The magnitude 7.0 January earthquake that caused catastrophic death and destruction in Haiti created hundreds of millions in economic damage, but insurance coverage for losses is minimal, according to modeling firms.
Risk Management Solutions (RMS) of Newark, Calif., cited data from London-based AXCO insurance information services listing Haiti as one of the smallest markets in the Americas, with a total non-life premium income of just under $20 million.
Insurance penetration is extremely low at around 0.3 percent of Haiti's gross domestic product. Most insured risks are in Port-au-Prince, with motor insurance accounting for 50 percent of all non-life premiums, RMS said.
Eqecat catastrophe risk modeling firm in Oakland, Calif. estimated economic damages from the quake to be "in the hundreds of millions of dollars."
RMS said buildings in the region tend to be built with heavy materials with little or none of the lateral reinforcing needed for earthquake resistance.
Haiti is the poorest country in the Western Hemisphere, with 80 percent of the population living under the poverty line and more than 50 percent in abject poverty.
"As rural poor migrate to the major cities they often take up residence in shanty towns on the city margins. They live in self-constructed homes, built using available materials," said Mary Lou Zoback, vice president for Earthquake Risk Applications at RMS. "This substandard construction cannot stand up to the frequent hurricanes, landslides and earthquakes that strike so many capital cities such as in Latin America, including Port-au-Prince."
The last major earthquake to hit Port-au-Prince occurred in 1770, causing 250 deaths and extensive damage. In recent years, only relatively minor earthquakes have been recorded, such as those in 1990 and 1994, with minimal to no damage, RMS said.
