Emilia-Romagna Italy flood industry loss finalised 3% lower at €495m: PERILS – Artemis.bm

The insurance market wide loss from severe flooding in Europe that impacted the Emilia-Romagna Region of Italy in May 2023 has now been finalised with a 3% reduction from the last figure by PERILS, bringing its estimate to €495 million.

PERILS initial estimate reported in July was for an industry loss of just €377 million, based on data reported by Italian insurers and only covering the property line of business.

PERILS industry loss estimate for this event covers the flooding that occurred in the Emilia-Romagna region of Italy across the period of 2nd to 22nd May 2023.

This is a particularly lengthy event duration. But, flood insurance claims can often be filed weeks after an event occurs, so it’s a good way to capture as many claims as possible, even if it falls outside of the typical hours clauses used across the insurance and reinsurance industry.

PERILS then hiked the industry loss estimate by 30% in August, lifting it to €488 million as greater clarity over the extent of the claims burden emerged.

Most recently, the total was raised further, with the third loss estimate from PERILS placed at €509 million, another 4% increase.

Now, the total has been lowered, as the final data gets reported by PERILS, with a decrease to €495 million.

The loss estimate from these floods only covers the the property insurance line of business and is based on loss data collected from affected insurance companies which are extrapolated up to 100% market level.

The overall economic cost for these floods has been estimated at EUR 9 billion, making the Emilia-Romagna Floods the costliest weather catastrophe on record for Italy.

Because of the low take-up rate of flood insurance by private households, the insured loss is far smaller at EUR 495 million.

Luzi Hitz, Product Manager at PERILS, said, “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 atmospherical perils such as hail, rain, or wind.

“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.”

Just last week, major reinsurers said the industry loss estimate for the Italian hail and convective storms was being raised to close to US $6 billion, so it’s possible the CLIX figure that Hitz references will be raised at the next reporting.

For these floods, Italy was struck by an extended period of low-pressure weather during May, which drove repeat periods of very heavy rains and flooding to the region.

Two main rain storms were seen as drivers of the flooding, on 2nd May and then again on 16th and 17th May, when extreme rainfall of over 200mm in 24 hours caused severe inundation and hundreds of landslides across several provinces of the Emilia-Romagna and the Marche regions.

Large cities affected included, Bologna, Cesena, Forli, Faenza, Ravenna, and Rimini , which were impacted by mud-laden overflowing waterways and rain-induced flash flooding.

The persistent and stationary nature of the rain storms led to large local water accumulations, overwhelming the capacity of rivers and urban drainage systems.

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