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

The insurance coverage will expense four.75% of the total worth of the insurance coverage each and every year, the finance ministry mentioned in a statement.

The South American nation is situated in the so-known as 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 triggered more than 1,600 deaths.

In 2010, an eight.eight magnitude quake and subsequent tsunami in Chile killed much more than 500 individuals and triggered some $30 billion in harm, wrecking hundreds of thousands of residences and mangling highways and bridges.

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

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

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

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