Chilean Earthquake—
20th century Chile registered over 50 severe earthquakes, according to Axco Insurance Information Services.
Very Different Scenario From Haiti, Says I.I.I.
NEW YORK—Billions of dollars in insured and economic losses are expected from the earthquake that struck central Chile on Saturday, Feb. 27. Fortunately, Chile has a highly developed insurance market, according to the Insurance Information Institute (I.I.I.).
In Chile, earthquake coverage is sold as part of the additional perils policy issued in conjunction with the standard fire policy. Separate earthquake policies are not normally issued to homeowners and businesses, though there may be some as part of an international program or if excess layer coverage is required. Damage from fires that occur as a result of earthquakes is also covered.
“In addition to a number of Chil-
ean insurers, many large internation-
al insurers and reinsurers — mainly
American and European — compete
for business in that country and will
provide the financial resources for
Chile’s reconstruction,” said Robert P.
Hartwig, CPCU, I.I.I. president and
an economist. “This is very different
from Haiti, which has virtually no
private insurance market,” he added.
“The billions that insurers will pay to
rebuild Chile will be a critical factor in
stabilizing the Chilean economy in the
wake of the worst disaster that country
has ever faced. Insurance is the swift-
est, most efficient means to affect re-
covery after catastrophic events.”
GROESBECK, Texas—Insurance
agents and brokers can access licens-
ing and compliance information re-
motely with a new one-of-a-kind
iPhone app that shows real-time li-
cense status information.
Earthquakes in the United States are not covered under standard homeowners or business insurance policies. Coverage is usually available for earthquake damage in the form of an endorsement to a home or business insurance policy. Residents of California can buy insurance from the California Earthquake Authority (CEA) through participating insurance companies. The CEA is a state-sponsored private-public partnership providing earthquake insurance to California homeowners, renters, and condominium owners.
Developed Insurance Licensing Services of America, Inc. (ILSA), the new app is a tool to saves time and money. Agents do not have to be members of ILSA to use the app, which can be downloaded for a one-time fee of $5.99.
Dr. Hartwig noted that Chile’s half-century commitment to strengthening building codes saved countless lives. “Chile’s building codes are among the most stringent in the world. Had Chile not heeded the lessons of another devastating earthquake in 1960 and invested in earthquake resistant building designs, the country’s situation would resemble that of Haiti, where an earthquake on Jan. 12 killed more than 200,000 people,” he said. The current death toll in Chile is estimated at 723, according to government sources.
Catastrophe risk modeling firm AIR Worldwide estimates that insured losses from the Feb. 27 Chilean earthquake will likely exceed US $2 billion. Total economic losses may exceed US $15 billion-$30 billion, according to AIR and EQECAT. EQECAT estimates that insured losses in Chile could total as high as $8 billion.
“This new app means that insur-
ance pros will never have to write
business without knowing their sta-
tus,” said ILSA CEO Arleen Taveras.
“This proprietary iPhone app checks
licenses against the National Produc-
er Database. It gives them one-touch
access to the country’s premier licens-
ing and compliance experts.”
Direct premiums written in Chile in
2008 totaled U.S. $5.8 billion, ac-
cording to Swiss Re. Of that, nonlife
(i.e., coverage on homes, businesses
and vehicles) insurance premiums ac-
counted for U.S. $2.3 billion and life
premiums U.S. $3.5 billion. By con-
trast, in Haiti, estimated total nonlife
premium income written in 2008 was
$19 million.
In Chile, it is estimated that about 90 percent of property policies carry earthquake coverage, according to Axco Insurance Information Services. However, only about 10 percent of residential properties and 60 percent of commercial properties are insured at all, according to AIR Worldwide. In Chile, there is no insurance pool or catastrophe fund for earthquake risks such as the CEA.
Earthquake Loss History Chile is located in a high risk seismic area, with a recorded history of earthquakes going back to 1570. In the
ILSA Information ILSA ( www.ilsainc.com), founded in 1997, handles insurance licensing and compliance in the entire U.S. as well as Puerto Rico and the U.S. Virgin Islands. It processes resident and non-resident initial licensing and renewals for all lines of authority including Adjuster, Third Party Administrator (TPA), Managing General Agent (MGA), Risk Purchase Group (RPG) and Surplus Lines. ILSA is a leading provider of individual and corporate services in the insurance industry, handling corporate qualifications and registration with the Secretary of State, annual returns, franchise tax returns, renewals, continuing education tracking, carrier contracts, appointment requests, affiliations, name changes, address changes, carrier licensing, viatical settlement reporting and surplus lines tax filings.
8 MARCH 11, 2010 • THE INSURANCE RECORD
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