european insurer they are becoming More vulnerable to damage related to extreme weather events, as reinsurers provide less coverage against natural disaster risks, and so will likely be forced to raise policy prices to take this new scenario into account. This is what has come to light Signals from the Italian market this weekAnd particularly from the non-life sector, with weather-related losses generally having a greater impact on profitability than before.
new trend
I reinsurance companies is truly global tightened its terms and conditions Limiting their coverage to protect against natural disasters, primarily in response to frequent and volatile weather-related losses due to climate change. Additionally, higher reinsurance prices have led some insurers to purchase less coverage. Reinsurance is a tool that insurance companies use to insure themselves.
Increase in weather-related losses was evident, Fitch Ratings reports Results of the first nine months Of the three largest Italian non-life insurers, Generali, Unipol and Allianz Italia, All three reported that losses from natural disasters, excluding reinsurance, contributed more to their loss ratios compared to the same period in 2022.
significant weather events
The rating agency reminds that like many other countries in Europe, Italy has also suffered losses this year. significant natural catastrophic eventsamong which Floods E in central Italy in June its destruction In northern Italy in July. However, the costs to insurers were generally higher than for similar incidents in previous years. “We believe this is mainly due to lower reinsurance coverage – for example, in Germany, Allianz Group reported an impact of 19.1 percentage points due to natural disasters in 3Q23, compared to 14.3% in 3Q21,” the report said. In comparison, when Germany experienced. “The biggest natural disaster in recent times with severe flooding in the western parts of the country.”
Italian underinsurance
It is also stated that Insurance against the risk of natural disasters is low in Italy Compared to European standards. According to data from ANIA (National Association of Insurance Companies), most large commercial buildings are insured against natural disasters, but only 15% of SME commercial properties and 5% of residential properties are insured, and only 5% of auto Insurance policies include disaster coverage. ,
In this context, Parliament Italian is having a discussion Proposal To present one on behalf of the governmentcompulsory insurance against natural disasters for businesses by the end of 2024. This could create a business opportunity for insurers, but could make their results more volatile, especially if reinsurers do not roll back their recent restrictions.
prices will increase
Despite the difficulties mentioned, Fitch does not see major problems for large Italian insurers. this is exactly what the prediction is Premiums will increase, compensating some if not all of the future impacts Greater risk of weather-related losses and higher reinsurance costs. In particular, auto insurance, the largest line of business, is likely to see a significant increase in premiums as it continues to operate at a substantial loss, partly due to the increased risk of natural disasters.