Spain Quake Covered By State Insurer; Claims Around $100M

NU Online News Service, May 13, 12:18 p.m. EDT

Claims from the earthquake that shocked the Murcia region of Spain on Wednesday will cost the state owned insurer around $100 million, risk-modeling firm EQECAT says.

According to the three major catastrophe modeling firms—EQECAT, AIR Worldwide and Risk Management Solutions—losses from the quake will be covered by Consorcio de Compensacion de Seguros, a state-guarantee insurer. Coverage for such events is mandatory in Spain, the modelers say.

EQECAT says based on current information, insured losses are not expected to exceed $100 million, net of deductible. The coverage is mandatory for property insurance except for agricultural property, construction and erection risks, both EQECAT and AIR note.

AIR says premium for the coverage “is generated through a tax paid by insurers and covers all direct physical losses from natural events deemed ‘abnormal’ by the government.”   

Two earthquakes registering 5.1 and 4.5 magnitude struck the southeastern section of Spain in the early evening in what is consider a highly active earthquake region. The main shock occurred at 6:47 local time, two hours after the 4.5 event. Reports vary on the number of deaths, ranging from 8 to 10.

The most heavily impacted area was the town of Lorca where many historic buildings dating back to the 16^th century were heavily damaged.

John Alarcon, senior associate at AIR Worldwide says in a statement that the type of masonry buildings from that era has “limited ability to resist earthquake lateral loads” and suffered cracking and wall collapse. AIR says local authorities are reporting that 80 percent of the town’s buildings were damaged.

Surrounding towns did not escape damage, AIR notes, including Totana, Albacete and Velez-Rubio in Almeria.

The Associated Press says this is the deadliest quake to strike Spain since 1956 when 12 people died in a quake that rocked the Granada region.