Even if the insured losses from the Chile earthquake fall in the mid-range of current estimates of between US$ 2 billion and US$ 8 billion, it will outpace Hurricane Wilma as the most expensive insured event in Latin America’s history, according to a release by reinsurance broker Cooper Gay.
Individual companies have also continued to release estimates of their exposure to the earthquake: Flagstone Reinsurance Holdings (US$ 50 million); Max Capital Group, Ltd. (US $10 to 20 million for both the earthquake and Xynthia), Platinum Underwriters Holdings (US$ 85 million from Q1 catastrophes), Validus (US$ 170 million to 270 million from Chile), Hiscox (US$ 100 million from Chile and Xynthia). Swiss Re and Munich Re had previously released estimates for exposure to the Chilean earthquake that combined to total over US$ 1 billion.
Some compliance and coverage issues have also begun to emerge from Chile as investigation of losses progresses: (1) Chilean law requires that losses be investigated and estimated by companies or local registered “liquidators” – any performance of duties reserved for such licensed professionals by foreign adjusters may pose regulatory compliance issues; (2) verification of entitlement to the expanded claim notice period agreed-to by local insurers for insureds impacted in particular ways by the earthquake; (3) potential conflicts (and ramifications thereof) between local insurers’ obligations to their insureds under local law and policies and their duties of cooperation/claims control under reinsurance agreements; (4) difficulties adjusting business interruption claims that in some instances will dwarf property damage; (5) detection of earthquake claims by insureds with no such optional coverage under their fire insurance policies; and (6) potential coverage/rescission issues posed by failure to build up to local code.
If you would be interested in learning more about the Chilean claims process or regulatory scheme, further discussing the evolving situation in Chile following the earthquake and/or receiving recommendations for local counsel and other professionals to assist on the ground in Chile, please feel free to contact EAPD attorney Machua Millett at mmillett@eapdlaw.com.