March 2nd, 2010

Update: 8.8 Mw Earthquake in Chile

Posted at 10:02 AM ET

chile1small1A massive earthquake struck off the coast of Maule in Chile at 06:34 UTC on February 27 (03:34 local time), causing severe damage across of the country and claiming more than 700 lives in Chile’s biggest earthquake for around 50 years. The earthquake, measuring 8.8 Mw, was located 60 miles (100 kilometers) north-northwest of Chillan and 200 miles (325 kilometers) southwest of Santiago, according to the US Geological Survey (USGS). The USGS added that the quake was centred about 21.7 miles (35 kilometers) underground and was felt in Argentina. This is the joint fifth largest earthquake ever to be recorded, according to the USGS. Around 150 aftershocks have hit the region since the main earthquake, the most powerful at 6.9 Mw.


Reports from coastal gauges indicate that a tsunami was generated with wave measurements ranging from 0.9 feet (0.3 meters) and 8.2 feet (2.5 meters) near the epicentre location. The Pacific Tsunami Warning Center consequently issued tsunami warnings for all 53 Pacific regions and countries, including Central and South America, New Zealand, the east coast of Australia, Hawaii, Japan and the Philippines.

chile1big2

 

Hazard data illustrated in the CAT-i map was taken from i-aXs®, Guy Carpenter’s web-based risk management platform. i-aXs users can view impacted areas on any map as well as see how their portfolios were affected. Please contact your broker or Instrat® representative for assistance or go to www.i-axs.info for further information.

It is feared losses will be in the billions of dollars, according to early estimates. EQECAT estimates the economic damage from the earthquake will be between USD15 billion and USD30 billion, or 10 percent and 20 percent of gross domestic product. Damage in the state of Santiago is expected to exceed 50 percent of the total, EQECAT said. EQECAT added that most of the damage, 55 percent to 65 percent would be to residential structures, with commercial damage accounting for 20 percent to 30 percent of the total and industrial damage making up 15 percent to 20 percent. In terms of insured losses, EQECAT said it expects insurers to pay between USD3 billion and USD8 billion, or 25 percent of the total economic losses. Separately, reports said the Chilean insurance association, AACH, expects insured losses of around USD2.5 billion. AACH said the estimate is based on losses incurred in the 1985 8.0 Mw earthquake, when insurers paid out 7.2 percent of the total damage, and EQECAT’s economic loss prediction.

 
AIR Worldwide, meanwhile, said insured losses from the earthquake are expected to exceed USD2 billion while the economic damage could reach around USD15 billion. According to AIR, the earthquake impacted area from Concepcion to Santiago contains residential and commercial properties with an insurable value of around USD275 billion. Of this total, approximately 70 percent is in the Santiago area and approximately 5 percent in Concepcion. However, AIR said insured losses will be limited to at least USD2 billion as residential insurance penetration (the percentage of properties that are insured for earthquake) is believed to be as low as 10 percent in Chile. AIR noted, however, that commercial insurance penetration rates are likely to be significantly higher, at about 60 percent. Risk Management Solutions (RMS) said some of the largest losses are expected to come from large industrial facilities.

 
The USGS said more than 12.5 million people live in areas impacted by a Modified Mercalli Intensity (MMI) of VII or higher (see Table 1 below), equivalent to very strong shaking with the potential for moderate to heavy damage. This number includes the 4.8 million people living in the capital city of Santiago, the USGS said. Santiago, Temuco (population of around 238,000 people), Rancagua (213,000), Concepcion (215,000), Chillan (150,000) and Talca (197,000) also experienced intensity VII shaking while the town of Talcahuano (population of 253,000) experienced intensity VIII, equivalent to severe shaking with the potential for heavy damage.

 
Witnesses said the shaking lasted for around 60 seconds and reports indicate that the damage is widespread and severe. The current official death toll stands at 723 but this could rise with at least nine people missing and some communities still cut-off. A state of catastrophe has been declared in six of Chile’s 15 regions after officials said about 1.5 million homes were damaged, a third of them severely, and hundreds of thousands of people have been left homeless. Around 2 million Chileans (one eighth of the population) are estimated to have been affected by the earthquake. Some coastal towns were levelled after first being shaken by the quake and then slammed by a tsunami that carried whole houses inland. The earthquake also severely damaged infrastructure, including roads, bridges, ports, airports, utilities and communication networks. The Chilean government has deployed 7,000 troops and imposed a curfew in the Maule and Concepcion regions after hundreds of looters ransacked stores for food and other goods. Looting also reportedly broke out in parts of Santiago.

 
Chile President Michelle Bachelet said the country is facing “an emergency without parallel” and early assessments indicate the destruction near the epicentre location is catastrophic. The towns of Maule and Talca are thought to be among the worst-hit areas. In Concepcion, the city closest to the epicentre, damage has been severe with buildings levelled and streets made impassable by debris and damaged roads. Around 60 people are feared to have been crushed after an apartment block collapsed. The city’s airport was also shut following the earthquake. The town of Constitucion was also severely hit, with reports of around 350 casualties. Around 90 percent of the historic centre in the town of Curico was levelled while several roads and bridges in the area were damaged or destroyed, according to reports. Chile’s main seaport in Valparaiso was ordered closed while damage was assessed and several copper mining operations in the region were shut down. However, the majority of the mines are located to the north of the epicentre point and press statements from the major copper mining companies confirmed that there had been little structural damage. Some mines have resumed operations despite limited power supplies. Several oil refineries in the area have reportedly sustained some damage, however.

 
In the capital of Santiago, some 200 miles (325 kilometers) northeast of the epicentre, power and communication lines were cut and reports said damage and destruction was evident throughout the city. Early assessments indicate that older buildings in the capital were badly damaged, while newly built properties fared well. All forms of transportation in the city were suspended. Santiago international airport was closed for around 24 hours after the terminal building was damaged but officials said the runways were unscathed and commercial airline services have subsequently been re-opened for some international flights. One metro line in Santiago has also been re-opened.

 
Coastal towns in Chile were also hit by tsunamis triggered by the earthquake. Surging waves of up to 8.2 feet (2.5 meters) submerged houses and smashed cars in communities across the country’s Pacific coast. Constitucion was badly hit by a tsunami while more than 20 boats were swept ashore by waves in the port of Talcahuano and dumped in the streets. Large waves also struck Chile’s Juan Fernandez island group, reaching halfway into one inhabited area and killing five people. Elsewhere, officials said at least eight people died and eight were missing on Robinson Crusoe Island, where a tsunami drove the sea almost 2 miles (3 kilometers) into the town of San Juan Bautista.

 
Further afield, hundreds of thousands of people sought higher ground after the Pacific Tsunami Warning Center warned of “widespread damage” across the Pacific region. Although the centre later said waves were not as high as predicted, reports in Japan said northern Hokkaido’s Pacific coastline was hit by a 3 foot (1 meter) high tsunami. Around 630,000 people in areas at risk were ordered to evacuate and coastal train services were suspended. Thousands of people also left coastal areas of the Philippines after text message warnings were sent. Parts of the Marquesas Islands in French Polynesia were hit by a 5.9 foot (1.8 meter) wave, but no casualties were reported. New Zealand’s Chatham Islands recorded a wave of 5 feet (1.5 meters) and areas along the main North and South Islands experienced small surges but with no reported serious damage. Several other Pacific nations were hit by tsunamis but no major damage or casualties were reported.

 
The event is Chile’s largest earthquake since the 8.0 Mw Valparaiso/Santiago quake of 1985. Closer to the epicentre location, AIR Worldwide said some 200 people died and around 140,000 homes were destroyed when a 7.6 Mw earthquake shook the cities of Concepcion and Chillan in 1939. The largest ever recorded earthquake, a 9.5 event, occurred off of Chile’s southern coast in 1960. Therefore, there is high earthquake awareness in Chile and the building codes in the country are among the most stringent in the world. Reports emerging from Chile said most of the collapsed buildings in the latest earthquake were of older design.

Table 1: Estimated Population Exposed to Significant Earthquake Shaking

 

Estimated MMI

Estimated Population Exposure

Perceived Shaking

VIII

5,480,000

Severe

VII

7,258,000

Very strong

VI

751,000

Strong

V

2,721,000

Moderate

Sources: USGS, WSI, Reuters News, Associated News, Agence France Presse, CNN News, BBC News, EQECAT, AIR Worldwide, Business News Americas

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