to protecting the domestic and public domain against other security threats, and now is the time to act.