Earthquake Risk Transfer for Chile

Earthquake Risk Transfer for Chile; Short-term earthquake loss
Fig.1 - Hashed circles represent current Earling undercover regions.

The Chilean Andes, as a characteristic tectonic and geomorphological region, is a perfect location to unravel the geologic nature of seismic hazards. The Chilean segment of the Nazca-South American subduction zone has experienced mega-earthquakes with Moment Magnitudes (Mw) >8.5 (e.g., Mw 9.5 Valdivia, 1960; Mw 8.8 Maule, 2010) and many large earthquakes with Mw >7.5, both with recurrence times of tens to hundreds of years. By contrast, crustal faults within the overriding South American plate commonly have longer recurrence times (thousands of years) and are known to produce earthquakes with maximum Mw of 7.0 to 7.5. Subduction-type earthquakes are considered the principal seismic hazard in Chile, with the potential to cause significant damage to its population and economy. However crustal (non-subduction) earthquakes can also cause great destruction at a local scale, because of their shallower hypocentral depth. Nevertheless, nature, timing and slip rates of crustal seismic sources in the Chilean Andes remain poorly constrained (Santibáñez, et al., 2019). Chile is one of the 5 regions that Earling pilot tests launched there.
The north and center of Chile received accurate EPAs, which means citizens in the specified regions can prepare for most of the significant events.

Chile short-term expected earthquake loss

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How EPA Affects Recent Insured Losses

Fig.2 - PML - Mean return period in years. Chile Average Annual Loss is about $2,396 million (Chile Disaster & Risk Profile, 2014). EPAs that are not supported by a First Notice increase insurance loss.

Fig.3 - EPA effect on the 16 Sep 2015 Chile earthquake (SwissRe, 2016).

Affordable Risk Transfer

Once a loss occurs, it is too late to revise an insurance policy. Consequently, the policyholder must be extremely diligent during policy purchase and renewal. Understanding specific insurance requirements, carefully calculating the property and business interruption values, outlining contingency plans, and anticipating the potential losses at each location are all key steps in maximizing future insurance recoveries. In sum, paying close attention to the potential impact of a loss at the insurance procurement stage will help to minimize issues and maximize recovery when a loss does occur.

Proposing the best time-window(s) for maximizing insurance coverage before a catastrophe is the Earling solution to transfer earthquake risks. Instead of 365 days insurance, maximize the current coverage only for a few days in each year.

Now that revising insurance policies once a loss occurs is too late, Earling helps to know the best time to transfer risk through new policies or extending the current coverage for a limited period of time for example only for 10 days and not for 365 days of year.
Maximizing insurance coverage after a catastrophic loss is difficult for any company but Earling Earthquake Preparedness Alerts assists to do it before a catastrophe occur.

Well Known Risk Takers

Tackle your risks with our solutions to the big players. We propose enterprise companies as well as SMEs and individualizes the best time to purchase a new earthquake policy or extending the current coverage to make it inexpensive.
risk takers
Currently, Japan, New Zealand, Greece, Turkey, Caribbean, Chile, Ecuador, Taiwan, Romania, Indonesia, California are the regions, which Munich Re accepts their risks. In addition, South Africa, Oklahoma and Utah are subject to further work. Also, between the regions that Earling issues Earthquake Preparedness Alerts, Japan, New Zealand, Caribbean, Chile, Ecuador, Taiwan, Indonesia and US (California, Utah) are undercover by Swiss Re to take the risks.

How we can help?

In general, Earling has a global seismic monitoring network and specialists that are subject matter experts. Regarding the challenges mentioned above, Earling is been able to deliver support.

  • In the pressure on profitability, performance management and key performance indicator settings.
  • In the entrance of parametric insurance markets and issuing alternative products, Earling can deliver independent advice by our global resources.
  • To keep control on the impact of catastrophic events, Earling can assist in optimizing, validating on Cat and reinsurance programs modelling.

Requirements

Schedule a meeting to see how Earthquake Preparedness Alerts can transfer your risks.
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