PERILS puts October Italy quake insured loss estimate at EUR31m

The series of earthquakes which hit Central Italy between the 26th and 30th October 2016 are estimated to have caused a property insurance and reinsurance market loss of just EUR 31 million by industry loss data provider PERILS AG.

The earthquakes were the second damaging swarm to hit the Central region of Italy in 2016, following the M6.2 earthquake which struck in August near the Umbrian town of Norcia. That quake was initially estimated to have caused a property insurance market loss of EUR34m, an estimate that subsequently rose to EUR66m at the second update.

For this second earthquake event PERILS AG, the independent Zurich-based provider of industry-wide catastrophe insurance data, industry loss estimates and data for use in reinsurance or catastrophe bond triggers, puts the initial industry loss at EUR31m.

The earthquakes included in this loss event estimate were Magnitude 5.4, 5.9, and 6.5, all striking the Central Italian region between the 26th and 30th October 2016. As the quakes were in and around the Umbria region, they affected many areas already damaged by the August earthquake event.

Modified Mercalli Intensities of the earthquake series in Central Italy between 26 and 30 October 2016: The map shows the Modified Mercalli Intensities from the three earthquakes which hit Central Italy at the end of October 2016. The strongest event occurred on 30 October and had a moment magnitude of Mw 6.5 (source: INGV). Catastrophic damage occurred in the Monte Sibillini area at the border between the Macerata (Marche region) and Perugia (Umbria region) provinces. PERILS’ first estimate of the market-wide insured property loss from the earthquake series amounts to EUR 31m.

Earthquake insurance penetration is low in Italy, hence the very low loss estimates from these events. As a result the majority of the loss is anticipated to be handled by primary insurers, with reinsurance capital providing little in the way of support.

Given the regions impacted by August’s and October’s earthquakes are similar it will be a difficult task to identify claims and losses, hence there is a chance that we could see this estimate rise as was seen after the August event.

As with the August event, the economic loss from this earthquake is likely significantly higher than the insurance loss, providing another example of the burgeoning protection gap evident in developed markets like Italy, particularly on quake insurance risks.

PERILS will provide its next industry loss estimate update for this event on the 26th January 2017.

PERILS explained the earthquake event in more detail:

A series of three major earthquakes with moment magnitudes of Mw 5.4, 5.9, and 6.5 according to the Italian National Geophysical Institute (Istituto Nazionale di Geofisica e Vulcanologia; INGV) occurred in Central Italy between 26 and 30 October 2016. They impacted the regions of Lazio, Marche and Umbria and affected many of the areas which had been struck earlier in the year by the Mw 6.0 earthquake of 24 August 2016.

The area of damaging shaking intensities was considerably larger than that experienced during the 24 August earthquake, due primarily to the large magnitude of the earthquake which occurred on 30 October. In fact, this earthquake was felt throughout Italy, and also in parts of Austria and the Balkan States across the Adriatic Sea.

Following the first Mw5.4 earthquake on 26 October, the population of the affected region was evacuated to safe locations. This meant that the risk to life posed by the subsequent earthquakes was greatly reduced. In total, there were only three fatalities despite the massive destructive force of these earthquakes. This demonstrates the effectiveness of the rescue work carried out by the local Fire Brigades and the Civil Protection Agency in the area.

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