NU Online News Service, March 2, 12:30 p.m. EST
Catastrophe risk modeling firm Eqecat said it estimates insured losses from the Chile earthquake will range from $3 billion to $8 billion.
According to the modeling firm's estimates, insured losses from Saturday's quake amount to 25 percent of the total economic losses. This loss, said Eqecat, represents 15-to-40 percent of the estimated insured limits for earthquake coverage.
The estimates are based on property and casualty insurance premiums of about $4 billion annually in Chile. The company noted that earthquake coverage comprises a minority of property and casualty premiums and coverage limits will be a large multiple of the annual premiums.
Eqecat said its initial estimate of insured loss is not yet based on the ground data or a geographic distribution of insured values at risks, and the range is correspondingly wide.
In addition, a large degree of uncertainty in the insured loss estimate stems from the extent of infrastructure damage. The speed of restoration of the transportation and utility networks can significantly impact business interruption losses.
The company's previously stated estimate of economic damage in the range of $15-to-$30 billion remains unchanged.
Imelda Powers, Towers Watson senior consultant on reinsurance brokerage, said based on figures from Swiss Re less than 50 percent of the p&c coverage in Chile is provided by domestic insurers, and international companies account for more than 59 percent of the premium.
She said about 10 percent of insurable residential buildings have quake coverage, and 60 percent of commercial properties.
Ms. Powers said she suspects that insured loss estimates will increase when a resulting rise in the cost of building supplies is factored in, which she said is the normal effect of a super catastrophe.
Yesterday AIR Worldwide estimated that the loss would exceed $2 billion.
During and earnings call today Liberty Mutual management said that the company has a 10-11 percent market share in Chile but it is too early for it to estimate its losses, Chief Financial Officer Dennis Langwell said the loss will be large, but not significant noting that the firm has "very significant reinsurance in place for this type of event.."
A Lloyd's spokesperson said the recent earthquake while "a terrible humanitarian event, from strictly an insurance perspective there will not be much of a large industry loss. Any exposure to Lloyd's is likely to be minimal."
Sabia Schwarzer, Group Communications Allianz of America, said of Allianz's exposure in Chile, "We expect there to be very little impact on Allianz as we are not a major player in that market and only active in selective industrial insurance business".
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