The catastrophic earthquake that struck central Chile last week is estimated to have caused billions of dollars in insured and economic losses. Insured losses are being estimated between U.S. $2 billion to $8 billion and total economic losses may cost between U.S. $15 billion to $30 billion.
If it wasn't for the highly developed insurance market in Chile, economic recovery would be much more difficult. In addition to a number of its own insurers, Chile also has many large international insurers and reinsurers (mainly American and European) that will provide the financial resources necessary for Chile's reconstruction, according to the Insurance Information Institute (III).
That makes Chile's situation much different from Haiti's, which was struck by a devastating earthquake on Jan. 12. Haiti has almost no private insurance market.
According to III, direct premiums written in Chile in 2008 totaled roughly U.S. $5.8 billion. Of that, nonlife (i.e. coverage on homes, businesses and vehicles) insurance premiums accounted for U.S. $2.3 billion and life premiums U.S. $3.5 billion. By contrast, in Haiti, estimated total nonlife premium income written in 2008 was $19 million. Makes you wonder how different recovery would be for Haiti if it had a stronger insurance market.
Unfortunately, the benefits of insurance are often seen only after a disaster strikes. While no amount of money can ever make up for loss of life, insurance makes it possible for survivors to rebuild their lives. I often hear people complain about paying for insurance – saying it's a waste of money. But it's situations like these that remind us why insurance exists.