Global credit ratings agency AM Best has revised its outlook on Italy’s non-life insurance sector from negative to stable, citing sustained growth momentum, pricing improvements, and a stabilising economic environment.The agency expects gross written premiums (GWP) in the non-life segment to continue growing at a steady pace in 2024. This follows a strong performance in 2023, when GWP rose by 7.7%—the fourth consecutive year of growth—according to data from the Italian insurance association, ANIA.
Motor Insurance Rebounds on Pricing Discipline
Motor insurance, which accounts for just over a third of non-life premiums, returned to growth in 2023 after years of contraction caused by intense market competition. Tariff adjustments have helped insurers offset inflationary cost pressures, particularly in claims and repairs.AM Best notes that while competition remains a challenge, the continued application of premium increases is expected to support profitability and reverse previous downward trends in the motor segment.
Economic Stability and Strong Non-Motor Performance
Italy’s economic outlook is improving, with the IMF projecting real GDP growth of 0.7% and stabilising inflation. This supportive macroeconomic backdrop is helping sustain demand for insurance products.Beyond motor lines, non-motor business segments have delivered consistent performance, contributing to overall sector resilience. Improved investment income is also providing additional financial support.
New Mandatory Natural Catastrophe Coverage to Expand Market
A key development comes from Italy’s 2024 Budget Law (Legge 30 dicembre 2023, n. 213), which mandates that corporate entities must purchase coverage for earthquakes, floods, and landslides. Compliance is required by December 31, 2024.While implementing regulations—such as coverage limits and valuation methods—are still pending, early market estimates suggest the total insured value could double, significantly expanding the property insurance market.
Historically, natural catastrophe risks in Italy have been largely ceded to reinsurers, limiting insurers’ net exposure. However, AM Best warns that the sector’s future performance will depend on reinsurers’ appetite for these risks. If reinsurance capacity becomes constrained, insurers could face greater earnings volatility.
High Protection Gap Signals Opportunity and Risk
Italy ranks second in Europe for the natural catastrophe protection gap, according to EIOPA, due to frequent and severe natural events combined with low insurance penetration. This gap represents a major growth opportunity, but also underscores the need for prudent risk management and sustainable pricing.
Outlook: Solid and Healthy Growth Ahead
AM Best concludes that 2024 is set to be a year of “solid and healthy growth” for Italy’s non-life insurance sector. The combination of disciplined pricing, economic stabilisation, strong non-motor performance, and new regulatory-driven demand supports a more positive trajectory.
Related topics: