Verisk, a catastrophe and risk modeling firm, said on Thursday it expects total economic losses from the twin earthquakes that struck north-central Venezuela on June 24 to exceed $10 billion.
The earthquakes hit near densely populated areas and prompted Venezuelan authorities to declare a national state of emergency as the human toll mounted into the thousands. According to Verisk, the most acute physical damage occurred in the Caracas metropolitan region and in the coastal state of La Guaira, where the firm estimates approximately 1,400 buildings were destroyed.
Uncertainty around insured losses
Verisk cautioned that the degree of uncertainty in estimating insured losses for this event is higher than is typical for its models. The firm identified several contributors to that elevated uncertainty, including macroeconomic conditions confronting Venezuela, elevated inflation, low insurance penetration in the affected areas and market complexities tied to sanctions.
Those factors, Verisk said, complicate the translation of physical damage into monetary insured-loss estimates and challenge standard modelling assumptions. The company did not provide a single insured-loss number, instead flagging the broader difficulty of applying conventional loss-estimation techniques in the current market and economic context.
Contextual implications
While Verisk framed its commentary around modelling uncertainty, the information supplied highlights specific geographic and market impacts: the concentrated destruction in Caracas and La Guaira points to substantial reconstruction needs in urban and coastal infrastructure; the reference to low insurance penetration indicates that a meaningful portion of losses may remain uninsured; and the mention of sanctions-related market complexities suggests frictions for insurers and financial intermediaries in processing claims and transferring capital.
Verisk's estimate of more than $10 billion in economic losses provides an early quantitative sense of the scale of the event, but the firm emphasized that conventional insured-loss projections should be treated with caution given the elevated uncertainties it identified.