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.

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