Chile Quake: Latin America’s Most Costly Insured Loss?

The Chile earthquake could outpace Hurricane Wilma as the most costly insured event in Latin America’s history, according to a recent posting at insurereinsure.com (the insurance and reinsurance blog of Edwards Angell Palmer & Dodge). Quoting commentary from reinsurance broker Cooper Gay it notes that even if insured losses fall in the mid-range of current estimates of between $2 billion and $8 billion, the earthquake likely will overtake Hurricane Wilma in 2005 as the most expensive insured event ever to hit Latin America. Insurereinsure.com goes on to note that some compliance and coverage issues have also begun to emerge from Chile as the investigation of losses progresses. International insurers and reinsurers continue to announce preliminary loss estimates following the quake. Global Reinsurance also quotes Cooper Gay analysis comparing the Chile quake to Hurricane Wilma. While Wilma was very specific to the Cancun region in Mexico, largely affecting coastal, hospitality-related properties, the Chile earthquake covers a much wider area (900 sq miles) and has destroyed a much broader spectrum of property. Cooper Gay also notes that up to 75 percent of the Chile quake was reinsured, but whether it’s a market-changing event will depend on whether losses creep up toward the top end of the insured loss estimates. The comments underscore the point that  insurance dollars will go a long way to help rebuild and defray the economic cost of the  quake. Check out the I.I.I. International Fact Book for information on the Chile insurance market.

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