Swiss Re Estimates Chile Quake Loss at $500 Million; Xynthia $100 Million
Swiss Re released its preliminary estimates for losses from the magnitude 8.8 earthquake that hit Chile on February 27 – $500 million – and from European windstorm Xynthia – $100 million. Both estimates are “net of the benefits of retrocession.”
The bulletin noted that the earthquake had “caused several hundred fatalities and triggered severe property damage along a coastal stretch of 600 km. [375 miles]. The strongest shaking around the epicenter affected less densely populated areas. However, several cities, including the greater Santiago area with a population of more than 5 million, also experienced severe and sustained tremors. This caused damage to several hundred thousand buildings despite the highly advanced anti-seismic construction standards in Chile.”
Unlike the situation in many countries, in Chile it is “common practice for owners of mortgaged residential property, commercial and industrial property to buy earthquake insurance from local and global private insurance companies,” the bulletin explained. “Accordingly, this latest earthquake will lead to significant insurance claims for property damage and business interruption which are designed to facilitate a swift economic recovery.”
Swiss Re’s preliminary estimates are based on an industry wide loss estimate of between $4.0 billion and $ 7.0 billion. The bulletin explained that the “broad range reflects variances in key single risk losses and loss amplification effects.” It also cautioned that the “uncertainties in estimating losses from such an event are significant, and this preliminary estimate may need to be adjusted as new information becomes available.”
Concerning Xynthia, Swiss Re noted that the “violent European windstorm” that crossed Western Europe on February 26–28 had followed “a rather unusual track from south-west to north-east. The storm reached its peak intensity over northern Spain and France. While its peak gusts remained well below those observed during winter storms Lothar or Klaus, Xynthia did trigger massive storm surges along the French Atlantic coast, where most of the fatalities were recorded.”
In addition the bulletin explained that coverage against wind and flood damage is “standard practice in the countries affected by Xynthia. These covers are provided by state-run cover schemes (CatNat in France, Concorcio in Spain) and by the private insurance sector.”
Source: Swiss Re – www.swissre.com