AIR Estimates Peru Quake Losses under $1 Billion

August 20, 2007

Boston’s AIR Worldwide estimates that insured losses from the magnitude 8.0 earthquake that struck Peru’s Ica region, south of the capital Lima, on August 15 are unlikely to exceed $1 billion. “It is still in the very early aftermath of this event and there remains uncertainty with respect to the quake’s actual parameters,” the bulletin noted.

The quake killed at least 500 people and devastated the town of Pisco, which was near the epicenter. Over 100 people were killed when the roof of a local church collapsed during a funeral service. Rescue teams have indicated that the death toll is likely to rise as they recover more bodies from the rubble of wrecked buildings. A large proportion of the traditional structures in the area were not built to withstand such a powerful earthquake.

AIR’s estimates include the fact that “the percentage of residential structures in Peru that are actually insured against the earthquake peril is quite low. While commercial take-up rates are much higher, the majority of commercial exposures are located in Lima, about 90 miles from the epicenter.”

“There are reports of some houses having collapsed in the center of the city, but Lima’s distance from the epicenter spared it from the widespread devastation being seen closer to the epicenter,” indicated Dr. Guillermo Franco, AIR Worldwide senior research engineer.

He added that “about 60 percent of construction in Peru is masonry, with another 15 percent traditional adobe. Away from the capital, Lima, these percentages are likely to be higher, particularly in the smaller towns and villages. Both construction types offer little or no lateral resistance against ground shaking.”

Source: AIR, news reports

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