While still under parliamentary discussion, the potential impact of the obligation for insurance against catastrophic risks is certainly a measure that, if confirmed, could prove to be of fundamental relevance for the insurance market (estimating premiums to a value of two billion euros).

According to the draft of the 2024 Budget Law, Article 24 (aptly titled “Measures concerning catastrophic risks”) has indeed foreseen that companies headquartered in Italy and foreign companies with a branch on the national territory must underwrite, by 31.12.2024, insurance policies guaranteeing damages to tangible fixed assets “directly caused by natural calamities and catastrophic events occurring in the national territory”. The same Article 24 also specifies that “events to be insured, as referred to in the first paragraph, include earthquakes, floods, landslides, inundations, and overflows”.

Companies failing to comply with this obligation might be excluded from receiving public contributions, subsidies, or benefits, especially those provided for calamitous and catastrophic events. Therefore, this intervention is motivated by a clear form of accountability and education regarding insurance risk among Italian companies, particularly concerning catastrophic risks (also considering the increasing number of such events registered in our country).

As for insurance enterprises, the draft also contains specific indications for companies, which can offer this coverage by assuming the entire risk themselves, in co-insurance, or in a consortium form (in the latter case, the consortium must be evaluated and approved by IVASS, the Italian regulatory body).

Regarding the content of the policy, it is currently provided that the contract should include a deductible or excess not exceeding 15% of the damage, as well as proportional risk-based premium application.

Finally, it has been established that any refusal or evasion of the contracting obligation by insurance companies is punishable by an administrative pecuniary sanction ranging from two hundred thousand euros to one million euros. The insurance market, however, is supported in the face of such significant risks by SACE (the Italian export credit agency, held by the Ministry of Economy and Finance and specialised in the insurance-financial sector), which would be authorised to provide insurers and reinsurers with coverage, under market conditions and through a specific agreement, for up to 50% of the indemnities that they are requested to cover (such a support cannot exceed five billion euros for each of the years 2024, 2025 and 2026).