The Impact of Johor Earthquake on Property Market

Article contributed to CNA – Earthquake in Johor

Impact of the recent earthquake on insurance coverage & property value

1. Should insurance coverage for earthquake be more part of the mainstream now and why?

Given the Segamat tremors, earthquake insurance is drawing attention, but insuring against earthquake is unlikely to become mainstream in Malaysia now. The country sits on a relatively stable tectonic plate, and major quakes are extremely rare. Insurers view earthquake cover as a low-demand, high-cost rider rather than standard protection, since the risk of widespread catastrophic loss would require higher premiums that most property owners are unwilling to pay. While Segamat’s quakes highlight that “low risk” does not mean “no risk,” the rarity of such events means earthquake coverage will likely remain optional and niche, not a core part of the insurance market.

2. Have you seen any changes in how property value is assessed in the area since the earthquakes?

Despite the recent tremors in Segamat, there is no impact to the property prices in Johor. Property prices are driven by core fundamentals such as location, demand, infrastructure and economic activity. Earthquakes are viewed as rare and isolated events with only minor structural impact. Unless seismic activity becomes more frequent or severe, it is unlikely that earthquake risk will be factored into mainstream property pricing. The only possible impact could be the wait-and-see attitude adopted by the potential buyers for property near the tremor area.

3. What should people know about insurance and things such as earthquake coverage in Malaysia?

In Malaysia, earthquake coverage is not common and only available as an optional add-on to fire or houseowner insurance. Given the country’s low seismic risk, demand is limited, premiums can be higher. Such policies would carry high deductibles meant for major losses rather than minor damage. The recent Segamat tremors highlight the possibility of quakes, but such coverage is expected to remain niche not mainstream.

Sr Tan Wee Tiam

Executive Director

Olive Tree Property Consultants