Insurance: "Risk modellers put Mexico City quake loss at up to US $4.8bn"
From Artemis:
The magnitude 7.1 earthquake that hit Mexico on the 19th September 2017,
with the epicentre near Atencingo in Puebla state but the damage being
considerable in Mexico City 75 miles away, is estimated to have caused
as much as US $4.8 billion of losses to insurance and reinsurance
interests.
Risk modellers estimates diverge considerably though, with AIR
Worldwide putting the industry loss at up to $2.1 billion, RMS saying
the re/insurance industry loss would not exceed $1.2 billion, but the
Mexico City headquartered seismic engineering specialists ERN
International estimated the insured loss at up to $4.8 billion.
ERN told us that its estimate of insured losses from the M7.1 Puebla
region and Mexico City earthquake is based on modelling of a portfolio
of buildings representative of the size and distribution of insured
buildings in the region. AIR’s and RMS’ loss estimates are based on
their respective risk modelling platforms and exposure data as well.
The divergence in estimates highlights how difficult it can be making
accurate assessments of the potential volume and amount of claims that
insurance and reinsurance interests will be liable for so soon after an
earthquake event. Earthquakes can be long-tailed, in terms of the
development of claims and so the final costs to the industry will take
some time to become clear.
AIR Worldwide said it puts the industry loss in a range from around $735 million to $2.1 billion, quite a large range in itself.
AIR explained the quake and the estimate:
This M7.1 earthquake occurred in central Mexico, roughly
55 km south-southwest of the city of Puebla and 120 km southeast of
Mexico City, where major damage and hundreds of fatalities have been
reported. The President of Mexico declared a state of emergency for
areas impacted by the M7.1 quake. In Mexico City, 52 buildings
collapsed, including a 10-unit apartment building, a four-story school,
and a three-story textile factory; about 500 more buildings were damaged
throughout the capital, including 22 hospitals, several churches, a
sports arena, and a medical laboratory.
According to the Federal Electricity Commission, power was restored
on the night of September 21 to 4.63 million households and business,
representing 95% of those that had lost power after the quake, mostly in
Mexico City and in the states of Guerrero, Morelos, Puebla, Oaxaca, and
Tlaxcala. Telephone lines were downed, and gas mains were ruptured.
Schools in the region have been closed until further notice.
According to AIR, the majority of residential buildings in Mexico are
of masonry construction, falling into one of three classifications:
reinforced masonry, confined masonry, and unreinforced masonry.
Unreinforced masonry is the construction type most vulnerable to shake
damage. Commercial buildings in Mexico are primarily of engineered
masonry or concrete construction, and are better able to withstand
ground motion. In Mexico City, most middle- to upper-class families live
in five- to 15-story reinforced concrete commercial dwellings. These
buildings are generally well designed and built with high quality
materials. However, reinforced masonry and confined masonry buildings
still account for a large portion of the building stock of Mexico City.....
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