Zurich-based catastrophe insurance data provider PERILS AG has released its final insurance market loss estimate for the floods in the Emilia-Romagna region of Italy during May 2023, lowering the figure slightly to €495 million.
This final figure compares to PERILS’ most recent loss estimates of €509 million, which was released six months after the event; €488 million, three months after the event; and €377 million, six weeks after the event. The catastrophe insurance data provider noted that these loss estimates cover the property line of business, and are based on loss data collected from affected insurance companies, which are extrapolated to 100% market level.
Outlining the particulars of the event, PERILS explained that exceptionally heavy and persistent rainfall affected northern and central Italy during the period of 2 to 22 May 2023, resulting in the country’s wettest May since 1951.
Two peak phases in particular, which occurred on 2 to 4 May and 16 to 18 May, reportedly overwhelmed the capacity of river and drainage systems and led to major flooding across the Emilia-Romagna region and parts of the neighbouring Marche and Tuscany regions.
17 people died, and an estimated 100,000 privately owned properties were affected by flood water. The municipalities of Ravenna, Faenza, Forli, and Cesena were the most affected areas.
According to PERILS, the economic cost of the event is officially estimated at €9 billion, making the Emilia-Romagna Floods the costliest weather catastrophe on record for Italy.
However, Only €495 million of this loss is said to be covered by insurance. PERILS observed that this is due to low take-up rates of flood insurance by private households and SMEs in particular, and the fact that a large part of the economic losses – around 50% – stems from damage to public infrastructure, which is typically not insured.
Luzi Hitz, Product Manager at PERILS, commented, “Italy was hit by a series of catastrophic weather events in 2023. From an overall economic perspective, the Emilia-Romagna Floods in May were the most severe.
“However, from an insurance perspective, the losses were relatively moderate at EUR 495 million, particularly when compared to the record insured losses from the severe convective storm events in northern Italy in July, which according to the latest CRESTA CLIX release, stand at EUR 4.8 billion.
“The difference in the loss magnitude is partly due to the fact that insurance penetration levels are low for flood, but higher for other atmospheric perils such as hail, rain, or wind.”
Hitz continued, “This situation might soon change. New legislation issued in December 2023 requires business owners in Italy to purchase insurance coverage for flood and earthquake until the end of 2024.
“The new law is aimed at reducing the current insurance protection gap for such catastrophes in Italy.”
