CHILE – Restoring a country’s stability

2010 in Chile – a devastating earthquake…

  • Measuring 8.8MW on the Richter scale occurred at 03.34hrs local time on Saturday February 27th 2010, in South Central Chile.
  • 90 minutes later a tsunami inundated over 500kms of coastline.
  • 700 people were killed, 12,000 injured and 1,000,000 lost their homes or workplaces.
  • Shock waves caused damage in Santiago; over 400kms from the epicentre.
  • 250 aftershocks of magnitude 5.0 or greater were recorded.
  • Transport, telecommunication networks, power and water supplies were all severely disrupted, some for several weeks.
  • Initial estimates put the cost of the insured damage at more than $10bn and threatened the economic stability of the country.
Chile earthquake

Aftermath of the earthquake

FitzGerald Consulting reacted immediately…

Within hours Managing Director, Bev FitzGerald, secured instructions from the largest PD/BI Insurer in Chile, with over 20% market share, to assess the immediate requirements for what was clearly going to be major CAT operation.

Despite severe disruption to flight schedules following damage at Santiago International Airport, 48 hours later FCL’s CAT team was mobilized, taking with them the knowledge and experience gained from 9/11, hurricane Wilma in Mexico, the London bombings and the L’Aquila earthquake in Italy.

damage to shipping

Damage to roads and shipping was huge

And took control..

  • Winning significant customer confidence by being the first to arrive in Concepcion when immediate insight was gained into the scale and complexity of many of the losses.
  • Deploying a team of surveyors, engineers, accountants and agri-business specialists to support the client’s local and international claims handlers drawn from the UK, the US, Canada and the Far East.
  • Managing the setting up of a dedicated CAT ‘suite’ in Santiago, to log and handle over 30,000 loss notifications.
  • Meeting all local loss adjusting companies and specialist consultants to establish resources and expertise and chairing weekly meetings to monitor progress and development.
  • Issuing a series of guidance notes, initially covering procedural matters and latterly a range of complex technical issues.
  • Triaging loss notifications on criteria governing size, location, anticipated level of complexity and specialist disciplines.
  • Assisting the client with implementing dedicated internal reporting strategies incorporating an appropriate cascade of MI across all their relevant divisions and territories.
  • Monitoring the setting and review of reserves to allow identification of gross and net exposure levels in ‘real time’.
  • Controlling the provision of interim payments and, where possible, driving cases to early settlements which had the added benefit of promoting policyholder goodwill.
  • Inspecting and directing all losses where reserves exceeded $250,000 and reviewing/authorising reports on these cases.
  • Designing and implementing dedicated electronic filing systems to ensure ‘best practise’ and providing comprehensive audit trails.
  • Liaising directly with Re-insurers on all major losses, explaining the strategy and technical issues and confirming progress at Market Meetings, both in the UK and in Santiago.


  • Being able to confirm preliminary estimates of the overall exposure levels to the client’s Executive Board in under eight weeks.
  • The large number of claims that were driven towards early settlement providing a tremendous boost to the client’s brand awareness.
  • 25,000 home owners’ claims being finalised by July 2010; 98% of ‘Small & Medium’ claims by Dec 2010 and 75% of all major losses (over $250,000) before the first anniversary in February 2011 when claim payments totalled over $1billion.
  • All claims having been settled equitably between Policyholders, Insurers and Re-insurers without any recourse to litigation and only with minimal complaint.
  • Recognition that Chilean regulatory controls had been strictly complied with and ‘best practise’ achieved in all procedures.
  • The client receiving full support and rapid reimbursement from their Re-insurers from whom extremely complimentary comments were received.
  • The containment of experts’ fees and expenses to reasonable and budgeted levels.
  • The excellent ‘team spirit’ created at every level.


  • The largest single component of all the major losses concerned the Chilean wine industry; a major contributor to the national economy with Winery losses insured by our client totalling $500m.
  • One of the country’s principal wine exporters had over 45m bottles destroyed and severe damage was sustained to warehouses and vats used for fermentation and storage.
  • Priority concerns included bottle shortages and how to process the 2010 harvest – which was imminent.
  • Based on advice from FCL’s viticulture experts, effective mitigation measures were quickly agreed and supported by substantial interim payments thereby protecting Insurers and Re-insurers’ ultimate exposure.

These measures preserved one of Chile’s leading companies whilst, at the same time, a major source of foreign exchange revenue for the country was protected which, in turn, contributed significantly to the restoration of the country’s economy.


  • A major proportion of the losses being settled within twelve months, with outlays totalling in excess of $1bn.
  • 100% recovery of Re-insurers’ liabilities without delays, disputes or compromises.
  • During a Market Meeting the Re-insurers’ delegation stated that this was possible only because of their confidence in FCL’s expertise, management and reporting.
  • A strong endorsement of the client’s position in Latin America as the Chilean Regulatory Authority subsequently confirmed that they had demonstrated ‘market leading performance’ following this disastrous earthquake.
  • A significant contribution towards the rapid recovery of Chile’s economic stability.


‘This will be regarded as the template for managing CAT events worldwide. The feedback from my colleagues at RSA and within our re-insurer and Lloyd’s partners to FCL’s sterling work has been magnificent.’

Scott Webb, Group Technical Claims Director, RSA