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Insured losses from the magnitude 8.8 earthquake in Chile will only account for a small fraction of total economic losses. According to catastrophe modeling firm AIR Worldwide, insured losses will probably cross the $2 billion threshold, while total economic losses could exceed $15 million. EQECAT, another cat modeling firm, released a preliminary economic loss estimate of $10 million to $15 million.
The area affected by the earthquake, AIR says, has residential and commercial properties with an aggregate insured value of approximately $275 million. Residential insurance penetration could be as low as 10%, while the commercial insurance sector has far higher penetration, reported to be approximately 60%.
According to Dr. Jayanta Guin, senior vice president of research for AIR Worldwide, "The total economic loss is likely to be severe from damage not only to buildings, but from the widespread impact on infrastructure, including roads, bridges, airports, and utilities and telecommunications networks."
Guin continued, "In the capital of Santiago, some 325km northeast of the epicenter, newer buildings have sustained damage to nonstructural elements and older buildings in Santiago have performed less well, with some sustaining major damage to masonry walls. Damage to contents is also expected to be significant. However, most newer buildings in the capital remain standing, illustrating the effectiveness of Chile's building code, even in the face of such a major quake."
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