Despite the strength of the magnitude 8.2 earthquake that struck off the coast of Chile, insured losses are expected to be negligible, according to reports from AIR.
The industry will be breathing a sigh of relief that it is not a repeat of the devastating Maule earthquake of February 2010, which resulted in $8.5 billion of insured loss.
That event changed perceptions about South American risk at a time when many markets were looking to Latin America as an attractive diversifying option. While, the latest event is evidently nowhere near as devastating, it does raise the prospect of future, sizable losses.
The earthquake struck 95 km northwest of Iquique in Chile, prompting initial tsunami warnings.
The Chilean government responded by issuing mandatory evacuation orders for those living along the coast, resulting in nearly 900,000 residents spending a night in inland locations.
While the Chilean navy reported waves as tall as 6.9 feet came ashore, no major damage was reported and only six fatalities have been established so far.
Commenting on the earthquake, Dr. Mehrdad Mahdyiar, senior director of earthquake research at AIR Worldwide says: “Since the quake’s epicenter was located quite a distance from the coast, the shaking inland was not very severe and should serve to reduce the insured losses from this event.”
“Also mitigating the potential for insured losses is that the impacted area is very rural and characterized primarily by low-rise buildings constructed from either the unreinforced masonry or confined masonry.”
AIR says that there has been an increase in seismic activity in the area, with four lower magnitude earthquakes occurring in March of this year.
Despite its distance from the mainland, AIR reports that the earthquake triggered landslides, started fires and was felt as far away as La Paz in Bolivia.
AIR, Chile, earthquake