Canadian Underwriter

“Limited impact” expected for Italian insurers following earthquake: Fitch

August 29, 2016   by Canadian Underwriter

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The impact on Italian insurers from the earthquake that struck the central part of the country is likely to be limited, ratings firm Fitch Ratings said on Friday.

Italy Quake

Firefighters retrieve a painting from a church in the small town of Rio, near Amatrice, central Italy, Sunday, Aug. 28, 2016. Bulldozers with huge claws pulled down dangerously overhanging ledges Sunday in Italy’s quake-devastated town of Amatrice as investigators worked to figure out if negligence or fraud in building codes had added to the quake’s high death toll. (AP Photo/Andrew Medichini)

Fitch Ratings estimates insured losses of 100 million to 200 million euros, arising mainly from property lines. Insured losses are expected to be 40 million to 80 million from primary insurers and 60 million to 120 million for reinsurers, Fitch said in a statement. A similar event that struck a nearby area in 2009, where the insurance exposure was higher, caused insured losses of around 250 million euros.

The estimate reflects the “low density of population and businesses and limited insurance coverage in the region.” Claims of this magnitude would not have a material impact on Italian insurers’ underwriting results or credit profiles, the statement said, noting that Italian non-life insurers wrote 2.3 billion euros of gross written premiums of property insurance in 2015.

Related: Tent cities setup northeast of Rome after earthquake in Italy, at least 241 dead

Italy has declared a state of emergency in the region hit by the earthquake and the government has pledged 50 million euros for first aid. The declaration of a state of emergency means that certain losses will be covered by a state fund for emergencies, limiting losses for insurers.

As of Aug. 28, the Associated Press reported that the death toll from the earthquake was 290 people. The magnitude 6.2 earthquake struck the town of Amatrice on the night on Aug. 23 and since then, at least 470 aftershocks have rattled the area – one as strong as magnitude 5.1, the Associated Press said.

Related: Italian rescuers pull victims out of rubble after 6.2 earthquake hits northeast of Rome

Aon Benfield’s Impact Forecasting said last week that the region of Italy hit by the earthquake has building with “inadequate supporting iron rods” and a “relatively low” penetration of earthquake insurance for residential property. “It remains too early to provide a specific economic or insured loss estimate at this time,” Impact Forecasting said in a cat alert at the time.

The United States Geological Survey has preliminarily estimated that there is a 62% probability that economic damage will exceed US$1 billion, Impact Forecasting stated.