Chilean Earthquake Energy Insurance Losses Top $350M

NU Online News Service, March 23, 2:43 p.m. EST

Chilean earthquake insurance claims from the energy industry should not exceed $350 million, according to an energy claims specialist with Marsh insurance brokerage.

The estimate, which followed a review of expected claims, does not include any future contingent business interruption claims, Marsh said. The relatively low level of claims means rates for the sector should not be affected, according to the brokerage.

Shortly after the 8.8 magnitude earthquake in Chile on Feb. 27, Marsh said it sent in claims specialists from around the world to support not only its local clients, but also international clients with interests in Chile.

Given the predicted escalating economic costs, international energy insurers would expect to see significant losses from the earthquake. However, despite the significant mining, power and oil processing infrastructure in Chile, Marsh said its research suggests that companies in this sector have been less affected than expected.

Martin Clark, head of Energy Claims at Marsh, said in a statement that, "Our first priority is to provide our clients with operations in Chile with the highest levels of service, ensuring they have access to the best loss adjusters, that insurer payments are made rapidly, and that the process allows our clients to carry out reinstatement work as quickly as possible. Our team on the ground is making sure this happens."

Jim Pierce, chairman of Marsh's Global Energy Practice, added, "Marsh's estimate of an energy loss in the region of $350 million means that losses from the Chilean earthquake will not change the current softening trend in the global energy insurance market.

"However, we expect that insurers will want to re-examine companies' risk management preparedness for natural catastrophes. There will also be renewed pressure from them on natural catastrophe limits of liability."