MEXICO: USD 1 billion insured losses after the first quake; much larger losses expected after the second one

Less than two weeks from the September 7, M8.1 earthquake, Mexico was hit Tuesday by another devastating quake which left behind a death toll of over 200 people. Unlike the first quake, the second event severely affected Mexico City.

Catastrophe modeling firm AIR Worldwide estimates that industry insured losses from the M8.1 earthquake that struck off the coast of the Mexican state of Chiapas on September 7, will be between MXN 14 billion - 20 billion (USD 0.8 -1.3 billion). While it is definitely too early for any economic loss assessment, it seems obvious that larger figures are to be expected after the September 19 earthquake.

The highest magnitude earthquake to affect Mexico in a century struck off the coast of the state of Chiapas at 11:50 p.m. local time, September 7. The M8.1 earthquake was located about 1,000 km from the capital, Mexico City. Tuesday, September 19 at 9:14 PM, a second event of M7.1 magnitute hit the country, its epicentre located between the states of Puebla and Morelos, about 75 miles south of Mexico City. Coincidentally, in the very same day Mexico was commemorating the 1985 quake, of magnitude 8.1, which killed at least 5,000 people, with some estimates as high as 40,000.

If Mexico City came through the first quake without experiencing major damage, the states of Oaxaca and Chiapas have experienced numerous aftershocks, dozens of which were M4.5 or greater, resulting in at least 96 people victims. According to federal officials, 12,000 homes were damaged in Oaxaca while in Chiapas, 54,000 homes were reported as damaged, of which 18,000 collapsed.

AIR's loss estimates explicitly capture damage from ground shaking. Losses include insured physical damage to onshore property (residential, commercial/industrial), both structures and their contents, and auto. Note that AIR's estimates of insured losses are based on assumptions about take-up rates in Mexico (the percentage of properties actually insured against the earthquake peril), about which there is considerable uncertainty. Please note that total economic losses are expected to be much higher than industry insured loss estimates. The range in AIR's loss estimates reflects uncertainty in the slip distribution at the fault, modeled ground motion, and damage estimation.

Related articles

ON THE MOVE

TOP EVENT

The 9th International Istanbul Insurance Conference started today in Istanbul

In emerging markets like Turkey, there can be a significant difference between the insured and total insurable losses. Parametric insurance is a smart way to close this protection gap. While the traditional products cover an insured loss, parametric products provide financial protection for various expenses from financial liabilities to contingent loss of profit which, in return, decreases the economic loss burden following a CAT event.

04.10.2017

61st "Rendez-Vous de Septembre" ends today in Monte Carlo: review

The 61st edition of the "Rendez-Vous de Septembre", the annual traditional meeting of reinsurers ends today in Monte Carlo. The Nat Cat insurance protection gap, as well as the global insurance market readiness to deal with the increasing complexity of the cyber risks were among the most debated topics.

14.09.2017

See all