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The Actuary The magazine of the Institute & Faculty of Actuaries

Insurers face up to $850m of losses from Ecuador earthquake

Insured losses resulting from an earthquake that struck Ecuador on 16 April will be between $325m (£226m) and $850m (£590m), according to AIR Worldwide.


Ecuador earthquake - rescue team making recovery © Shutterstock
Ecuador is still assessing the amount of casualties and widespread losses from the earthquake. © Shutterstock

The country is still evaluating the casualties and widespread losses that resulted from the magnitude 7.8 earthquake. 

Citing from the Ecuador’s Secretariat for Risk Management, AIR Worldwide said 570 had been killed and more than 4,600 injured. 

More than 1,100 buildings had been destroyed and over 800 damaged. Other impacts include lack of running water, power, and communications systems, as well as damage to highways and bridges. An airport in Manta was closed.

President Rafael Correa declared states of emergency of six of the country’s worst hit regions: Esmeraldas, Los Ríos, Manabí, Santa Elena, Guayas and Santo Domingo.

Arash Nasseri, senior engineer at AIR Worldwide explained the region experienced some of the largest earthquakes in the world.

“Seismic hazard in Ecuador is driven primarily by the Nazca subduction zone, which is located just offshore of western South America,” he said.

“This subduction zone has led to uplift of the Andes mountain range and has produced some of the largest earthquakes in the world, including the largest earthquake on record, the 1960 magnitude 9.5 earthquake in southern Chile.”

The catastrophe modeling firm’s estimates explicitly capture damage from ground shaking. Insured losses are based on assumptions of earthquake insurance penetration rates in Ecuador.

Therefore, the firm warned there could be “considerable uncertainty”. Total economic losses are expected to be “much higher” than insurers’ payout.

The findings were published just before another earthquake hit the country today. 

The US Geological Survey rated it at magnitude six. So far no immediate damage has been reported.