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Jun 5, 2018 - Keywords: vulnerability; insurance; natural disasters; Italy ... where the frequency of environmental disasters has been raising significantly3.

International Journal of

Financial Studies Article

Vulnerability to Natural Disasters and Insurance: Insights from the Italian Case Francesco De Masi and Donatella Porrini *

ID

Dipartimento di Scienze dell’Economia, Università del Salento, Via per Monteroni, 73100 Lecce, Italy; [email protected] * Correspondence: [email protected]; Tel.: +39-0832-29-8776 Received: 5 January 2018; Accepted: 24 May 2018; Published: 5 June 2018

 

Abstract: The aim of this article is to analyze the concept of “vulnerability” to natural disasters, focusing on the specific case of the Italian earthquake insurance. In this sense, we examine in detail the vulnerability definition and its relevance for citizens and for insurance companies. Then we investigate the Italian insurance market characterized by a very low penetration of natural disasters insurance and the potential effects of a recent Government initiative called “Sisma Bonus”. The idea is that its technical content, in terms of a specific definition of vulnerability, may contribute to developing a better consciousness about vulnerability and a larger diffusion of insurance products. Keywords: vulnerability; insurance; natural disasters; Italy JEL Classification: G22; G28; H24; Q54

1. Introduction At a global level, in 2016 there were 327 disaster events1 , and this value reflects the tendency of a gradual but significant increase in the number of catastrophes in the last 40 years2 . At a European level, the European Environment Agency (EEA) outlines a dramatic situation where the frequency of environmental disasters has been raising significantly3 . The events, considered by the Agency, are natural calamities such as earthquakes, seaquakes, landslides, floods; that is to say a set of natural phenomena different from each other, which occurred in different regions, according to the environmental characteristics. For this reason, there has been an increase in the exposition of the territory and the economy towards disaster risks and the role of insurance products is becoming more and more relevant, because they offer an ex-post compensation for possible damages, but also because they incentivize the ex-ante arrangement of appropriate precautionary measures, the so-called risk mitigation (Porrini and Schwarze 2014). In this respect, Italy is a country particularly exposed towards catastrophic events, based on the configuration of the land, but at the same time is a country where there is an insufficient penetration of insurance policies. The historical analysis confirms this consideration: only in the last 150 years, a seismic disaster occurred on average every 4–5 years; in the same period, more than 2800 landslides and a particular elevated number of floods occurred in the country (Guidobboni and Valensise 2013).

1 2 3

Swiss Re Institute (2017). Swiss Re (2017). European Environment Agency (2010).

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In particular, focusing the attention on the most recent occurrences, two earthquakes have hit Italy. The first refers to May 2012 when two seismic swarms in Emilia Romagna caused damages for about 13.3 billion of Euros and insurance losses of around 1.24 billion Euro (corresponding to a percentage near the 9.3% of the total economic losses). The second, instead, refers to the catastrophic events in the Center of the Country starting in August 2016 in the area of Amatrice, Accumuli and Norcia. In this case the economic damages were about 7.1 billion Euro, while the insurance losses were around 106.5 million Euro (corresponding to only the 1.5% of the total economic losses)4 . These events show the high vulnerability of the national territory, of the historical heritage and the architectural buildings. The high amount of economic losses attests the described scenario and underlines the necessity of the definition of a correct contrast strategy. From these first reflections, also emerges the limited recourse to insurance as a financial tool to cover the damages derived from natural disasters. This is in connection with the fact that in Italy, it is generally expected that, if a certain natural disaster happened, the State will intervene punctually with assistance measures aimed at the determination of aids to the population involved and thereafter the distribution of public economic resources for the reconstruction (Porrini 2016). This article therefore intends to investigate the reasons of this condition, trying to examine in detail the vulnerability concept and its relevance for citizens and for insurance companies. In this sense, the next section provides an in-depth study about the vulnerability concept, by analyzing the theoretical and applied aspects. The second focuses on the relevance of that concept and on its influence on the demand and supply of insurance policies, focusing on the Italian scenario. Finally, the third and last section considers the Italian Government intervention that introduced the so called “Sisma Bonus” with the goal of building a national plan of prevention of seismic events. 2. Vulnerability: Theoretical and Applied Aspects Referring to the traditional definition of the risk concept5 , we intend to focus on a specific element: Vulnerability. Around it, the evaluations here realised try to analyse all the aspects directly related, in order to contribute to the existing body of the knowledge. “Vulnerability” can be defined as the characteristic of a single person or a group that influence their capacity to anticipate, cope with, resist and recover from the impact of a natural hazard (an extreme natural event or process) (Wisner et al. 2003). In addition to people, it is also necessary to extend the concept to buildings and infrastructures. In this case, vulnerability expresses the percentage of the economic value that can be impaired from the occurrence of the considered event (Canuti and Casagli 1994). Furthermore the specific features of the territory and its characteristics are important, because they enable to calculate the vulnerability also from a geological point of view. The three differ definitions, quoted above, are represented in Figure 1. Figure 1 sums up the three main aspects that we have to consider in order to provide a complete and exhaustive definition of the vulnerability concept: The social aspect, the economic aspect, and the physical and environmental aspect. These three elements particularly interconnected one with one another, stemming from the descriptions previously carried out. Consequently, in order to reach a complete and true understanding, it is necessary to adopt an interdisciplinary approach that allows to reach an overall view.

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PERILS (2017). Following the traditional definition: Risk = Hazard × Exposure × Vulnerability “Hazard” refers to the probability that a specific event, potentially dangerous, with a high intensity, can occur in a specific area, in a specific time; “exposure” refers to the exposed elements, that is to say population, properties, economical activities, public services, environmental and cultural goods. It can be identified through the number of units (for example the number of monuments), the economic value or the percentage of expected loss; “vulnerability” will be detailed descripted in this section. (Canuti and Casagli 1994; Einstein 1988; Fell 1994; Varnes 1984).

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SOCIAL ASPECT

VULNERABILITY

PHYSICAL AND ENVIRONMEN TAL ASPECT

ECONOMIC ASPECT

Figure Vulnerability aspects. Figure 1. 1. Vulnerability aspects.

In fact, vulnerability concept could be be very different duedue to the fact, the thedefinitions definitionsthat thatstem stemfrom fromthe the vulnerability concept could very different to extent of the and and of the of view fromfrom which it can the extent of elements the elements of points the points of view which it be cananalyzed. be analyzed. For this reason, it is important to remember one one of of the the best best well-known well-known definitions. definitions. It is the one of the UNISDR (United Nations Office for Disaster Risk Reduction) that defines vulnerability as “the conditions determined by physical, social, economic and environmental factors or process, which which increase the susceptibility susceptibility of of aa community community to to the the impact impact of of hazards” hazards”66. In reality, because it describes thethe conditions of reality,this thiskind kindofofdefinitions definitionsidentifies identifiesa astatic staticsituation, situation, because it describes conditions aofpopulation, an immovable property or natural resource. As a function of corrective actions, actions, indeed, a population, an immovable property or natural resource. As a function of corrective aindeed, lower level of vulnerability is possible. Therefore, a dynamic profile ofprofile the vulnerability concept a lower level of vulnerability is possible. Therefore, a dynamic of the vulnerability emerges. In this field, Nations Development vulnerability as concept emerges. In the thisUNDP field, (United the UNDP (United Nations Programme) Developmentdefines Programme) defines avulnerability human condition process resultingorfrom physical, social,from economic and environmental factors, as a or human condition process resulting physical, social, economic and 7 . impact of a environmental factors, which determine thedamage likelihood ofofdamage the which determine the likelihood and scale of fromand the scale impact a givenfrom hazard 7 givenInhazard . this regard, we may find a starting point in the World Conference on Natural Disaster Reduction In this Japan, regard,May we 1994), may find a the starting point for in an theimprovement World Conference on Natural Disaster (Yokohama, where guidelines in this sense were indicated. Reduction (Yokohama, May 1994), where themainly guidelines forspreading an improvement in this sense were The principal elements, Japan, that were recalled, referred to the of a culture of prevention indicated. Theawareness principal elements, that were recalled, to authorities the spreading of institutions a culture of and a better towards these themes fromreferred private mainly citizens, and preventionYokohama and a better awareness towards these themes from private citizens, authorities and (so-called Strategy). institutions Yokohama Strategy). In order(so-called to reach this goal, there are essentially two fields that require more efforts: the definition In ordercontrast to reach policies this goal,towards there are essentially two fields that require more efforts:of the definition of adequate catastrophic events and a punctual regulation the rules in of adequate contrast policies towardsand catastrophic events and a punctual regulation of the rules in terms of respect for the environment the construction of buildings and infrastructures. In this terms of respect for the environment and the construction of buildings and infrastructures. In this perspective the insurance solution represents a useful strategy to be adopted because it allows perspective the insurance solution a useful strategy to be adopted because it allows obtaining to obtain advantages both inrepresents a perspective of damages coverage, but also in the capability of obtaining to obtain advantagesofboth a perspective of damages coverage, but also in the incentivizing the construction newinbuildings and the realization of reinforcing works incapability line with of incentivizing the construction of new buildings theall, realization of reinforcing in line prevention regulation. It is necessary, therefore, to act,and above in these fields in order toworks improve the with prevention national system. regulation. It is necessary, therefore, to act, above all, in these fields in order to improve the national system. 6 7

6 7

UNISDR (2004). UNDP (2014).

UNISDR (2004). UNDP (2014).

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3. Vulnerability and the Role of Insurances The definition of the vulnerability concept is fundamental in the study and in-depth analysis of insurance models. It represents a key element in the determination and development of a system that should be able to efficiently contrast the environmental disasters damages. These considerations are true not only for citizens who seek an insurance policy for these events, but also for the insurance companies that have to take into account them in order to set fair premiums. Both points of view aim for the determination of a specific territory’s riskiness and for the appropriateness of the building regulations adopted for the construction. In other words, what is important to focus on is the capability of a specific element (population, buildings, infrastructure, activities, and natural resources) to withstand the effects depending on the event intensity. 3.1. How Vulnerability Influences the Demand of Insurance Products: The Italian Case Focusing on the Italian scenario, the catastrophic events that have hit the Center of Italy since the August 2016, once again have drawn the attention to the extreme vulnerability of national territory, highlighting that the Italian cultural heritage is not able to withstand an earthquake, even it is not particularly high intensity. Although the basic ideas are similar, the relevance of these considerations is different for insurance companies or for private citizens. Starting from the latter, according to a recent market research of GSK Eurisko the majority of Italian families does not think they are particularly exposed to the risk of catastrophic events8 . In particular, data show the following situation:

• • •

17% believe that their own homes are exposed to catastrophic risks; 63% believe that their own homes are not exposed to catastrophic risks; 20% do not know.

This research shows that about the 83% of the population does not admit they are part of a segment characterized by a particularly high exposition and, for this reason, does not think necessary to purchase an insurance policy that covers a risk that is not considered real. The direct consequence of those considerations is that only one house out of 50 in Italy is covered by an insurance policy against the natural disasters risk, earthquake, flood or both9 . These data must be associated with a substantial complexity and uncertainty relating to the construction materials used and their deterioration level. These are evaluations that draw greatly on buildings vulnerability, above all if they are quite old (D’Ayala et al. 2006). Furthermore, we have also to consider the consciousness that if a natural disaster comes true, the Government reply would be prompt in order to take the necessary steps to help the population affected. This attitude is widely spread in Italy but, indeed, when faced with a catastrophic event, the Government sets different measures according to the different situations. The recent events in the Center of Italy, where there have been several and repeated seismic activities in Amatrice, Accumuli and Norcia are emblematic. An approach close to the one described was adopted after these events. Analyzing other environmental disasters, we can see how this kind of contrast strategy represents the historical way the Italian Governments has faced these situations, implementing ex-post public interventions. This kind of interventions is not considered compulsory by law, but is, instead, recognized by the Institutions, which must operate to contrast the natural disasters damages at a national level. Currently, it is a consolidated procedure through which the Government, after every natural disaster, issues specific measures, above all taxes, in order to raise economic funds to carry out aid, to reactivate

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Eurisko (2017). Ania (2017).

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traffic structures, to indemnify theREVIEW damages suffered by public Authorities, private citizens and firms Int. J. Financial Stud. 2018, 6, x FOR PEER 5 of 12 (Porrini 2010). The described scenario has contributed to a limited diffusion of private solutions and it is an evaluation necessary in order to examine the origin of the 83% of the population who do not believe they are exposed to natural disasters. Furthermore, there is another relevant element to be be evaluated. evaluated. The penetration penetration of insurance insurance coverage coverage for catastrophic catastrophic events events is is very very limited: limited: 95% of policies do not show any insurance extension, extension, as as we we can can see see in in Table Table1.1. Table Table 1. 1. Policies extension extension to to natural natural disasters. disasters.

Extension to Natural Policies Distribution % Insurance Values Distribution % Insurance Values Extension to Policies Number Policies Number Disasters Number (mln ofof Euro) Policies Number (mln Euro) Natural Disasters No Extension 8,253,990 95.0% 3,206,693 No Extension 8,253,990 95.0% 3,206,693 Only earthquake risk 188,364 2.2% 74,061 Only earthquake risk 188,364 2.2% 74,061 Only flood risk 184,963 2.1% 39,030 Only flood risk 184,963 2.1% 39,030 Both 62,074 0.7%0.7% 23,793 Both 62,074 23,793 TOTAL 8,689,391 100.0% 3,343,576 TOTAL 8,689,391 100.0% 3,343,576 Our of data datafrom: from:Ania Ania (2017). Ourelaboration elaboration of (2017).

Distribution % Distribution % Insurance InsuranceValues Values 95.9% 95.9% 2.2% 2.2% 1.2% 1.2% 0.7% 0.7% 100.0% 100.0%

Table 11 shows shows in in the the detail detail the the limited limited extension extension to to natural natural disasters disasters of of insurance insurance policies policies in in the the Table market, according to the data spread on 30 September 2016. Therefore the data underline the limited market, according to the data spread on 30 September 2016. Therefore the data underline the limited consciousness of of citizens citizens about about their their vulnerability vulnerability and and their their exposition exposition to to these these events: events: to to strengthen strengthen consciousness this argument, argument, it it is is estimated estimated that that only only 610,000 610,000 houses houses out out of of 31.2 31.2 million million (according (according to to the the latest latest data data this published by ISTAT—The Italian National Institute of Statistics) are insured, more or less 2%. published by ISTAT—The Italian National Institute of Statistics) are insured, more or less 2%. These data data are are in in clear clear contrast contrast with with the the Italian Italian territory territory configuration, configuration, aa country country historically historically These exposed towards towards these these events. events. In of Italian Italian houses houses are are exposed In particular, particular, itit is is clear clear that that about about the the 78% 78% of characterized by a high or a medium-high risk with reference to earthquake and hydrogeological characterized by a high or a medium-high risk with reference to earthquake and hydrogeological phenomena (Farina (Farina 2017). 2017). phenomena For this reason, citizens is not justified in terms of exposition and For this reason, the thelimited limitedconsciousness consciousnessofof citizens is not justified in terms of exposition vulnerability. However, the reasons we must consider here are: The limited insurance culture; the and vulnerability. However, the reasons we must consider here are: The limited insurance culture; widespread certainty about thethe existence ofof a kind ofof“certain the widespread certainty about existence a kind “certaincompensation” compensation”from fromthe theGovernment, Government, and the underestimation of the risk perception because of the rarity of these events, even though they they and the underestimation of the risk perception because of the rarity of these events, even though are of high intensity (Ronchi 2017). are of high intensity (Ronchi 2017). 3.2. How How Vulnerability Vulnerability Influences Influences the the Supply Supply of of Insurance Insurance Products Products 3.2. On the the contrary, contrary,the theimportance importanceattached attachedtotovulnerability vulnerabilityconcept concept the insurance companies On byby the insurance companies is is different. When they implement actuarial models to supply their products, they deeply analyze the different. When they implement actuarial models to supply their products, they deeply analyze the territory and and the the buildings buildings features, features, as as well well as as their their exposition exposition towards towardsthese theseevents. events. territory The main main phases phases and and activities activities that that each each company company follows follows in in this this sector sector can can be be summarized summarized in in The four key points (Weymann 2015), as in Figure 2. four key points (Weymann 2015), as in Figure 2.

STEP 1

• RISK IDENTIFICATION

STEP 2

• EVALUATION

STEP 3

• PREVENTIVE STRATEGY

STEP 4

• RESIDUAL RISK MANAGEMENT Figure 2. Evaluation steps. Figure 2. Evaluation steps.

The first element the companies need to consider is the risk identification they have to cover financially. A deep analysis about the event to be insured is necessary, finding all the specific characteristics.

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The first element the companies need to consider is the risk identification they have to cover financially. A deep analysis about the event to be insured is necessary, finding all the specific characteristics. The second is the evaluation in terms of repetitiveness and proportions of the damages that could derive. In this specific step, the vulnerability concept plays a very important role. Without an accurate study of these elements, the definition of a correct financial strategy will undoubtedly be misleading and barely available for adoption. All the insurance companies have to necessarily analyze in the detail the territorial features, in relation to the exposition towards the catastrophic event considered. These evaluations represent the starting point for the construction of a reliable model of reference and for the determination of an insurance product that can be offered to the market with success. The third and the fourth phases are mainly based on the identification of a preventive strategy and on the capability of being able to manage the residual risk. Under the first aspect, it is important to underline the relevance of insurance not only in an “ex-post” scenario in respect to the catastrophic event, but also in an “ex-ante” one trying, in other words, to incentivize the construction of new buildings or the fulfilment of consolidation works following the prevention regulation. Therefore this condition generally improves the exposition and the vulnerability to natural disasters. Specifically, insurance companies can provide economic incentives for risk prevention measures: By fixing the premium in function of the risk, they can motivate contractors to personally intervene in order to make their own properties less vulnerable10 . The analysis above is in line with what we have affirmed at the beginning of this paragraph about the different perception towards the vulnerability. In fact, vulnerability is a structural element for insurance companies differently from the citizens, who do not seem to have a correct knowledge of it. 3.3. The Evolution of the Vulnerability Concept in an Insurance Prospective The vulnerability concept, repeatedly quoted in this article, is a particularly broad topic and can be analyzed from different point of view in relation to the elements taken into consideration. A territory, for example, can be exposed to a certain event due to its morphological configuration, as well as the events that has occurred over the years. Focusing our attention on the earthquake risk in Italy, the above map (Figure 3) locates the area characterized by a seismic dangerousness along the national territory, with colors more or less intense in connection to more or less elevated exposition. Nevertheless it is important to underline that this is not sufficient to identify a high or low exposition of a certain building or a single house. Where, in fact, buildings were constructed following the prevention regulation that would secure the property from potential disasters, then it would be able to mitigate the vulnerability, despite any features of the territory. These are considerations that directly refer to the definition of vulnerability. With respect to the three profiles from which the vulnerability concept stems, the elements that contribute to its relevance are different. Looking at the territorial characteristics, focusing the attention on the aspect linked to the constructions quality, the main elements that influence the vulnerability can be summarized as the followings: planning errors, construction errors, materials age. These factors have a direct incidence to the exposition size of a certain building, because they draw on the resistance capability in respect to a catastrophic event. They can be identified in three different moments: I. II. III.

10

Pre-consolidation: Concentrating resources to make a consolidation intervention; Pre-event: Identifying the most vulnerable elements; Post-event: Localizing damages.

European Commission (2013).

be analyzed from different point of view in relation to the elements taken into consideration. A territory, for example, can be exposed to a certain event due to its morphological configuration, as well as the events that has occurred over the years. Focusing our attention on the earthquake risk in Italy, the above map (Figure 3) locates the area characterized by 2018, a seismic Int. J. Financial Stud. 6, 56 dangerousness along the national territory, with colors more or less intense 7 of 12 in connection to more or less elevated exposition.

10

Figure 3. Map of seismic dangerousness along the national territory. Source: Italian National Institute of Geophysics and Volcanology, April 2004. European Commission (2013).

4. The Italian Case of “Sisma Bonus” The Italian Government plans to move in the direction to stimulate the citizens’ consciousness about their exposition, as well as reducing buildings vulnerability. Focusing carefully on this new strategy, it has recently approved, in the “Legge di Stabilità 2017”11 , a national plan for the evaluation and classification of the buildings seismic exposition and a relative prevention plan, with the goal of improving risk mitigation. It is an action particularly relevant because it fits perfectly in a scenario to incentivize a higher perception and consciousness of its own vulnerability, given that measuring vulnerability, indeed, is a fundamental passage for an effective risk reduction and for the promotion of a culture of disaster resilience (Birkmann 2006). In the Ministerial Decree, all the characteristics of the new system are described in detail: the guidelines, that allow for a classification of buildings according to the seismic risk, are highlighted, as well as the way to certify the efficiency of the interventions realized by qualified professionals. Along with this measure, there is a system of tax concession that allows spreading it in a fast and effective way. It is composed by a set of tax allowances that are recognized in the case that, after having carried out adjustments on the house, there is an improvement of one, two or more seismic risk classes. Moreover, the legislative regulation provides for a system based on the identification of eight risk classes. Placed in ascending order, they are indicated as follows: A+ , A, B, C, D, E, F, G. The definition of the risk class, that marks a home, is carried out through two methods alternatively: the conventional and the simplified method. The first is a universal method, that is to a say a method that can be used with all the construction typologies, differently from the second that can be used only in case of masonry construction.

11

Ministerial Decree number 65, 07/03/2017.

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Both methods allow for a preventive evaluation of its current class, as well as a further analysis of the new class determination, based on possible adaptation works. The selection of the correct class of affiliation needs accurate evaluations. A first parameter to consider is the PAM (“Perdita Annua Media attesa”—expected average annual loss), that is to say the annual allocation of the costs for the damages deriving from future seismic phenomena, expressed as a percentage12 . Referring to the conventional method, a first classification takes place regarding to the value of the PAM, in relation to the parameters indicated in Table 2. Table 2. PAM Index. Expected Average Annual Loss (PAM)

PAM Class

PAM ≤ 0.50% 0.50% < PAM ≤ 1.0% 1.0% < PAM ≤ 1.5% 1.5% < PAM ≤ 2.5% 2.5% < PAM ≤ 3.5% 3.5% < PAM ≤ 4.5% 4.5% < PAM ≤ 7.5% 7.5% ≤ PAM

A+ PAM APAM BPAM CPAM DPAM EPAM FPAM GPAM

Source: Ministerial Decree number 65, 07/03/2017.

Alongside this evaluation, another parameter is usually adopted, namely the IS-V13 security index of each home, in relation to which it is possible to obtain a further classification. As Table 3 shows, this index involves a building classification in seven risk classes, differently from the PAM parameter that considers eight classes. Table 3. Security index. SECURITY INDEX

IS-V CLASS

100% < IS-V 80% ≤ IS-V < 100% 60% ≤ IS-V < 80% 45% ≤ IS-V < 60% 30% ≤ IS-V < 45% 15% ≤ IS-V < 30% IS-V ≤ 15%

A+ IS-V AIS-V BIS-V CIS-V DIS-V EIS-V FIS-V

Source: Ministerial Decree number 65, 07/03/2017.

In the simplified method case, the determination of the risk classification is based on the European Macro seismic Scale (EMS), that allows for the identification of six different classes of vulnerability, according to the masonry structure typology14 . The Table 4 shows for each structure, the associated vulnerability class. In particular, the circle indicates the most reliable value, compared to the continuous and dashed lines which respectively refer to probable and less probable values. Thus a range is established in which the class of belonging is determined, for each individual structure.

12 13

14

The elements that are considered for the calculation of the expected average annual loss are direct economic losses and the annual average frequency of exceeding the events that seriously damage the building in question. The index IS-V, also known as Risk Index, is determined through relevant and close evaluations, realized by specified experts, that allow to identify the value of PGA (Peak ground acceleration, that is equal to the maximum ground acceleration that occurred during earthquake shaking at a location), the place where there is the building and the construction conditions. Based on the scale EMS-98. See European Council (1998).

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The evaluation of a certain level of dispersion is based on the status of the structure, as well as on the quality of the construction, which can affect the vulnerability in a more or less elevated way. Here we refer to a series of considerations of a technical-construction nature, which require an accurate analysis carried out by experts who analyze the state of the buildings. Int. 2018, 6, REVIEW 999of Int. J.Stud. Financial Stud. 2018, 6, x FOR PEER REVIEW Int. Financial Stud. 2018, 6,6,xxxFOR FOR PEER REVIEW of 12 Int.J.J.J.Financial Financial Stud. 2018, FORPEER PEER REVIEW of12 12 9 of 12 Int. J. Financial Stud. 2018, x FOR PEER REVIEW Int. J. Financial Stud. 2018, 6, 6, x FOR PEER REVIEW Int. J. Financial Stud. 2018, 6, x FOR PEER REVIEW

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Table class attribution for masonry constructions. Table 4. Vulnerability class attribution masonry constructions. Table Vulnerability class attribution for masonry constructions. Table 4.Vulnerability Vulnerability class attribution for masonry constructions. Table 4.4.4. Vulnerability class attribution forfor masonry constructions. Table 4. Vulnerability class attribution for masonry constructions. Table 4. Vulnerability class attribution for masonry constructions. Table 4. Vulnerability class attribution for masonry constructions.

Vulnerability Class Vulnerability Vulnerability Class Vulnerability Class Vulnerability Class Class Vulnerability Class Vulnerability VulnerabilityClass Class V V V V 6 5 4 3 V6 V V5 V V4 V V3V V2V V1 V V V V6V 2 2 1 1 V5V V4V V3V V22V V11V Structure Typology V 66 6 55 5 44 4 33 3 V V V V V V44 V1 Structure Typology V V3V3 V2 V2 V2 V1 V1 6 V6 5V5 (=A EMS) (=B EMS) (=C EMS) (=D EMS) (=E EMS) (=A EMS) (=A EMS ) (=B EMS ) (=C EMS ) (=D EMS ) (=E EMS ) (=A EMS) ) (=A EMS ) (=B EMS ) (=C EMS ) (=D EMS ) (=E EMS ) (=A EMS ) (=A EMS ) (=B EMS ) (=C EMS ) (=D EMS ) (=E EMS ) (=A EMS ) (=A EMS ) (=B EMS ) (=C EMS ) (=D EMS ) (=E EMS ) (=A EMS ) (=A ) (=B ) (=C ) (=D ) (=E ) (=A (=AEMS EMS (=BEMS )EMS)(=C(=C EMS)EMS (=DEMS) EMS (=A(=A EMS) EMS EMS (=A EMS) (=B EMS) (=DEMS)(=EEMS (=E)EMS)EMS EMS) Masonry of stone without Masonry of stone without Masonry of stone without Masonry ofof stone without Masonry stone without Masonry of stone without Masonry of stone Masonry of stone without binder (dry) without binder (dry)(dry) binder (dry) binder (dry) binder (dry)binder binder (dry) binder (dry) Masonry of unbacked Masonry of unbacked Masonry of unbacked Masonry ofof unbacked Masonry unbacked Masonry of unbacked Masonry of unbacked Masonry of unbacked MASONRY bricks (adobe) bricks (adobe) bricks (adobe) bricks (adobe) bricks (adobe) bricks (adobe) bricks (adobe) bricks (adobe) Masonry of hewn stone Masonry of hewn Masonry of hewn stone Masonry ofof hewn stone Masonry hewn stone stone Masonry of hewn stone Masonry of hewn stone Structure Typology Structure Typology Structure Typology Structure Typology Structure Typology Structure Typology

MASONRY

MASONRY MASONRY MASONRY MASONRY MASONRY MASONRY

Masonry of hewn stone

Masonry of massive stone Masonry of massive Masonry of massive stone Masonry ofof massive stone Masonry massive stone stone Masonry of massive stone Masonry ofmassive massive Masonry of stone for monumental for monumental for monumental for monumental for monumental stone for monumental for monumental for monumental constructions constructions constructions constructions constructions constructions constructions constructions Masonry of bricks Masonry ofand bricks Masonry of bricks and Masonry ofof bricks and Masonry bricks and Masonry of bricks and and Masonry of bricks and Masonry of bricks and treated stone treated stone treated stone treated stone treated stone treatedstone stone treated treated stone Masonry of bricks Masonry ofand bricks Masonry of bricks and Masonry ofof bricks and Masonry bricks and and Masonry of bricks and Masonry ofbricks bricks and Masonry of and floors of high rigidness floors of high rigidness floors of high rigidness floors of high rigidness floors of high rigidness floors of high rigidness floors of high rigidness floors of high rigidness Reinforced and/or confined Reinforced and/or confined Reinforced and/or confined Reinforced and/or confined Reinforced and/or confined Reinforced and/or confined Reinforced Reinforcedand/or and/or confined masonry masonry masonry masonry masonry masonry confined masonry masonry Source: Ministerial Decree number 65, 07/03/2017.

Source: Ministerial Decree number 65, 07/03/2017. Source: Ministerial Decree number 65, 07/03/2017. Source: Ministerial Decree number 65, 07/03/2017. Source: Ministerial Decree number 65, 07/03/2017. Source: Ministerial Decree number 65, 07/03/2017. Source: Ministerial Decree number 65, Source: Ministerial Decree number 65,07/03/2017. 07/03/2017.

The elements, on which examination is on, are referred to both external and internal The elements, onthe which the examination is focused on, are referred to both external and internal The elements, on which the examination is focused on, are referred to both external and internal The elements, on which the examination isfocused focused on, are referred toto both external and internal The elements, on which the examination is focused on, are referred both external and internal The elements, on which the examination is focused on, are referred to both external and internal The elements, on which the examination is focused on, are referred to both external and internal structures. structures. structures. structures. structures. structures. The elements, on which the examination is focused on, are referred to both external and structures. Here we consider: Here we consider: Here we consider: Here we consider: Here we consider: Here we consider: Here we consider: internal structures. −−− − The resistance of fundamentals and their relative −resistance The resistance of fundamentals and their rigidity; relative rigidity; of fundamentals and their relative rigidity; The resistance ofof fundamentals and their relative rigidity; The resistance fundamentals and their relative rigidity; − The The resistance of fundamentals and their relative rigidity; Here consider: The resistance of fundamentals and their relative rigidity; −−− − −we the binder quality; −binder thequality; binder quality; the binder quality; the binder quality; − −the the binder quality; the binder quality;of wooden frame; presence −−− − the −possible the possible presence of wooden possible presence of wooden frame; the possible presence ofof wooden frame; presence wooden frame;frame; the possible − −the the possible presence of wooden frame; The of fundamentals and their relative rigidity; presence offor wooden frame; the possible −−− − resistance the material typology used the construction; − the material typology used for the construction; the material typology used for the construction; the material typology used for the construction; the material typology used for the construction; − − the the material typology used for for the the construction; material typology used construction; −−− −binder the constructive quality; the quality; −constructive the constructive quality; quality; the constructive quality; the constructive quality; − −the the constructive quality; the constructive quality; and/or the damaging; −−− − the −deterioration the deterioration and/or the damaging; the deterioration and/or the damaging; the deterioration and/or the damaging; and/or the damaging; the deterioration the presence of wooden frame; − possible the deterioration and/or the damaging; and/or the damaging; − the deterioration −−− − the wall height; − the wall height; the wall height; the wall height; the wall height; − − the the wallwall height; the typology used for the construction; height; that −−− −material every element can influence the construction evaluation. − other every other element that can influence the construction evaluation. other element that can influence the construction evaluation. every other element that can influence the construction evaluation. every other element that can influence the construction evaluation. − −every every other element that can influence the construction evaluation. every other element that can influence the construction evaluation. the constructive quality; With respect itititit to the extent of the considered ranges, in order to improve building classification With to respect to theof extent of the considered ranges, in order to improve building classification With respect the extent the considered ranges, in order to improve building classification With respect toto the extent of the considered ranges, inin order toto improve building classification With respect the extent of the considered ranges, order improve building classification With respect to the extent of the considered ranges, in order to improve building classification it it it With respect to the extent of the considered ranges, in order tohave improve building classification the deterioration and/or the damaging; use statistical data linked to seismic events that, if they to occur, might or might is common to is common to use statistical data linked to seismic events that, if they have to occur, might or might is common to use statistical data linked to seismic events that, if they have to occur, might or might isiscommon common totouse use statistical data linked totoseismic seismic events that, they have totooccur, occur, might orormight might usestatistical statisticaldata datalinked linkedto seismicevents eventsthat, that,ifififthey theyhave haveto occur,might mightor might commonto is statistical data linked to seismic events that, if they have to occur, might or an might isdamage commonthe to use not structure (Zuccaro 2004). As aaa aconsequence, ititititis necessary to adopt not damage the structure (Zuccaro 2004). As a consequence, it is necessary to adopt not damage the structure (Zuccaro 2004). As consequence, is necessary to adopt an not damage the structure (Zuccaro 2004). As consequence, is necessary to adopt an not damage the structure (Zuccaro 2004). As consequence, is necessary to adopt the wall height; not not damage the the structure (Zuccaro 2004). As As a consequence, it is to to adopt ananan an damage structure (Zuccaro 2004). a consequence, itofnecessary isthenecessary adopt interdisciplinary approach, combining statistical data with the evaluation structure typology, interdisciplinary approach, combining statistical data with the evaluation of the structure typology, interdisciplinary approach, combining statistical data with the evaluation of the structure typology, interdisciplinary approach, combining statistical data with the evaluation ofof the structure typology, interdisciplinary approach, combining statistical data with the evaluation the structure typology, interdisciplinary approach, combining statistical data with the evaluation of the structure typology, every other element that can influence the construction evaluation. interdisciplinary approach, combining statistical data with the evaluation of the structure typology, in order to obtain classification as detailed and real as possible. in order toaaaaobtain a classification as detailed and real as possible. in order to obtain classification as detailed and real as possible. inin order toto obtain classification asas detailed and real asas possible. order obtain aclassification classification detailed and real possible. in order to obtain as detailed and real as possible. inConcluding order to obtain a classification as detailed and real as possible. the analysis of evaluation and classification plans of buildings seismic exposition, Concluding the analysis of evaluation and classification of buildings seismic exposition, Concluding the analysis of evaluation and classification of buildings seismic exposition, Concluding the analysis ofof evaluation and classification plans ofplans buildings seismic exposition, Concluding the analysis evaluation and classification plans of buildings seismic exposition, Concluding the analysis of evaluation and classification plans of buildings seismic exposition, With respect toprovided the extent of the considered ranges, inplans order to building classification it is Concluding the analysis of evaluation and classification plans ofimprove buildings seismic exposition, the next step, by the new Decree, is based on the determination of aaa preventive plan, the next step, provided by the new Decree, is based on the determination of a preventive plan, the next step, provided by the new Decree, is based on the determination of preventive plan, the next step, provided by the new Decree, is based on the determination of preventive plan, the next step, provided by the new Decree, is based on the determination of a preventive plan, the the nextnext step, provided by by the the newnew Decree, is based on on the the determination of aofpreventive plan, step, provided Decree, is based determination a preventive plan, common to use statistical data linked to seismic events that, they to occur, might or might not evaluating every intervention that can be realized with the goal of obtaining risk mitigation and the evaluating every intervention that can be realized with the goal of have obtaining risk mitigation and the evaluating every intervention that can be realized with the goal of obtaining risk mitigation and the evaluating every intervention that can bebe realized with the goal ofif obtaining risk mitigation and the evaluating every intervention that can realized with the goal of obtaining risk mitigation and the evaluating every intervention that can be realized with the goal of obtaining risk mitigation and the evaluating every intervention that can be Every realized with the goal ofneeds obtaining risk mitigation and the determination of the new exposition class. realized activity to be submitted to an damage the structure (Zuccaro 2004). As a consequence, it is necessary to adopt an interdisciplinary determination of the new exposition class. Every realized activity needs to be submitted to an determination of the new exposition class. Every realized activity needs to be submitted to an determination of the new exposition class. Every realized activity needs to be submitted to an determinationofofthe thenew newexposition expositionclass. class.Every Everyrealized realizedactivity activityneeds needstotobebesubmitted submittedtotoanan determination determination of order the new expositionthe class. Everyand realized activity needs to be of submitted to an accurate analysis, in effectiveness in accurate analysis, into to evaluate the efficacy and the effectiveness inof terms of structural accurate analysis, in to evaluate the efficacy and the effectiveness in terms structural accurate analysis, ininorder order toorder evaluate the efficacy and the effectiveness ininterms terms of structural accurate analysis, order toevaluate evaluate theefficacy efficacy andthe the effectiveness terms ofstructural structural approach, combining statistical data with the evaluation of the structure typology, order to obtain a accurate analysis, in order to evaluate the efficacy and the effectiveness in terms of structural accurate analysis, in to order to evaluate the efficacy and the effectiveness in terms ofin structural improvements in relation the risk exposition. improvements in relation to the risk exposition. improvements in relation to the risk exposition. improvements inin relation toto the risk exposition. improvements relation the risk exposition. improvements in relation to the risk exposition. classification as detailed and real as possible. improvements in relation to the risk exposition. Here we need to consider that each home could require specific interventions, which compared Here we need to consider that each home could require specific interventions, which compared Here we need to consider that each home could require specific interventions, which compared Here we need toto consider that each home could require specific interventions, which compared Here we need consider that each home could require specific interventions, which compared Here we need to consider that each home could require specific interventions, which compared Here we need to consider that each home could require specific interventions, which compared Concluding the analysis ofthis evaluation and classification plans of buildings seismic exposition, the to others, may differ. For this reason, in order to identify the new classification of buildings, itititit is to others, may differ. For this reason, in order to identify the new classification of buildings, to others, may differ. For this reason, in order to identify the new classification of buildings, to others, may differ. For this reason, in order to identify the new classification of buildings, isis it is to others, may differ. For reason, in order to identify the new classification of buildings, to others, maymay differ. ForFor thisthis reason, in order to identify the the newnew classification of buildings, it is is to others, differ. reason, inthat order tocertify identify classification of buildings, it is necessary to develop a specific examination can the status pre and post intervention. In next step, provided bytothe new is based on the determination ofpre apost preventive plan, necessary develop aDecree, specific examination that can certify thepre status and post intervention. In necessary to develop aaa specific examination that can certify the status and post intervention. In necessary toto develop specific examination that can certify the status pre and post intervention. InIn evaluating necessary develop aspecific specific examination that can certify the status pre and intervention. necessary to develop examination that can certify the status pre and post intervention. In necessary to develop aevaluated specific examination that can certify the status pre and post intervention. In fact, each activity may be differently depending on the case in question. fact, each activity may be evaluated differently depending on the case in question.and the determination fact, each activity may be evaluated differently depending on the case in question. fact, each activity may bebe evaluated differently depending on the case inin question. fact, each activity may evaluated differently depending on the case question. every intervention that can be realized with the goal of obtaining risk mitigation fact, each activity may be evaluated differently depending on the case in question. fact, each activity may be evaluated differently depending on the case in question.

of the new exposition class. Every realized activity needs to be submitted to an accurate analysis, in order to evaluate the efficacy and the effectiveness in terms of structural improvements in relation to the risk exposition.

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Here we need to consider that each home could require specific interventions, which compared to others, may differ. For this reason, in order to identify the new classification of buildings, it is necessary to develop a specific examination that can certify the status pre and post intervention. In fact, each activity may be evaluated differently depending on the case in question. Similar devices are adopted for industrial warehouses. Also in this case, indeed, the set of rules quoted above can be used. However, there is a significant difference from houses that allows for the simplification and speeding up of the process. In the case of industrial warehouse is sufficient to carry out reinforcement works for the structure and to follow the indicated instructions in order to obtain a low exposition to seismic phenomena, without being necessary to carry out a preventive evaluation. As far as the evaluation and the certification of the realized interventions are concerned, the Decree states that these activities be carried out by qualified experts, all of whom have the required knowledge to do so. False declarations represent, in this contest, a relevant risk, because they can attest a building state that is different from the real condition. They are frauds that can cause extremely serious consequences, not only for the building’s inhabitants, but also for those in the nearby buildings. In order to avoid such events, a “permanent monitoring commission” is established in the Decree, at the “Consiglio Superiore dei Lavori Pubblici”. This Commission holds the role of supervisor with the task of examining and giving a judgment on the effectiveness of the prevention intervention, thus being able to validate or not the statements made by the experts. This whole series of interventions is accompanied by a deduction system, with a duration of 5 years. This is a method by which an amount relative to the interventions carried out is subtracted from taxes due to the State. In particular, the legislation presents a system of rewarding deductions. In other words, we can identify a model that allows for the evaluation of the amount of the deduction proportionally with respect to the intervention and the relative real improvement of the dwelling, in terms of risk classes. Going into detail to determine the amount of the deductions, it is necessary to differentiate two different types: on the one hand housing (first or second house) and productive buildings, on the other condominiums and common parts. The deduction amount in a proportional way respect to and to the relative real improvement of the home, in terms of risk classes. As far as the first case is concerned, there is a deduction of 70% with respect to an improvement of one risk class. If, after the intervention, there is an improvement of two or more classes, the deduction will be equal to 80%. With regard to the second hypothesis, there is a deduction of 75% for an improvement of a risk class, or one of 85% for two or more classes. The obtainment of such tax benefits can be only be achieved after the certification of the work carried out and their compliance with the project and with respect to the sector legislation. Furthermore, it is expected that these measures be applied for a spending amount not greater than 96,000 euro per property unit, per year; in the case of joint ownerships, therefore, the amount of 96,000 euro is to be multiplied by the number of property units that form the entire building. According to the Ministerial Decree, all the evaluations, quoted above, have to be reported in a certification, drawn up following the indications set in the enclosed B of the Decree. It is a conclusive operation that involves the completion of the entire procedure. It summarizes all the information linked to the evaluation of the works done, according to what has been declared by the expert instructed to certify the completed intervention. It serves to confirm the passage into a better risk class and, as a consequence, to allow owners to benefit from the relative tax concessions. This provision opens up new scenarios of intervention, with a view to developing and disseminating methods of ex-ante contrast to damage deriving from environmental disasters. The possibility of using tax concessions for improvements to the buildings is an important and significant risk mitigation strategy. The more relevant the latter may be the more spread the Government strategy will be.

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To these obvious but necessary considerations, we need to add more about the concrete possibility of seeing economic policies materialize, which, together with the provision described in detail, can allow Italy to take a considerable leap in quality in terms of exposure to seismic risk. 5. Conclusions The “Sisma Bonus” by Italian Government, as described in the article, is a relevant national plan of building prevention towards seismic events. Undoubtedly it is a measure that moves in the direction of a better citizens’ consciousness of these themes. In a country, like Italy, where citizens refer almost only to the Government after a natural disaster, this measure has a relevant role to play trying to develop a different culture. In this sense, it could be a “trailblazer” towards new interventions. Through this kind of interventions should be possible to spread a better consciousness about vulnerability given a detailed knowledge of all the elements that influence the exposition to natural catastrophes. The presence of tax deductions is fundamental to incentivize the interventions and allow a true application of these policy in Italy. In this prospective, this article outlines that the effects of the “Sisma Bonus” would be to facilitate the private action, in the perspective of providing insurance instruments and solutions that can make Italy a country that is able to efficiently contrast the damages deriving from natural disasters. Author Contributions: All authors have contributed significantly to this research in all phases and sections. Conflicts of Interest: The authors declare no conflicts of interest.

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