Natural risks, Giorgetti: spread insurance policies for better protection

The question of the contribution of the insurance sector in the modern era, which is facing the effects of the climate crisis on the one hand and the ever-increasing importance of digital innovation on the other, is the central theme of the Insurance summit organized by the National Association of Insurance Companies (Ania) under the title "Climate change and innovation: the contribution of the insurance sector".

The event itself took place on October 3 in Rome and brought together participants such as Economy Minister Giancarlo Giorgetti, Minister of Enterprise and Made in Italy Adolfo Urso, Director General of the Italian Banking Association Giovanni Sabatini and Ania President Bianca Farina.

The Minister of Economy Giorgetti

spoke on the topic of natural risks.

He said: "The data on the economic consequences associated with them clearly show how important it is to increase the spread of insurance coverages for our country. The morphology of the Italian territory, the impact of human activity on it and the effects caused by climate change expose us to increasing risks of natural catastrophes and require an ever-increasing intervention of the State. "

The minister said that with an estimated property wealth (individuals and businesses) of around 8 trillion euros, the insured share is only 675 billion euros, which is around 9%, while in France and Germany the figure is around 60%. These figures show the need for urgent action. The conclusion of multi-risk policies, which include natural risks together with fire risks, accompanied by a reassurance scheme, thanks to the involvement of SACE, could be the basis for such an intervention.

During the conference, Giorgetti also announced a new national scheme

This aims to strengthen infrastructure investment and tackle natural and climate change risks. In particular, the Minister stated that a profound reform is needed in the use of government guarantees, which should no longer be used to water down the economic system with liquidity, but should become selective instruments used to reduce the cost of capital and facilitate the attraction of private investors to take secondary positions in high value-added operations. According to Giorgetti, the guarantee should only be provided for sustainable operations that would not be possible without this coverage.

In Italy, more than 80% of civilian dwellings are at medium to high risk from earthquakes, landslides, floods and coastal erosion, but only 5.3% are insured against such events, according to Ania's 2022 estimates. Also making the situation even more critical is the fact that global warming caused by greenhouse gas emissions is increasing the frequency and intensity of events such as heat waves, fires, late frosts and hail.

These are scenarios that our country is not yet prepared to deal with. After Greece, we are the European country with the largest difference between losses from natural disasters and the amounts covered by insurance policies. This gap in insurance protection, in economic terms, amounts to 4.6 billion dollars, according to the Swiss Re sigma 2022 study.

The problem of inadequate insurance protection also affects 4.5 million businesses in Italy, especially those of small size. Ania estimates that the penetration of policies to cover natural and climate risks for micro-enterprises (up to nine employees) is extremely low (5%), but is increasing for small (55%), medium (67%) and large (80%) enterprises.

The public costs required to support the cost of rebuilding are rising significantly, and insurance companies, in addition to working with the government using private resources, are more efficient and faster in making damage payments and helping to protect real estate from such events. Therefore, taking out catastrophic risk policies covering earthquake and flood damage (Cat Nat) is a possible solution. This type of policy, according to Ania, covers all material and direct losses caused by earthquake and flooding, including those that are direct consequences of fires, explosions or flash floods resulting from said events. At the same time, it is also possible to insure against natural phenomena. Typically, Ania continues, damage caused by natural phenomena such as heavy rains, high winds, tornadoes, storms and hail is included in the coverage area for residential homes, called "atmospheric nuisance" or "natural events. "