The initial magnitude 7.0 earthquake that caused catastrophicdeath and destruction in Haiti on Jan. 12 was virtually uninsured,although the insurance industry quickly rallied last week to helpraise relief funds for the devastated nation.

Risk Management Solutions of Newark, Calif., cited data fromLondon-based AXCO insurance information services listingimpoverished Haiti as one of the smallest markets in the Americaswith a total non-life premium income of just under $20million.

Insurance penetration is extremely low at around 0.3 percent ofgross domestic product. The majority of Haiti's insured risks aresituated in Port-au-Prince, and motor insurance accounts for 50percent of all non-life premiums, RMS said.

“Haiti is the poorest country in the Western Hemisphere, andpoor countries tend to purchase very little property insurancecoverage,” said Robert P. Hartwig, president of the InsuranceInformation Institute, in a statement.

“The fact that there is very little information about Haiti'sprivate insurance market suggests that the market is verysmall–likely not more than a few tens of millions of dollars,” headded. “Consequently, private insurer losses…will be modest andwill not have a material impact on global insurance and reinsurancemarkets.”

Beyond earthquakes, Haiti's insurance markets face challengesfrom frequent hurricanes, severe floods, landslides and mudslides,poor public safety infrastructure, and the fact that the countryhas a history of political and civil unrest, Mr. Hartwig noted.

The last major earthquake to hit Port-au-Prince occurred in1770, causing 250 deaths and extensive damage. In recent years,only relatively minor earthquakes have been recorded, such as thosein 1990 and 1994, with minimal to no damage, RMS said.

The Caribbean Catastrophe Risk Insurance Facility said Haiti'sgovernment, as a member of its risk pooling facility, will receivea little under $8 million for earthquake damage.

CCRIF said the amount it will pay Haiti is approximately 20times the country's $385,500 premium for its earthquake coveragepolicy taken out as part of its disaster risk managementstrategy.

Based on calculations from the preliminary earthquake locationand magnitude data, the pool said the 7.0 quake was of sufficientsize to trigger the full policy limit for the earthquake coverage,with payment after a 14-day waiting period.

CCRIF said in addition to providing parametric catastrophecoverage, it has been assisting the Caribbean region to becomedisaster resilient by working with partner organizations such asthe Caribbean Institute for Meteorology and Hydrology and theCaribbean Disaster and Emergency Management Agency to provide dataand other technical assistance for better planning for, response toand recovery from natural catastrophes.

The pool noted that CIMH was running detailed weather forecastmodels over Haiti to identify areas prone to landslides from flashflooding in the areas that have been affected by the earthquake“and will facilitate proactive action.”

CCRIF said it was “hopeful that the rapid payment of funds underHaiti's policy will assist the government and people of Haiti inaddressing immediate needs as they begin the recovery andrebuilding process.”

CCRIF is owned, operated and registered in the Caribbean forCaribbean governments. It is designed to limit the financial impactof catastrophic hurricanes and earthquakes to Caribbean governmentsby quickly providing short-term liquidity when a policy istriggered.

The pool describes itself as the world's first and, to date,only regional fund utilizing parametric insurance, giving Caribbeangovernments the unique opportunity to buy earthquake and hurricanecatastrophe coverage with lowest-possible pricing.

Sixteen governments are members of the fund. In 2007, CCRIF saidit paid out almost $1 million to the Dominican and St Luciangovernments after the Nov. 29, 2007 earthquake in the easternCaribbean, and in 2008, CCRIF paid out $6.3 million to the Turks& Caicos Islands after Hurricane Ike made a direct hit on GrandTurk.

Even though most private insurers were not directly exposed tothe quake damage, many top carriers rushed to arrange relief aid toHaiti to help finance relief and rebuilding efforts.

o ACE Group announced that its ACE CharitableFoundation will donate $250,000 to the American Red Cross HaitiRelief and Development Fund. The foundation will also match ACEemployee donations to the Red Cross fund on a dollar-for-dollarbasis.

“We are deeply saddened and disturbed by the immense loss oflife, suffering and destruction that the people of Haiti haveexperienced,” said Evan G. Greenberg, chair and chief executiveofficer of ACE. “Our hearts go out to the Haitian people, who havelost many loved ones in this tragedy and face a difficult recoveryeffort ahead.”

o Allstate said its Allstate Foundation made adonation of $50,000 to the American Red Cross. The foundation willalso match employee contributions up to an additional $50,000 for atotal commitment of $100,000. In partnership with the American RedCross, the foundation set up a Web site for employees and agencyowners to give to the relief effort at http://american.redcross.org/allstate-emp.

o Aon Corp. announced it was making a $100,000donation to the Red Cross Haiti Relief and Development efforts, andwould match up to an additional $300,000 in contributions from itscolleagues around the world.

o Chubb Group said it would head up a $500,000donation effort, contributing $125,000 to Doctors Without Bordersand the same amount to Share Our Strength. In addition, Chubb willmatch employee contributions to qualified relief organizations on atwo-for-one basis, up to $250,000. If total employee donationsexceed $125,000, Chubb said it will continue to match thoseemployee dollars on a dollar-for-dollar basis.

o The CPCU Society established a special fundto aid victims of the Haiti earthquake, matching the contributionsof its members and chapters up to $25,000. The funds will bedonated to the Clinton/Bush Haiti Fund of former Presidents BillClinton and George W. Bush. Society members and chapters have beenasked to submit their contributions by Feb. 19 “so that the aid canbe provided expeditiously.”

o Crawford & Company, a provider of claimsmanagement solutions, contributed $10,000 to Doctors WithoutBorders/Medecins Sans Frontieres to aid the group's medical reliefefforts in Haiti.

o New York Life Insurance Company said it woulddonate $100,000 and donate up to an additional $150,000 in matchingcontributions by employees and agents.

o Philadelphia Insurance Companies presentedthe American Red Cross with a $50,000 donation, teaming up with thePhiladelphia CBS-affiliated television station for “OperationBrotherly Love Help for Haiti.”

o Zurich Financial Services Group said itsZurich Foundation would match up to nearly $250,000 in charitablecontributions made by Zurich employees to recognized charitableorganizations.

Meanwhile, the Insurance Industry Charitable Foundation calledon the industry to lend help to two organizations it recentlysupported with grants for their humanitarian efforts. The IICF saidthe International Rescue Committee, with 75 years of expertise inemergency response, and World Cares Center, which supports localgroups, are in need of funds to support the relief effort inHaiti.

Contributions can be made to IRC at www.theirc.org/donate/donatenow-haitiand to World Cares Center at www.worldcares.org/content/donate-world-cares-center.

The IICF is also asking to be informed of industry giving bycontacting it through e-mail at [email protected].

In terms of the damage caused, RMS said buildings in the regiontend to be built with heavy materials (concrete, or masonry), withlittle or none of the lateral reinforcing needed for earthquakeresistance.

“Around Port-au-Prince there's a striking contrast of high-endproperties and shanty housing extending up the hillsides, with nobuilding regulations in force to protect against earthquakedamage,” said Neena Saith, senior catastrophe response manager atRMS.

She noted reports of hundreds of buildings having collapsed inPort-au-Prince, including the presidential palace, the World Banklocal offices, hotels, a hospital, the university and the UnitedNations headquarters. Hundreds of other buildings have also beendestroyed or sustained severe damage. Hundreds of thousands ofpeople are estimated to be homeless.

Mary Lou Zoback, vice president for Earthquake Risk Applicationsat RMS, said Haiti is the poorest country in the WesternHemisphere, with 80 percent of the population living under thepoverty line and over 50 percent in abject poverty.

“As rural poor migrate to the major cities they often take upresidence in shanty towns on the city margins. They live inself-constructed homes, built using available materials. Thissubstandard construction cannot stand up to the frequenthurricanes, landslides and earthquakes that strike so many capitalcities such as in Latin America, including Port-au-Prince,” shesaid.