Swiss Re estimates the insurance fall-out from the recent Chilean earthquake to be up to $7bn.

Swiss Re, one of the world’s leading insurers, says that the Chilean earthquake could cost insurers in the region of $4 - $7 billion as the full effect of the disaster takes its financial toll.

So far 2010 has been littered with natural disasters, with earthquakes and hurricanes battering the globe. The Haiti earthquake claimed the lives of more than 200,000 people, injuring 300,000 and displacing almost 1,000,000.

Swiss Re estimates that the 8.8 magnitude earthquake that hit Chile on 27 February is likely to cost it around $500m, but said the total insured losses for the insurance sector could be anywhere up to $7bn. The earthquake has resulted in an estimated 279 deaths and caused severe damage to properties along a coastal stretch of 600km.

Swiss Re explained why the sum is so high: “In Chile, it is common practice for owners of mortgaged residential property, commercial and industrial property to buy earthquake insurance from local and global private insurance companies.

“Accordingly, this latest earthquake will lead to significant insurance claims for property damage and business interruption which are designed to facilitate a swift economic recovery.”

However, these costs are negligible compared to those in 2004, which was a year of some of the world’s worst natural disasters of modern times, including the Asian Tsunami and an accumulation of 23 hurricanes and typhoons in the US and Japan. Swiss Re said that insured losses totalled almost $50bn worldwide.

As well as the Chilean earthquake, Swiss Re estimates that Xynthia – a violent windstorm that crossed Western Europe on 26-28 February and caused the deaths of more than 50 people – will cost insurers around $100m before tax.