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Italy brings in obligation for companies to buy natural catastrophe insurance


The Italian Parliament has issued a Budget Law for 2024 which includes a specific duty for corporate entities to buy insurance policies covering earthquakes, floods and landslides by 31 December 2024.

Statistics show that almost 70% of Italian housing stock falls into earthquake prone zones and the government action comes against a backdrop of the country having a considerable insurance protection gap regarding natural catastrophes.

The earthquakes in central Italy in 2009 and 2016 cost public accounts more than EUR30 billion (£25.6 billion) around 1.7% of national output. In response to last May’s floods in Emilia Romagna that killed 15 people, Prime Minister Giorgia Meloni allotted EUR1.5 billion (£1.3 billion) for the area and topped up a EUR490 million (£418m) national fund to tackle natural disasters with an additional EUR200 million (£170m).

Businesses are being urged to act promptly to comply with the insurance obligation before the deadline, despite some lingering uncertainties over the implementation.

The obligation was introduced last December and means companies will have to buy these policies if their registered office in Italy or have their registered office abroad with a permanent establishment in Italy, which has to be registered in the Companies Register pursuant to article 2188 of the Civil Code. Agricultural companies are excluded.

If a company breaches the insurance obligation it will be excluded from receiving public contributions, including those provided in calamitous and catastrophic events. The assets covered are tangible fixed assets consisting of land and buildings, plants and machinery, and industrial and commercial equipment.

Companies don't have to buy policies if their real estate is encumbered by building abuse or has been constructed without the required authorisation, or the building is encumbered by abuse arising after the date of construction.

Insurance undertakings must enter into policies covering catastrophic events. Violating this obligation is punishable by an administrative fine imposed by the Institute for the Supervision of Insurance (IVASS)  of between EUR100,000 and EUR500,000.

Insurance companies may offer coverage either by directly assuming the entire risk; or in co-insurance or in consortium through a plurality of undertakings. The consortium must be registered in the Italian Information Centre (CONSAP) Register and authorised by IVASS, which assesses its capacity.

The applicable deductible cannot exceed 15% of the damages and insurance premiums must be proportional to the risk.

By decree of the Minister of the Economy and Finance and the Minister of Business and Made in Italy, further implementation and insurance schemes may be introduced to determine which catastrophic events are to be insured and the limits to be provided.

Reinsurance by SACE SPA  - 100% controlled by the Italian Ministry of Economy and Finance (MEF) - is authorised to reinsure private market insurers up to 50% in respect of the indemnities they have to pay in case of a catastrophic event, in any case not exceeding EUR5 billion (£4.2 billion) for each of the years 2024, 2025 and 2026.

W Denis brokers arrange competitive (re)insurance on a wide range of property risks across Europe and the World, spanning all types of businesses, particularly heavy industry. For more information please contact:

Eastern Europe

Southern Europe

Western Europe &/or elsewhere worldwide

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