02 March 2010
Published in: Cat risk - ILS
Insured losses from Chile quake to exceed $2bn
Insured losses from the earthquake that struck Chile on Saturday are likely to exceed $2bn, according to AIR Worldwide.
The area from Concepción to Santiago impacted by the 8.8 magnitude quake contains residential and commercial properties with an insurable value of about $275bn. However, of the damage incurred to these properties, only a small portion is expected to be insured. Residential insurance penetration is believed to be as low as 10%, while commercial insurance penetration rates are believed to be significantly higher, at about 60%.
AIR believes that total economic losses may exceed $15bn. Eqecat, another catastrophe modelling firm, has said it expects the total value of economic damage to be between $15bn and $30bn [see IERM, Catastrophe/weather, 1 March, "Chile quake may cause $30bn in damages - Eqecat"].
Dr Jayanta Guin, senior vice president of research and modelling at AIR Worldwide, commented: "Fortunately the epicentre was located in a region with relatively low population density -- unlike the recent Haiti earthquake, which struck close to Port-au-Prince, a city of more than three million people. Furthermore, Chile's long history of damaging quakes has resulted in strict building codes, making the building stock considerably less vulnerable that Haiti's."
London-based insurer RSA announced today an estimated cost of around £30m, net of reinsurance, for claims arising from the earthquake. It does not expect the event to affect its combined operating ratio of around 95% for 2010, although it did note the situation is "still evolving".