Up to EUR200m earthquake loss for Italian insurers, estimates Fitch

Fitch Ratings has estimated that Italian insurers will only face a loss of between EUR100m and EUR200m, with reinsurance capital paying for the majority of claims, from this weeks magnitude 6.2 earthquake, far below the estimated figure of an $11 billion economic loss.

As we wrote earlier today, the Italian Civil Protection Department suggested that this weeks devastating earthquake in Italy, near the Umbrian town of Norcia, could result in economic losses of around $11 billion.

The insurance and reinsurance industry loss was always set to be much lower, with earthquake coverage in the Italian non-life industry only around 2%, or perhaps even a bit lower.

Fitch said that it estimates insured losses of EUR100m to EUR200m for Italian insurers, mostly from property insurance lines. Its estimate reflects a low population and business density in the affected region, as well as limited insurance coverage.

Fitch expects the insured losses to be EUR40m to EUR80m for primary insurance companies and EUR60m to EUR120m for reinsurance firms.

“Claims of this magnitude would not have a material impact on Italian insurers’ underwriting results or credit profiles,” Fitch explained, adding that “Italian non-life insurers wrote EUR2.3bn of gross written premiums of property insurance in 2015.”

It’s also worth noting that the Italian governments declaration of a state of emergency means that a portion of the loss will be covered by a state fund for emergencies, which will further limit the impact to insurance and reinsurance markets.

Fitch’s report is only for the impact to Italian insurers, meaning some international companies could perhaps see losses as well. However, it certainly looks like the insurance and reinsurance industry impact, as well as any impact to ILS funds, will be limited due to the low penetration of earthquake cover in this region  and across Italy.

Also read:

– Italy earthquake could cause $11bn economic loss: Report.

– M6.2 earthquake hits Umbria, Italy – some ILS assets exposed.

– No impact expected to Azzurro Re I cat bond from quake: Plenum.