NU Online News Service, March 29, 3:45 p.m. EDT
DENVER–The earthquake in Haiti was weaker than the Chilean earthquake, but that country suffered greater damage and higher casualties because of its lack of building codes and preparedness plans, an insurance regulator said.
Eric Nordman, director of National Association of Insurance Commissioners' Regulatory Services Division, made his remarks in a presentation to the Catastrophe Insurance Working Group during the NAIC's Spring National Meeting held here.
He said Haiti suffered 200,000 deaths during its 7.0 magnitude earthquake, compared to 795 deaths in Chile during the stronger 8.8 magnitude earthquake.
Infrastructure in Haiti, he said, is not meant to withstand any kind of shaking. In contrast, Mr. Nordman said, Chile has strict building codes, and structures there are designed with maximum earthquake protection methods.
Ray Spudeck, chief economist at the Florida Office of Insurance Regulation (OIR), who chaired the working group for Florida Commissioner Kevin McCarty, said the figures show the difference building codes and mitigation can make. He called it "awful" when the world sees "live experiments" in this manner, but said if disasters have to happen, it is important to learn from them.
Because of Chile's preparedness, insurance penetration is much more significant, resulting in much higher projected insured losses compared to Haiti, he noted.
For Haiti, Mr. Nordman said the Caribbean Catastrophe Risk Insurance Facility, of which Swiss Re is the lead insurer, is preparing to pay the Haitian government $8 million–the limits of the policy purchased from the pool for a premium of $385,000.
Insured losses, Mr. Nordman said, are expected to be minimal, as the property and casualty market as a whole is just under $20 million and insurance penetration is "extremely low" at about 0.3 percent of the Gross Domestic Product.
By contrast, insured losses in Chile could cost up to $8 billion, Mr. Nordman said, with Swiss Re alone expecting to pay around $500 million.
Mr. Nordman said Swiss Re has noted that it is common for owners of mortgaged residential, commercial and industrial properties in Chile to buy earthquake insurance.
Speaking to economic damages, Mr. Nordman noted that Haiti is one of the poorest countries in the Western Hemisphere, with per capita gross domestic product of $1,300. Economic damages, he said, could reach $14 billion.
For Chile, per capita GDP is $14,700, and economic damages are estimated at $15-to-$30 billion–which is 10-to-15 percent of the nation's real GDP.
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