Guillermo Franco, AIR senior engineer, said, "While damage from this event will likely be between two and three billion Euros given the scale of destruction, insured losses will be limited due to the low penetration of earthquake insurance in the region."

Yesterday, in an interview, he said estimates for the percentage of homes insured in Italy are about 5 percent, with commercial coverage about 35 percent--and takeup in the quake region was probably less.

"Damage to commercial properties will likely drive the insured losses, since a higher proportion of businesses tend to purchase earthquake insurance," said Mr. Franco.

AIR noted that a 6.0 quake in 1997 in the Umbria-Marche region about 60 miles from the latest event caused an estimated $4.5 billion in economic losses of which less than 2 percent was insured, according to AXCO Insurance Information Services.

"While the geographic extent of damage was fairly limited--to L'Aquila and nearby towns--the severity of damage within the affected area was high," said Mr. Franco.

He remarked, "Research published in 2005 points at the possibility of ground motion amplification in the city of L'Aquila due to the existence of an underlying sedimentary basin. Once ground motion records become available, we'll be able to discern whether this effect might have played a significant role in the destruction witnessed in this event."

An estimated 15,000 buildings were damaged in Monday's quake and tens of thousands of people have had to leave their homes while inspections are underway. In the nearby village of Onna, virtually every home was damaged or destroyed. Similar levels of destruction were reported in the nearby village of Tempera, said AIR.

Mr. Franco said "the historic center of L'Aquila has been devastated and, as expected, damage to unreinforced masonry (URM) buildings is severe. Narrow streets have been made impassable by the rubble of collapsed URM houses--many of them more than 100 years old.

"However, damage was not restricted to the oldest structures. Many reinforced concrete (RC) frame buildings dating from the 1960s and 1970s--and thus predating seismic code provisions--suffered heavy damage as well."

Among the buildings from the 1960s 1970s period, he said, the variability of damage is reported to be high, with one severely damaged next to another which appears to be intact. But, Mr. Franco noted that even newer RC frame buildings also suffered damage, and many exhibit gaping shear cracks in their walls."

AIR said that building codes were updated in Italy following a 1980 quake that killed 3,000 persons in Irpinia and these codes were updated in early 2008 to reflect the latest seismic hazard map published by Italy's National Institute of Geophysics and Volcanology (INGV).

Meanwhile, aftershocks continue to rumble through the Abruzzo area, including a magnitude 5.6 that struck the ancient mountain-top village of Fossa. The initial earthquake on Monday likely weakened some buildings, making them more vulnerable to the aftershocks, according to the modeling firm.

AIR said it will be sending a reconnaissance team to the affected area once search and rescue operations have ceased.

Another catastrophe modeling firm, Newark, Calif.-based Risk Management Solutions said it would not be releasing a loss estimate for the quake , "due to the uncertainty in actual insurance penetration and coverage in this region, although we do expect insurance losses to be low."

The firm said large insured loss events in Italy are driven by losses to commercial or industrial properties and "Previous events nearby show that the total insured damage to be typically less than 5 percent of the total damage."