3 April 2014 Insurance

Low insured losses expected from Chile quake

Low insured losses are expected following the 8.2 magnitude earthquake that struck Chile’s coast on the evening of April 1, 2014.

Catastrophe modelling firm AIR Worldwide said that it does not expect significant insured losses because the region is relatively sparsely populated.

“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,” said Mehrdad Mahdyiar, senior director of earthquake research at AIR Worldwide.

“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. Since unreinforced masonry is vulnerable to earthquake damage, these buildings will likely experience moderate damage such as falling roofs and noticeable cracks in walls. Damage to confined masonry buildings will be limited, as this construction type has been used in Chile for many years and has performed well in past earthquakes.

The quake struck at a depth of 20.1 kilometers, and the epicenter was located 95 km northwest of Iquique, Chile.

The most imminent threats from the quake were tsunami waves. The Pacific Tsunami Warning Center issued tsunami warnings for Chile and Peru, which have since been lifted. The USGS issued a yellow alert for fatalities meaning some casualties are possible (6 deaths have been reported so far). AIR does not expect significant insured losses because the region is relatively sparsely populated.

The Chilean government issued mandatory evacuation orders for those living along the coast. These orders remained in effect until early Wednesday morning for coastal areas north of Antofogasta, Chile. As a result, nearly 900,000 residents spent the night in inland locations.

Chile’s navy reported that the first tsunami wave hit the coast within 45 minutes of the quake. Waves as tall as 6.9 feet came ashore in the northern port cities of Pisagua and Iquique causing flooding but no major reports of damage.

According to AIR there have been no major reports of damage with the exception of destroyed adobe homes in Arica. Landslides have blocked roads throughout the region and power and telecommunications outages are widespread. There are also fires burning in some locales. The quake also shook modern buildings in nearby Peru and in Bolivia’s high altitude capital of La Paz. None of the major copper mining companies have so far reported problems with their operations.

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