Positive Outlook for the Insurance Sector
Moody’s Ratings has highlighted that the recent mandate requiring Italian companies to secure insurance policies for natural catastrophe risks is a credit positive development for the property and casualty (P&C) insurance sector. This initiative, introduced by the 2024-2026 Budget Law, mandates coverage for all businesses operating within Italy, including those with a registered office or a permanent establishment in the country.
Details of the New Insurance Requirement
The Italian government has formalized this requirement through an interministerial decree, published in the Official Journal, which outlines comprehensive regulations for mandatory insurance against natural disasters and catastrophic events. The insurance is designed to cover damages to land, buildings, machinery, as well as industrial and commercial equipment as recorded in financial statements.
Impact on Insurance Premiums and Risk Management
According to Moody’s Ratings analyst, Louis Nonchez, this regulatory change is expected to substantially enhance premium income, particularly from small enterprises that have traditionally not invested in natural catastrophe insurance. Nonchez noted, “Although this measure may increase earnings and capital volatility for insurers, Moody’s Ratings anticipates that reinsurance support from Sace, a public entity under the Ministry of Economy, along with improved risk distribution among Italian insurers, will effectively mitigate these risks.”
Implementation Timeline
Originally scheduled to be enforced by 31 December 2024, the obligation has been deferred to 31 March 2025 under the Milleproroghe decree, allowing businesses additional time to comply with these new insurance requirements.
