25 August 2016Insurance

Many residential homes in Italy not insured for earthquake

Risk modelling agencies have said it is too early for loss estimates following the earthquake in central Italy this week but two have suggested that many residential properties may not be insured against earthquake risk.

A strong and shallow earthquake struck central Italy in the early hours of August 24, approximately 10 kilometres southeast of Norcia and 100 kilometres northeast of Rome.

The main earthquake with magnitude of 6.2 and a depth of 10 kilometres, followed by a dozen weaker aftershocks, caused severe damage to the areas of Amatrice, Accumoli, Norcia, and Pescara del Tronoto.

But according to AIR Worldwide earthquake coverage is not often included in standard homeowners’ policies, and is typically issued as extension of fire policies.

The catastrophe modelling firm said that for industrial and commercial structures, earthquake coverage may be offered for an additional premium, which varies by region.

The government budget includes provisions for post-disaster insurance pay-outs instead of a state pool or catastrophe fund into which companies can contribute.

The hardest hit towns were reportedly smaller, older towns, with numerous buildings having collapsed and severe building damage reported in the town of Amatrice.

Meanwhile, Robert Muir-Wood, chief research officer at RMS, also noted that it seems likely may residential properties will not be insured.

“A full picture of the damage will likely take several days, but it is clear there is little higher value property in the towns and villages affected by the area of stronger shaking, which will limit insurance losses as residential properties are generally uninsured for earthquake,” he said.

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5 October 2016   The insured property losses caused by the earthquake which hit Central Italy on August 24 is expected to be €34 million, as estimated by catastrophe insurance data provider PERILS.