Mandatory nat cat cover in Italy a credit positive for P&C sector: Moody’s

Moody’s Ratings has suggested that the new obligation for companies in Italy to take out insurance policies covering natural catastrophes risk is credit positive for the P&C insurance sector.

The Italian government recently published an interministerial decree in the Official Journal, setting out further rules for mandatory insurance against natural disasters and catastrophic events.

As Reinsurance News understands, this insurance requirement was introduced by the 2024-2026 Budget Law and applies to all companies with a registered office in Italy or a permanent establishment in the country.

It covers damage to land, buildings, machinery, and industrial or commercial equipment recorded in financial statements.

According to Moody’s Ratings analyst Louis Nonchez, this regulatory change will “significantly boost” premium income, especially from small businesses, who have historically not purchased natural catastrophe insurance.

“Although this measure may increase earnings and capital volatility for insurers, Moody’s Ratings expects that reinsurance provided by Sace, the public company controlled by the Ministry of Economy, along with better distribution of natural catastrophe risks among Italian insurers, will help mitigate these risks,” Nonchez added.

Initially set to take effect on 31 December 2024, the obligation has been postponed to 31 March 2025 under the Milleproroghe decree.

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