The reconstruction of northern and southern communities after the war, the state's preparation for earthquakes - and the connection to the insurance industry
Jul 19, 2024
By: Itzick Simon, CEO
Last Passover Eve, a report was submitted for government approval that deals with the long-term rehabilitation of areas after a disaster . An extremely important document that was born about two years ago at the initiative of the Bennett-Lapid government to examine dealing with earthquakes, and which was based, among other things, on disaster-prone areas such as Japan or New Zealand.
The settlements of the western Negev and northern Israel were not destroyed by an earthquake, but the arrival of such a report at such a time is truly a case of Timing is Everything. If it wasn't clear before October 7, there is now no doubt that the issue of urban renewal and the durability of buildings is not only intended for earthquake damage, but is mandated by security realities. Acceleration is the order of the day.
In the next article, I will touch on these issues. Together with Dr. Benny Brosh, I will also analyze the State Comptroller's recently published monitoring report regarding the readiness (or more accurately: the lack of readiness) of five peripheral authorities that were examined as test cases, and I will also address the role of the insurance industry in this area.
By: Itzick Simon, CEO
Last Passover Eve, a report was submitted for government approval that deals with the long-term rehabilitation of areas after a disaster . An extremely important document that was born about two years ago at the initiative of the Bennett-Lapid government to examine dealing with earthquakes, and which was based, among other things, on disaster-prone areas such as Japan or New Zealand.
The settlements of the western Negev and northern Israel were not destroyed by an earthquake, but the arrival of such a report at such a time is truly a case of Timing is Everything. If it wasn't clear before October 7, there is now no doubt that the issue of urban renewal and the durability of buildings is not only intended for earthquake damage, but is mandated by security realities. Acceleration is the order of the day.
In the next article, I will touch on these issues. Together with Dr. Benny Brosh, I will also analyze the State Comptroller's recently published monitoring report regarding the readiness (or more accurately: the lack of readiness) of five peripheral authorities that were examined as test cases, and I will also address the role of the insurance industry in this area.
Focusing on long-term rehabilitation?
The report submitted to the government deals with earthquake preparedness and focuses specifically on the fourth and final stage - long-term rehabilitation. The least dramatic stage is usually preparedness, since unlike the other three stages - prevention, immediate response, and short-term rehabilitation - it does not affect loss of life.
In a country where entire regions are in a state of disaster and devastation, the report brings news that the long reconstruction phase may be an opportunity . Its editors give as an example the massive construction boom in San Francisco following an earthquake that struck the city in 1906. An event that led to planning and development with renewed and out-of-the-box thinking, and the creation of the city that is known to the whole world today as a vibrant and modern city.
The report submitted to the government deals with earthquake preparedness and focuses specifically on the fourth and final stage - long-term rehabilitation. The least dramatic stage is usually preparedness, since unlike the other three stages - prevention, immediate response, and short-term rehabilitation - it does not affect loss of life.
In a country where entire regions are in a state of disaster and devastation, the report brings news that the long reconstruction phase may be an opportunity . Its editors give as an example the massive construction boom in San Francisco following an earthquake that struck the city in 1906. An event that led to planning and development with renewed and out-of-the-box thinking, and the creation of the city that is known to the whole world today as a vibrant and modern city.
These things correspond with the State Comptroller's monitoring report published at the beginning of the year (January 2024), which, as mentioned, dealt with the monitoring of local authorities' earthquake preparedness, and defined the situation in unequivocal words: " A picture of multi-year failure ."
The audit activity focused on five municipalities along the "Syrian-African divide" – Beit Shean, Hatzor HaGalilit, Tiberias, Safed, and Kiryat Shmona – but the message that emerges from it is national in the broadest sense.
Although a strong earthquake in Israel is only a matter of time and although preparedness has a "decisive impact on protecting human life," the results on the ground are (very) far from satisfactory.
It seems that the state has not been able to make significant progress on the issue in the 5 years that have passed since the previous audit report, and it is very far from being properly prepared.
The factors and bodies that need to "reset" are, according to the Comptroller: the Prime Minister, the Minister of Defense, the Minister of Construction and Housing, the ministers who are members of the Civilian Emergency Preparedness Committee, the National Security Council, and of course the Inter-Ministerial Steering Committee for Earthquake Preparedness.
The Comptroller notes in the report that there is no escape from " formulating long-term action plans and allocating a multi-year designated budget to realize the goals defined in them - and preferably one hour earlier ."
State Comptroller's Report from January 2024 – "A Picture of Failure"
Insurance companies have an important social role in this matter, and it is unfortunate to see that their level of involvement is minimal to non-existent, even though in practice they are the ones who will have to bear the heavy costs and the enormous implications for the insurance industry in Israel.
This is reflected in the fact that they do not act significantly to exert public and political pressure, to express a position and to exert all their weight on the state authorities. Their voice is not heard, and it is a shame. Moreover, most insurance companies in the country are withdrawing from projects to strengthen buildings, offering more challenges than solutions, and not supporting the national mission of preparing for earthquakes and the missile threat.
Insurance companies are running away from their social role
Are Israel's poor preparedness and the implications of a disaster for the insurance market in particular and the state in general on the agenda of the Capital Market Authority and the Insurance Supervisor? It seems that not enough. The Capital Market Authority is focused on analyzing financial preparedness - of the state and the individual - but it should take a more central role in pushing the relevant government ministries.
According to the forecasts and the financial preparedness report carried out by the National Economic Council in 2010, there is a likelihood of such enormous damages that they will lead to the collapse of insurance companies in Israel.
Current reference for today from the report:
"It should be emphasized that although the document below focuses on the issue of earthquakes, the principles and conclusions presented below are equally relevant to dealing with other major disaster events, especially war events."
However, in a discussion in 2/2023 in the Knesset Finance Committee on the subject of budgetary preparedness for earthquakes, the Finance Ministry representative said: "There is no money specifically set aside for an earthquake event. The day after an earthquake, there are budgets that will be directed to this issue if necessary, using the state budget method. The state does not set money aside."
Capital Market Authority – and the Insurance Supervisor
As expected and as has been stated previously, the current report by the State Comptroller also found that there is insufficient implementation of TAMA 38 in the periphery . The Comptroller emphasized the main reason for this, which is that TAMA 38 is based on an economic model, and in many areas in the periphery where property values are low, there is no economic viability for its promotion.
This is a well-known challenge for which quite a few solutions have been outlined in the past, which are not being implemented (at least not to any significant extent). For example:
· Transfer of building rights – providing the possibility of transferring building rights from a specific building or complex to other locations, including, if necessary, to other local authorities.
· Awareness – Increasing public awareness of the importance of promoting urban renewal in the periphery.
· Public/governmental activity – taking the task of promoting urban renewal in the periphery into the hands of the state and promoting large-scale evacuation and construction complexes with government funding or government assistance.
· Providing incentives to contractors and entrepreneurs who work in the periphery – Providing incentives to contractors and entrepreneurs who work in the periphery. For example, through tax benefits, state-guaranteed loans, and more.
· Promoting urban renewal on public lands – especially lands located near potential sites for development.
One of the senior experts working in this field is Dr. Benny Brosh , former director of the Building Division at the Standards Institute and currently director of the Engineering and Regulatory Division at the Rav-Brah Group and a lecturer in structural engineering in the Department of Civil Engineering at Ariel University.
Dr. Brosh emphasizes that while the challenges in the periphery are well-known, earthquake preparedness does not depend solely on proximity to the Syrian-African rift.
"Everyone is talking about the periphery and we need to talk about the periphery," he explains. "At the same time, we must not forget that strong earthquakes will affect the entire country. The history of the Land of Israel is intertwined with earthquakes that caused enormous damage even in cities like Jerusalem, Safed and Ramla in the interior of the country. In parallel with finding appropriate solutions for the periphery, we must continue to work in this area throughout the country and, of course, also in the central region where millions of Israelis live."
Local authorities - No implementation of TAMA 38 in the periphery
The Comptroller notes that the Ministry of Housing is initiating building reinforcement across the country in various and varied ways. For example, calls for developers to take part in TAMA 38 projects with participation in funding from the ministry, strengthening projects as part of neighborhood rehabilitation (with priority given to buildings with a high proportion of public housing), calls for housing committees to use the ministry to promote earthquake preparedness, charging for projects to renovate apartment buildings in combination with renovation and reinforcement, and more.
The auditor's report reveals that performance is not good. Of the approximately 1,200 buildings mapped in the authorities that were examined for the need for reinforcement, only approximately 80 buildings were actually reinforced by the Ministry of Housing. The Ministry of Construction and Housing responded that if the task were left solely to it, it would take more than 80 years to carry out all the reinforcements required in the periphery of the mapped buildings.
The State Comptroller recommended in response that the issue be given priority, while maintaining an effective dialogue regarding it between the Ministry of Construction and Housing, local authorities, and the Ministry of Finance.
"The State Comptroller refers to the economic issue, and that is very true," says Dr. Brosh. "According to the report, the estimated cost of strengthening the structures mapped in the authorities examined is around 1.35-2.1 billion shekels, but the actual price will be orders of magnitude higher after a high-intensity earthquake."
Very few buildings were reinforced by the Ministry of Housing
The State Comptroller mentions in the report that in 2018 the Home Front Command mapped buildings that needed strengthening, but the documents are gathering dust in a drawer. " Although this information was in the hands of these authorities ," it says, " no evidence was found indicating that they are using it to promote the strengthening of the buildings ."
This is connected to another finding, which is the lack of operational plans for dealing with earthquakes . For the purpose of comparison, the auditor takes the city of Vancouver (Canada), which prepared a detailed plan for preparing for an earthquake. Including specific and individual reference to areas such as firefighting systems, water and sewage systems, regulating access roads, strengthening bridge systems, emergency transportation routes, and more.
In Israel, in the five authorities that were examined, the situation is completely different. As of the date of the audit, no authority had prepared an operational plan. In addition, no budgetary sources were defined for financing, treating, and strengthening buildings that were identified as requiring strengthening.
"The lack of an operational emergency plan is a very serious matter," emphasizes Dr. Brosh. "If there is no plan, then there will inevitably be no correct conduct at the moment of truth. The immediate meaning is an increase in the number of casualties and deaths and an extension of the duration of suffering and extreme living conditions for a wider population."
Authorities do not address the mapping of structures that require reinforcement
Public buildings themselves are dangerous
Another worrying issue that emerges from the report is that in the five authorities examined, the authorities' own public buildings were built before 1980 and are not reinforced. Worse still, the report shows that approximately 70% of the schools were not reinforced, and in absolute numbers, this amounts to approximately 40 schools that could collapse in an earthquake on their students and staff.
"A school that has not been reinforced for an earthquake is much more dangerous than a school on the conflict line that has no shelter," warns Dr. Brosh. In the municipality of Beit Shean, for example, the inspector speaks of 9 out of 10 schools that have not been reinforced, and in Safed, 10 out of 12. These are very worrying figures.
It is important to note that a government decision was made in 2010 according to which the budget for strengthening schools would come entirely from the Ministry of Education and the Ministry of Finance. In other words, not from the authority's budget . However, the authority is the one responsible for promoting the issue and acting to strengthen the educational structures within its jurisdiction.
The State Comptroller recommended that the inspected authorities step up their game. Among other things, they were advised to submit additional requests to strengthen schools that have not yet been strengthened, to cooperate with the Ministry of Education to obtain the necessary budgets, and of course, to promote the projects in the planning institutions.
"The Ministry of Education is fully budgeting for strengthening activities for educational structures, and local authorities should utilize the budget to improve the preparedness of their residents and increase their safety," the report states.
In conclusion,
The above article covers only a small portion of the issues raised in the State Comptroller's report, which we understand are among the most significant. A deeper study of the report reveals many more interesting data that must be a "wake-up call" for all those involved in the field of urban renewal in Israel: the Israeli government and its ministries, local authorities, the apartment owners themselves, and even the insurance companies, who will not be able to escape the news.
Urban renewal is also the key to protecting domestic and public spaces from the missile threat – and it is the order of the day.
The above article covers only a small portion of the issues raised in the State Comptroller's report, which we understand are among the most significant. A deeper study of the report reveals many more interesting data that must be a "wake-up call" for all those involved in the field of urban renewal in Israel: the Israeli government and its ministries, local authorities, the apartment owners themselves, and even the insurance companies, who will not be able to escape the news.
Urban renewal is also the key to protecting domestic and public spaces from the missile threat – and it is the order of the day.
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