Italy

	Europe Earthquake
	HailCalc Europe

Europe Earthquake - Italy

Seismicity in Europe

Europe has a long and complex history of seismic activity. The convergence of the Eurasian and African plates across the Mediterranean has resulted in a wide zone of collision tectonics and the formation of smaller microplates along the plate boundary zone. Seismic activity generally decreases northward away from the Mediterranean region through the Alps.  North of the Alps, within the interior of the Eurasian plate, earthquakes are associated with several slowly deforming rift zones created by extensional forces.

Italy's Seismic Risk

Italy has an extensive historical record of earthquakes, with more than 400 damaging events documented during the last 2,000 years. Most of the earthquakes observed in Italy are generated by the relative motion along the boundaries of microplates in the Eurasian-African plate collision zone. Seismic activity varies considerably across the country, but the regions with the most activity are associated with three main tectonic features: the Apennine Mountains that run down the center of the Italian peninsula, the Alps in northeast Italy, and the Calabria-Sicily region of southern Italy.

The highest seismic activity is associated with the Apennine Mountains, the site of one of the most damaging earthquakes in Italy’s recent history, the 1980 Irpinia Earthquake. With a magnitude of 6.9, the earthquake caused an estimated total of US$10 billion (1980 values) in damage. In 1976, the magnitude 6.5 Friuli Earthquake struck the Alpine region of northeastern Italy, causing an estimated US$2.6 billion in damage (1976 values). This was the largest magnitude earthquake to hit northern Italy since 1887. The southern Calabria-Sicily region experienced one of the most damaging events in Italy’s recorded history in 1908, when the magnitude 7.3 Messina Earthquake struck, destroying up to 98% of the buildings in nearby cities.

Underwriting and managing earthquake insurance in this environment is a complex undertaking. Since 1997, the RMS® Italy Earthquake Model has helped insurers and reinsurers in this task by quantifying risk across various regions and a wide variety of construction types. The 2007 update of the RMS® Italy Earthquake Model migrates the Italy earthquake model into the broader framework of the RMS® Europe Earthquake Model to provide European insurers and reinsurers a consistent platform for earthquake risk assessment.

Model Highlights

	Stochastic database of earthquake events based on long recorded history of earthquakes in Europe. The full Europe Earthquake model includes over 45,000 simulated earthquakes
	High-resolution hazard modeling using the RMS variable resolution grid (VRG); includes databases for soil type, liquefaction and landslide susceptibility
	RMS third-generation earthquake modeling incorporating spectral response approach to building damage calculations
	Vulnerability functions capturing the unique behaviour of European building stock, including regional variations with building inventory data in case of unknown primary characteristics
	Building vulnerability curves developed through RMS research and collaboration with local experts
	Broad suite of secondary modifiers to help refine building damage assessment

Geographic Scope

All of Italy, including Sicily, Sardinia, San Marino, and Vatican City

Exposure Data Resolution

Data input supported at the following levels of resolution: latitude/longitude, street address, street name, postal code, city, Communa, province, region, and CRESTA zone

Related Models

Industrial Facilities model

HailCalc Europe

Hail produced by severe thunderstorms can cause severe, though localized, levels of damage in Europe, which is usually covered in standard windstorm policies, and therefore contributes significantly to the average annual loss (AAL) in this region. For some countries, hail losses can total up to over one third of the AAL from winter windstorms.

Much of central Europe is prone to severe thunderstorms during May to September, particularly around the Alpine foreland. The risk from this peril is highlighted by the 1984 Munich Hailstorm, which caused more than €1.5 billion damage in today’s values, around half of which was insured. Since then, insurance penetration increased and property values at risk have continued to rise, thus the expected losses from a similar event today would be much higher. However, while such intense hailstorms can occur every two to three years, the narrow footprint of severe damage means that the probability of such an event passing over a densely urbanized area and generating large insured loss is much lower.

HailCalc Europe is designed for portfolio EP analysis and reinsurance purchasing. The software originated in 2001 from research into the relationship between radar measurements and hail losses in Switzerland. A unique method takes hail kinetic energy derived from radar data and translates this into hailstorm footprints. Hail kinetic energy represents the time-integrated volume of hailfall in a particular location that can be directly related to the intensity and extent of hail damage. The original researchers collaborated with Swiss Re to extend the methodology across Europe, blending this innovative methodology with Swiss Re’s wealth of expertise and large volume of claims data to derive damage functions. A catalog of nearly 2,000 historical hailstorms was developed from operational radar data and combined with additional climatological and meteorological data to generate the stochastic event set on a 3 km-x-3 km grid spanning eight European countries.

RMS’ acquisition of HailCalc Europe complements the latest RMS Europe Windstorm Model, which includes a separate component to model wind-related losses from severe thunderstorms in addition to winterstorms. The combination of the two models will uniquely enable RMS clients to assess their risk from key sources of windstorm loss. Regionally-based insurance companies with business in hail-exposed areas will particularly benefit from the addition of severe thunderstorm loss modeling to the long-established RMS suite of peril models. The model will also be highly valuable for auto insurers, as auto claims can contribute to up to 70% of hail damages.

Model Highlights

	Stochastic event set generated from a comprehensive database of 1,800 historical hailstorms derived through complex processing of operational radar
	Hazard and risk modeling are carried out at high resolution on a 3 km-by-3 km grid and allow correlation of risk across multiple countries
	Vulnerability model development work carried out in partnership with Swiss Re, providing access to inventory information, insured exposure and claims data
	Models leading lines of business for each country: Residential, Commercial, Industrial, Agricultural and Auto
	Validated using detailed loss data from recent events

Geographic Scope

HailCalc Europe covers the following eight countries: Austria, Belgium, France, Germany, Italy, Luxembourg, Netherlands, and Switzerland.

Exposure Data Resolution

HailCalc Europe incorporates a different geocoding technique than that used by the RMS models. For all modeled countries, only exposure data aggregated to CRESTA - or country-level is supported. During data import, HailCalc Europe disaggregates the imported exposure onto a 3 km-by-3 km grid using inventory maps developed with Swiss Re. The loss calculations are performed at this grid level resolution and are re-aggregated for output.

RMS provides HailCalc Europe as a standalone software platform, separate from RiskLink^® and RiskBrowser^®, in its original format without any modifications. As part of the version 7.0 release in Spring 2007, functionality will be included to allow users to import HailCalc Europe losses into RiskLink to group hail losses with any other RiskLink modeled losses and apply required treaties. Future RMS research and development will focus on upgrading the peril model to enable location-level loss modeling and fully integrate the model into RiskLink and RiskBrowser.