Photo credit: www.independent.co.uk
A magnitude-6.0 earthquake rocked central Italy early Wednesday morning, killing more than 260 people. Losses are expected to be below that of the 2009 L’Aquila event, which Willis Re estimated to have £502 million in insured losses. The quake could be felt as far away as Bologna to the north and Naples to the south, and devastated centuries-old towns where historic churches and monuments dot the landscape.
The picturesque village of Amatrice was particularly hard hit, with the mayor telling The Guardian that “half of the town no longer exists.” The town of L’Aquila, which lost 300 residents during the earthquake in 2009, has promised to take in the hundreds left homeless in Amatrice.
As your insureds in Italy focus on rescue efforts and begin the grim task of sifting through the rubble left behind, you can get a more complete view of your potential exposure—and market opportunities—throughout the region.
Understand and act quickly on the impact to your portfolio
Centered about 110 kilometers northeast of Rome and about 35 kilometers north of the deadly magnitude 6.3 earthquake that hit L’Aquila in 2009, the Istituto Nazionale di Geofisica e Vulcanologia (INGV) estimates a magnitude of 6.0 and depth of 4 kilometers. Shallow earthquakes like these generally cause more damage, as was the case here.
To help you understand the extent of this and prior events, SpatialKey includes shakemaps from the U.S. Geological Survey (USGS) global library of earthquake footprints, which show the impact in and around the epicenter. You can easily visualize which policyholders have been affected and begin mobilizing your claims team to respond as quickly as possible.
Willis Re is already providing insurance companies with an assessment of their potentially affected risks by providing event-response analytics with SpatialKey.
“We have been assisting insurers in visualizing the event and their insured risks that are likely to have been affected,” explains Tim Edwards, Head of Europe, Willis Re Catastrophe Analytics. “We have applied the latest USGS event footprint in SpatialKey to individual client portfolios. This enables the identification of potential policies impacted by the most severe shaking intensities, including net exposures after earthquake indemnity limits. This has allowed insurers to work with their claims teams, senior management, and reinsurers and respond in a timely fashion.”
The image below is an example of the types of value-added analytics Willis Re delivers to its clients to support their event response efforts.
The epicenter was not within a major urban center, and losses from commercial and industrial facilities are expected to be low. Many Italian families, however, flock to the Apennines mountain region in summer, causing populations to double or triple this time of year—a seasonal factor that undoubtedly contributed to the hundreds of lives lost.
Following the quake, about 200 aftershocks rippled throughout the region, most likely causing more damage to many historic buildings because of shakes, fires, and landslides. Evaluating the impacted areas now to determine if the damage occurred from the initial and subsequent quakes will arm your claims team with the information they need to combat possible fraud in the coming weeks.
With risk, comes opportunity
As you wait for the dust to settle and the claims to begin coming in, you can use SpatialKey to easily display areas where past or future hazard severity may be indicative of loss potential. You can also get a better understanding of your potential exposure by portfolio segment, policy, location, or any attribute within your portfolio data.
Italy is one of the most earthquake-prone countries in Europe, and has documented at least 400 damaging earthquakes in the last 2,000 years. According to Axco, a recent Swiss Re report suggests that only one percent of private households have earthquake coverage, which is heavily limited.
What’s more, the 2009 L’Aquila earthquake made it clear that the Italian government can no longer act as the “insurer of last resort.”
In countries like Italy, it's important to visualize locations of older buildings because many were built before earthquake codes were in place. Savvy insurers looking for ways to pick higher quality risks are leveraging state-of-the-art tools like SpatialKey, and accessing multiple data sources to make informed underwriting decisions and write more earthquake coverage.
Now is the time to begin revising your underwriting guidelines to prepare for what could become a growing private insurance market. This latest earthquake may be just the catalyst to spur Italians to look for coverage—and you’ll want to be ready to write profitable business before your competitors.
To learn more about how SpatialKey can help you manage and grow your earthquake portfolio, contact us today.