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Insurer in Full: Italy builds Europe’s latest public-private cat reinsurance scheme as Guy Carp advises on structure

Guy Carpenter is advising the Italian Association of Insurance Companies (Ania) on the construction of a new state-backed nat cat reinsurance scheme..

Following new legislation requiring Italian-registered businesses to purchase cover for risks arising from weather-related perils, The Insurer can reveal.

The reinsurance arm of Marsh McLennan was engaged by Ania late last year to advise on the impending draft law, according to sources.

The law – which was eventually implemented as Article 24 of Italy's 2024 annual budget – came into effect on 1 January. It mandates the creation of a new reinsurance scheme by 2024 year-end that ensures all Italian-domiciled businesses buy quake and flood insurance.

According to specialists in Italian law, Article 24 allows for certain flexibility in the construction of the new reinsurance facility but is specific that it must engage with domestic Italian insurers and it should provide a limited last-resort government backstop.

During an Italian parliamentary hearing in November 2023, Ania president Maria Bianca Farina said: "The Italian insurance industry has been asking for many years now to define a public-private partnership on disaster risks.

“We therefore express our firm appreciation for the initiative, which has the ambitious objective of reducing the insurance protection gap, a gap in Italy that is much higher than that of other European countries.

”Farina also emphasised the need to define a methodology to determine the maximum exposure of the private sector within the scheme, as well as how damage exceeding the combined exposure of the public and private sectors will be managed.

According to multiple sources, Guy Carpenter is continuing to advise on the construction of the new scheme. The intermediary already advises on many of Europe's existing public-private partnerships, including the UK's Flood Re and terrorism mutual Pool Re, together with France's terrorism mutual Gareat.

The reinsurance broker – together with other Marsh McLennan entities – also advised the Ukrainian government and London marine insurers on the pioneering Unity scheme to support grain exports.

Guy Carpenter's European CEO Julian Enoizi is an expert in public-private partnerships and initially joined the firm in 2022 from Pool Re to lead its public sector practice.

The existence of a state-supported backstop means the new Italian reinsurance scheme shares some similarities with terrorism mutuals Pool Re and Gareat. In contrast, the French and Spanish nat cat schemes (see below) are effectively funded by a mandatory levy or tariff that excludes the private market from participating.

One distinct difference, however, is that the proposed new Italian cat reinsurer will only have a limited state-backed backstop in contrast to the uncapped guarantees enjoyed by Pool Re and Gareat. The size of the backstop is yet to be determined although this publication understands the platform that will be used is Italy's state-owned export credit guarantee arm Sace.

Sace is currently a €5bn fund but this will be regarded as too modest to fund a major earthquake or flood loss. Homeowners will not be mandated to buy the cat cover with the focus on businesses only. 


The new legislation follows a record year for Italian cat losses. This included severe convective storms in northern Italy during last year's third quarter, with losses from hail and wind damage estimated at $2.2bn by Clix, the loss index produced by industry data organisation Cresta.

The storms particularly impacted the regions of Lombardy, Veneto, Friuli-Venezia-Giulia, Piemonte and Emilia-Romagna.

The Emilia-Romagna region was also hit by flooding in May 2023, which industry loss aggregator Perils currently predicts will cost insurers €509mn.

These losses placed upward pressure at 1 January Italian renewals, with changes to structure, pricing and terms following the country's record loss year in 2023.

At the 1 January 2024 renewals, Guy Carpenter's global property cat rate-on-line index noted that upward pressure was felt in EMEA, especially in geographies with ceded loss activity in 2023, such as Italy, France and Turkey.

Guy Carpenter declined to comment.

The Insurer comment

This is a positive for the industry as the type of structure envisaged should support Italy's commercial property insurers in growing the overall market. This is an important requirement for sustaining the private market and for narrowing the protection gap.

It is also a sign of tangible progress in the development of new public-private partnerships in Europe. Encouraging news considering the industry's desire to work with governments to mitigate the threat of catastrophic cyber attacks…


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