SANTIAGO, March 17 (Reuters) – Chile has agreed to an earthquake insurance coverage program with the World Financial institution defending it from $630 million price of harm from robust earthquakes, in an effort to shore up dangers to public debt from doable pure disasters.

The insurance coverage will value 4.75% of the whole worth of the insurance coverage every year, the finance ministry mentioned in an announcement.

The South American nation is positioned within the so-called Pacific Ring of Hearth, an space characterised by frequent earthquakes and energetic volcanoes.

The southern Chilean metropolis of Valdivia was struck in 1960 by a 9.5 magnitude earthquake, essentially the most intense on report, which brought on over 1,600 deaths.

In 2010, an 8.8 magnitude quake and subsequent tsunami in Chile killed greater than 500 folks and brought on some $30 billion in harm, wrecking a whole lot of hundreds of properties and mangling highways and bridges.

“This insurance coverage will enable Chile to obtain pre-established compensation funds for as much as the utmost protection, within the occasion of sure high-intensity parameterized seismic occasions that trigger materials harm to the nation and public funds,” the ministry mentioned.

“If an earthquake is bigger than a specific threshold and happens in a specific zone and depth, the insurance coverage offers for a particular payout related to the occasion, which, on common, happens roughly each 70 years,” it added.

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

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