2009-04-08

By Editor, CIR

Monday's earthquake that struck the Abruzzo region of Italy is likely to have caused insured losses of between E200 million and E400 million, a catastrophe modelling firm estimates.

AIR Worldwide says the estimate includes losses to residential, commercial and industrial buildings and contents, but not business interruption.

Total damage from the earthquake is estimated at between E2 billion and E3 billion. The group adds that earthquake insurance has fairly low penetration in the region and most insured losses will be for damage to commercial properties.

The earthquake occurred some 100 km from a magnitude 6.0 earthquake that struck the Umbria-Marche region in 1997, and reportedly caused an estimated USD4.5 billion in economic losses of which less than 2% was insured.

A spokesman for the country's insurance regulator ISVAP agreed that Italian insurance companies are likely to have only a moderate exposure to damage claims.

The president of the ANIA insurers association, Fabio Cerchiai, said it was time to reform the country's laws on insurance for natural disasters.

"Ours is one of the few countries that does not have a mixed public-private system against natural disasters," he commented.

British companies may find they are unwittingly affected by the quake, says John Bell, head of claims at Aon Risk Services' commercial division.

"If they have suppliers, customers or subsidiaries that have suffered damage, this can lead to financial losses back in the UK. In terms of making insurance claims, there may also be cover issues as insurers have been reluctant to include earthquake cover in such a geologically unstable area.

"Given the complex nature of commercial relationships and policy exclusions, anyone who may have been affected should seek professional advice from their risk advisers."

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