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

The insurance coverage will price four.75% of the total worth of the insurance coverage every single year, the finance ministry stated 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 brought on more than 1,600 deaths.

In 2010, an eight.eight magnitude quake and subsequent tsunami in Chile killed a lot more than 500 people today and brought on some $30 billion in harm, wrecking hundreds of thousands of properties and mangling highways and bridges.

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

“If an earthquake is higher than a unique threshold and happens in a unique zone and depth, the insurance coverage gives for a certain payout linked with the occasion, which, on typical, happens roughly just about every 70 years,” it added.

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

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