The neighboring country of Bolivia and Argentina lies in the so-called Pacific Ring of Fire, an area characterized by frequent earthquakes and active volcanoes (Photo: reddeemergencia)
Chile has taken out earthquake insurance with the World Bank. It is intended to protect the South American country from damage from strong earthquakes in the amount of 630 million dollars in order to hedge the risks for national debt from possible natural disasters. Insurance will cost 4.75 percent of the total value of insurance each year, the Treasury said in a statement. The neighboring country of Bolivia and Argentina lies in what is known as the Pacific Ring of Fire, an area characterized by frequent earthquakes and active volcanoes. The southern Chilean city of Valdivia was hit by a magnitude 9.5 earthquake in 1960, the strongest on record, killing over 1,600 people. In 2010, an 8.8 magnitude earthquake and subsequent tsunami in Chile killed more than 500 people and caused around $30 billion in damage, destroying hundreds of thousands of homes and damaging highways and bridges.
“This insurance will allow Chile to receive pre-determined compensation payments up to the maximum coverage amount in case certain parameterized high-intensity seismic events cause material damage to the country and public finances,” the ministry said. “If an earthquake exceeds a certain threshold and occurs in a certain zone and depth, the insurance provides a specific payout related to the event, which occurs on average about every 70 years,” the ministry said.
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