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

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

The South American nation is positioned in the so-known as Pacific Ring of Fire, an location 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 extra than 500 folks and brought on some $30 billion in harm, wrecking hundreds of thousands of residences and mangling highways and bridges.

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

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

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

Our Requirements: The Thomson Reuters Trust Principles.

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