AIR Worldwide Estimates Insured Losses from M8.3 Earthquake in Chile at Between CLP 400 Billion and CLP 600 Billion
BOSTON, September 21, 2015 - Catastrophe modeling firm AIR Worldwide estimates that industry insured losses from the M8.3 earthquake that struck Chile's central coast near Illapel on September 16 will be between CLP 400 billion (USD 600 million) and CLP 600 billion (USD 900 million). AIR Worldwide is a Verisk Analytics (Nasdaq:VRSK) business.
"The September 16 earthquake was the result of convergence between the Nazca and South American tectonic plates," said Dr. Mehrdad Mahdyiar, vice president and senior director of earthquake hazard research at AIR Worldwide. "Here, the Nazca plate plunges beneath the South American plate, forming a subduction zone. Active subduction zones are some of the most likely plate interfaces to generate quakes of catastrophic magnitude and also pose the greatest risk of triggering tsunamigenic tectonic events."
Authorities have stated that at least 12 people have died as a result of the quake, which was felt as far away as São Paulo,Brazil, more than 3,000 km away. Strong shaking was felt in Chile's capital city of Santiago, the nation's most populous city, where tall buildings swayed for up to three minutes.
Dr. Mahdyiar continued, "The main shock, which was followed by several strong aftershocks, triggered a tsunami that was recorded in several countries. The tsunami produced waves up to 1 meter in height as far away as the Hawaiian Islands."
The port city of Coquimbo reported the highest tsunami wave at nearly 5 meters; debris and fishing boats washed inland into the downtown area, where homes and businesses were inundated. The town of Illapel, located directly east of the quake's epicenter, suffered the heaviest damage resulting from strong ground motion.
According to ONEMI, the Chilean agency responsible for public safety and emergency response, more than 400 residential buildings have been destroyed; in addition to these, more than 700 residential buildings have sustained major damage. Chile is the world's leading producer of copper, and several mines were affected by ground shaking caused by the quake.
"The 2010 M8.8 Maule earthquake released a significant amount of accumulated energy and reduced the seismic risk offshore of Santiago, but increased the risk along the northern segment of the subduction," commented Dr. Mahdyiar.
The rupture area and the slip distributions of the recent earthquake and that of the 2010 Maule earthquake suggest that a small part of the Nazca subduction zone south of the rupture area of this recent earthquake and north of the rupture area of the Maule earthquake did not rupture during these two earthquakes and should be at a higher state of stress, thus increasing the likelihood of a future earthquake. This segment of the Nazca plate experienced partial or full ruptures during the 1906 M8.2 and 1985 M7.98 earthquakes and is capable of producing an M7.5 to M8.0 earthquake.
The location and magnitude of this earthquake are consistent with AIR's recent seismicity model for this region. AIR's time-dependent model for this region estimates a higher rupture probability for this type of earthquake compared to the corresponding time-independent estimate.
AIR's loss estimates explicitly capture damage from ground shaking,tsunami, and liquefaction. Losses are dominated by shake damage in AIR's scenarios, with a very small contribution from liquefaction.AIR's estimates are based on assumptions about take-up rates in Chile (the percentage of properties actually insured against the earthquake peril), about which there is considerable uncertainty.The range in loss estimates reflect uncertainty in the slip distribution at the fault, modeled ground motion, tsunami inundation, and damage estimation. The assumed exchange rate is 1CLP = 0.0015 USD.
AIR's insured loss estimates reflect:
• Insured physical damage to onshore property (residential,commercial/industrial), both structures and their contents, and auto
• Direct business interruption losses
The loss estimates do not reflect:
• Losses to uninsured properties
• Losses to land
• Losses to infrastructure
• Indirect business interruption losses
• Loss adjustment expenses
• Losses from non-modeled perils, including fire-following and landslide
• Demand surge-the increase in costs of materials, services, and labor due to increased demand following a catastrophic event.
About AIR Worldwide
AIR Worldwide (AIR) is the scientific leader and most respected provider of risk modeling software and consulting services. AIR founded the catastrophe modeling industry in 1987 and today models the risk from natural catastrophes and terrorism in more than 90 countries. More than 400 insurance, reinsurance, financial,corporate, and government clients rely on AIR software and services for catastrophe risk management, insurance-linked securities,detailed site-specific wind and seismic engineering analyses, and agricultural risk management. AIR Worldwide, a Verisk Analytics(Nasdaq:VRSK) business, is headquartered in Boston with additional offices in North America, Europe, and Asia. For more information,please visit www.air-worldwide.com.