NU Online News Service, March 3, 3:38 p.m.EST

Extended disruption of commerce and construction materialshortages will inflate the multibillion-dollar cost of rebuildingChile's quake-damaged areas, said Risk Management Solutions.

The warning by the Newark, Calif.-based catastrophe modelingfirm follows an estimate Monday by Oakland, Calif.-based Eqecatmodeling firm that Chile's economic damage will hit $30 billion.Insured loss estimates have ranged from $2 billion to $8billion.

RMS said the greatest insured losses will come from damage toexpensive properties in the Valparaiso vicinity.

Robert Muir-Wood, RMS chief research officer, predicted that"the ultimate costs of the earthquake will become exacerbated byextended periods of business disruption and by cost increases dueto shortages of materials and workers to advance thereconstruction."

"With more than a million properties known to be damaged, therewill be shortages of building materials and labor, raising thecosts of repairs. People will also expect their reconstructedbuildings to be built to better standards than the ruins theyreplace," said a statement from Mr. Muir-Wood.

While the highest fault displacement and ground motion from theChile earthquake was toward the south of the rupture close toConcepcion, the rupture also extended to the north coast to within50 km of the city of Valparaiso, RMS said.

It is the level of damage to high-value properties in thisdensely populated and wealthy region that will be a key driver ofthe overall insurance loss in the earthquake, RMS explained.

The firm noted that the main concentration of high-valuebuildings and insured exposure runs in a corridor from the coastalcities of San Antonio, Valparaiso and Vina del Mar extending inlandto the capital city of Santiago with its 5.9 million people--36percent of Chile's total population.

RMS mentioned that across this region there are numerous 10-20story reinforced concrete buildings designed to a strong buildingcode. However, the low-frequency, strong motion from the recentearthquake made buildings of this height range resonate so stronglythat in some cases the key structural components havefractured.

In the wealthy coastal town of Vina del Mar a dozen majorapartment buildings have serious structural damage and up to 6,000people have been forced to move out. Several of these high-valuebuildings are so badly damaged at their core that they will have tobe demolished, reported RMS.

South of Valparaiso, around the middle section of the faultrupture, RMS said the accompanying tsunami has severely impactedboth coastal ports and some wealthy coastal resort communities.

In the 1960 magnitude 9.5 earthquake--immediately south of the2010 fault break--displacement along the fault rupture reached 66feet, sufficient to cause subsidence at the surface, lowering theground by as much as 8 feet.

"In the southern coastal city of Valdivia, low-lying streets andhouses became permanently flooded after the 1960 earthquake and hadto be abandoned. Evidence suggests similar subsidence from therecent fault rupture has affected certain coastal communities,potentially requiring houses to be relocated inland," commented Mr.Muir-Wood.

In addition to housing and commercial buildings, heavyindustries and infrastructure were strongly affected by the recentearthquake in the coastal region, RMS said.

It added that electricity grids, highways and bridges, ports,mines, refineries, and communication networks have sustained lossesand many communities still lack functional electricity andcommunication networks. Looting and fires in the city of Concepcionwere said to be hampering relief efforts.