Catastrophe modeling firm EQECAT has upped its original insured loss estimates for Italian earthquake following a magnitude 5.8 and 5.4 aftershocks that struck the region Tuesday.
EQECAT upped its insured loss estimate from 300 to 700 million Euros ($375 to $875 million), according to a statement Wednesday. EQECAT had issued a 100 euro million insured loss estimate following the May 20 magnitude 6 mainshock.
“The current insured loss estimate of €300 to €700 million is a significant upward revision from EQECAT’s original estimate of €100 million with a credible upper bound of €200 million,” the statement said “Reasons for the increase include the contribution to losses from the most recent aftershocks and updated insight on insured values in the region.”
EQECAT explained that the aftershocks “create significant new losses” despite the lower magnitude because of “increased vulnerabilities of structures” already affected by the May 20 event. Estimates were also increased because the region remains at risk of additional aftershocks.
Another wildcard in EQECAT’s estimates is insurance penetration, with the firm adding that the region’s concentrated economic base of food and industrial production insurance uptake remains “highly variable.”
“EQECAT’s insured loss estimate is based on assumed insurance penetration rates of approximately 3% to 5% for commercial/industrial lines of business and 1% or less for residential,” the statement said “With low take-up rates and relatively small area of strong shaking, industry loss estimates are particularly sensitive to geographic distribution of exposure covered by insurance. Damage to a single facility could significantly influence total industry losses, if that facility happens to be one of the covered minority.”
Building structure will also factor into insured losses, EQECAT says, adding that building codes for the region have a low level of earthquake-resistant design.