March 26, 2023 4:16 pm

SANTIAGO, March 17 (Reuters) – Chile has agreed to an earthquake insurance coverage system with the Globe Bank guarding it from $630 million worth of harm from powerful earthquakes, in an work to shore up dangers to public debt from attainable organic disasters.

The insurance coverage will expense four.75% of the total worth of the insurance coverage every year, the finance ministry mentioned in a statement.

The South American nation is positioned in the so-named Pacific Ring of Fire, an region characterized by frequent earthquakes and active volcanoes.

The southern Chilean city of Valdivia was struck in 1960 by a 9.five magnitude earthquake, the most intense on record, which triggered more than 1,600 deaths.

In 2010, an eight.eight magnitude quake and subsequent tsunami in Chile killed extra than 500 persons and triggered some $30 billion in harm, wrecking hundreds of thousands of houses and mangling highways and bridges.

“This insurance coverage will let Chile to obtain pre-established compensation payments for up to the maximum coverage, in the occasion of particular higher-intensity parameterized seismic events that bring about material harm to the nation and public finances,” the ministry mentioned.

“If an earthquake is higher than a specific threshold and happens in a specific zone and depth, the insurance coverage gives for a particular payout connected with the occasion, which, on typical, happens about every single 70 years,” it added.

Reporting by Fabian Andrés Cambero Writing by Carolina Pulice Editing by Sarah Morland and David Gregorio

Our Requirements: The Thomson Reuters Trust Principles.

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