EQECAT revises Italian earthquake damage estimates due to aftershocks

Risk modeling firm EQECAT has increased its estimate of damages from Italy’s May 20 Magnitude 6.0 earthquake to between $375 million and $875 million because of recent aftershocks that hit the Emilia-Romagna region May 29.

The two aftershocks, which affected an area similar to the main earthquake, occurred about 30 km northwest of the city of Bologna, according to EQECAT. It noted that the new loss estimate “is a significant revision” from the initial damage figure of between $125 million and $250 million.

“Reasons for the increase include the contribution to losses from the most recent aftershocks and updated insight on insured values in the region,” EQECAT noted in a release. “Despite the lower magnitude of the events on May 29, these aftershocks could significantly contribute to insured losses, given the increased vulnerabilities of structures already affected by the May 20 event. Furthermore, the region remains at risk of additional damaging aftershocks.”

An update from risk modeler RMS notes that an industrial facility is reported to have collapsed in Medolla, resulting in three out of a total of 14 fatalities reported thus far. A damaged facility in San Felice has also contributed to the fatality figures reported.

“Local media reports indicate that the earthquake on Tuesday, 29 May has affected the balsamic vinegar industry – though the extent to which is as yet unknown,” RMS notes on its website. “The earthquake suspended operations at Ferrari and Maserati plants in the region, though no damage has been reported from either company.”

RMS reported in a statement issued on May 30 that insured damages are expected to be low. “Italy’s relatively low penetration of earthquake insurance means the losses from two earthquakes to hit the same northern region in just over a week are also expected to be low,” the RMS statement reads.

Pointing out that penetration of earthquake insurance is greater for commercial and industrial risks than for residential property in Italy, RMS estimates that 40% of such risks are covered.

“Full value earthquake insurance policies are extremely rare in Italy, if offered at all, and most policies typically have limits between 20% and 50% of sums insured,” RMS notes.