SANTIAGO, March 17 (Reuters) – Chile has agreed to an earthquake insurance coverage system with the Planet Bank that protects it against $630 million in damages from sturdy earthquakes, in a bid to raise public debt dangers from feasible all-natural disasters.

Insurance coverage will price four.75 % of the total insurance coverage worth each year, according to a statement from the Ministry of Finance.

The South American nation is situated in the so-named Pacific Ring of Fire, an location characterized by frequent earthquakes and active volcanoes.

In 1960, the southern Chilean city of Valdivia was hit by a magnitude 9.five earthquake, the most intense to date, which brought on more than 1,600 deaths.

In 2010, an eight.eight-magnitude earthquake and subsequent tsunami in Chile killed much more than 500 men and women and brought on an estimated $30 billion in harm, destroying hundreds of thousands of properties and damaging highways and bridges.

“This insurance coverage will let Chile to get predetermined compensation payments up to the maximum coverage, in the occasion of particular parameterized seismic events of higher intensity that trigger material harm to the nation and public finances,” the ministry stated.

“If an earthquake is higher than a particular threshold and happens in a particular zone and depth, the insurance coverage offers for a particular payment associated to the occasion, which happens on typical about each 70 years,” it added.

Reporting by Fabian Andres Kamber Writing by Carolina Pulice Editing by Sarah Morland and David Gregorio

Our Requirements: Thomson Reuters Trust Principles.

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