Posted on 10 Mar 2010
Swiss Re today announced that, based on current information, it provisionally estimates its loss arising from the earthquake in Chile to be $500 million. The total insured losses for the insurance sector for the earthquake in Chile are estimated to be in the range of $4 billion to $7 billion. In addition, Swiss Re estimates its loss for the European winter storm Xynthia to be approximately $100 million.
The magnitude 8.8 earthquake that hit Chile on 27 February 2010 has caused several hundred fatalities and triggered severe property damage along a coastal stretch of 600 km. The strongest shaking around the epicentre 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.
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. 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 suggest the total insured loss for the insurance industry for the earthquake in Chile will be in the range of $4 billion and $7 billion. The broad range reflects variances in key single risk losses and loss amplification effects. Based on preliminary estimates, Swiss Re expects its claims for the earthquake, net of the benefits of retrocession, to be approximately $500 million before tax. 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.
Xynthia was a violent European windstorm that crossed Western Europe on 26–28 February 2010 on 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. 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, Consorcio in Spain) and by the private insurance sector.