Chile earthquake among world’s most powerful

RMS issued the following statement on the earthquake in Chile:

The magnitude 8.8 earthquake that struck offshore of Chile on 27 February ranks in the top 10 most powerful quakes and occurred on a portion of the fault zone between two previously devastating earthquakes in 1960 and 1922. “Given the previous events along the fault, there was an increased probability of another earthquake on this section,” commented Dr Claire Souch, vice president at RMS.

“One positive outcome of Chile’s history of powerful earthquakes is that building standards are some of the most stringent globally and are generally much higher than in the rest of South America.” She said: “Close to half of all the properties in Chile have been built in the past 40 years when building codes have been in force. Most residential buildings are made of reinforced concrete, which acts as a buffer against ground shaking, which is in sharp contrast to the shanty housing that was destroyed by the Haiti earthquake.”

The earthquake was the result of a rupture some 300 miles (500 km) in length, causing widespread and severe damage across Chile. Reports on the morning of Monday, 1 March indicate that at least 700 people have been killed, although this estimate is expected to continue to rise over the coming days. Up to 1.5 million homes in total are thought to have been damaged; of the buildings that have fully collapsed, many are of older design and include numerous historic structures, as would be expected.

Insured exposure

Earthquake coverage is widespread in Chile, with ninety percent of property insurance policies carrying earthquake cover. “Given the recent history of earthquakes, insurance penetration in Chile is relatively high at around 3.5 per cent of GDP. To put this in context, coverage there is higher than in Mexico, although still lower than the US,” commented Dr. Souch. “A lack of power and damage to infrastructure is likely to increase demand for materials and labor and escalate insured losses. As previous events have shown, this could be in the order of 30 per cent.”

Damage has been particularly severe in Chile’s second largest city, Concepcion (an industrial city of population approximately 215,000) around 70 miles (112 km) south-southwest of the epicenter. Concepcion reportedly suffered shaking up to intensity VIII on the MMI scale, with the potential to cause moderate-to-heavy damage to resistant structures and heavy damage to vulnerable structures.

The capital Santiago has also been significantly affected, although has not totally collapsed. Many buildings have been destroyed and there have been power outages affecting large parts of the city. Many road bridges have been damaged or destroyed across Santiago, but officials say public transport services are slowly returning to normal. “Unlike New Orleans following hurricane Katrina, Santiago has not come to a standstill, so although the damage is severe we’re not looking at a so-called ‘super cat’ event,” said Dr Souch.

Some of the largest losses are expected to be from large industrial facilities. Copper mining is Chile’s largest export activity and production was interrupted by power shortages, but there has been no structural damage to the facilities reported so far. Oil refineries seem to be the most affected. Aconcagua oil refinery located close to Santiago, has currently halted operations and may be fixed within six days. Bio Bio oil refinery, located in a coastal location close to the Concepcion has the largest output in the country and is in the epicentral area. Though the extent of damage to this facility is not known, statements from the government indicate that the repairs to this facility are expected to take longer than at Aconcagua.

RMS, which released an upgrade of its Chile earthquake model in 2009, is continuing to monitor the situation and will provide updates accordingly.