Mexico quakes could move P&C industry

Mexico's September earthquakes could have a long-term impact on risk analysis in the country, sparking more frequent and intensive analyses by local P&C insurers, according to the director of insurance broker Lockton México.

Speaking to local daily El Economista, Lockton director Guadalupe de la Torre said the earthquakes have shaken local insurance companies after decades of relative complacence.

"There were many years when there was no earthquake like the [1985 Mexico City quake]," said De la Torre. "We had other events that were not high impact, but now [with these quakes] it has made us all very sensitive."

The executive added there has been a strong uptick in requests for risk assessment in non-commercial buildings, as homeowners begin to consider adding earthquake protection for their apartments and properties, adding that before September very few homeowners sought such coverage.

"This has been a lesson that may move us culturally," she said. "We might just be seeing this effect right now, but listening to our clients, the impact generated goes deep."

Economic impact update

President Enrique Peña Nieto met with media at his official residence to offer an update on the earthquake recovery efforts, announcing the total cost of rebuilding will likely rise to 48bn pesos (US$2.55bn).

As reported in local daily El Economista, the president said it would probably be three to four months before all of those who lost their homes in the Sept. 7 and Sept. 19 earthquakes would once again have a normal roof over their heads.

The government continues to be in cleanup mode and estimates that it will require 700mn pesos to clear away rubble alone.

At the meeting, finance minister José Antonio Meade said there would not be any additional stimulus package in the 2018 budget, signaling a commitment to reducing public debt; however, the official said the federal government already has 27bn pesos to use for the effort.

"It remains to be seen how much local governments can add," said Meade. The minister added that while they only expect 1.5bn pesos from development bank Banobras and a few remaining additions, "we have no problem to complete the 48bn," adding that the finance ministry could always help states issue zero-coupon bonds to acquire necessary capital through debt.