Swiss Re puts total cost to insurance industry of Chile quake at $4-7 billion

Swiss Re puts Chile quake insurance cost at $4-7BN

GENEVA — Swiss Reinsurance Co. said Wednesday that the strong earthquake in Chile last month will cost the insurance industry $4-7 billion, an estimate shared by its Germany-based rival Munich Re AG.

Swiss Re said it is common practice for property owners in Chile to buy earthquake insurance, meaning the temblor would result in significant claims for property damage and disruption of business.

The 8.8-magnitude earthquake and a subsequent tsunami killed more than 450 people and damaged hundreds of thousands of buildings.

Zurich-based Swiss Re said it alone expects to make a pretax payout of $500 million for losses arising from the Feb. 27 quake.

Munich Re expects to face claims of about euro400 million ($540 million) from the quake. It said it has sent several experts to Chile “to ensure swift and effective claims settlement.”

The quake would likely affect the price of its insurance cover, Munich Re board member Torsten Jeworrek said in a statement.

Swiss Re also said it expects to pay out $100 million for damage related to the winter storm Xynthia that swept across Western Europe on Feb. 26-28, causing severe damage in Spain and France.

Munich Re estimated the total insured losses from the storm at between euro1.5 billion and euro2.5 billion ($2 billion and $3.4 billion), and its own likely payout at up to euro100 million ($136 million).