Catastrophic Events in Italy: Insurance Coverage and State Intervention

Catastrophic Events in Italy: Catastrophic Events in Italy: Insurance CoverageInsurance Coverage

and and State InterventionState Intervention

Some statistical data: number of Some statistical data: number of catastrophic events in the world catastrophic events in the world from 1970 to 2008 [Efrom 1970 to 2008 [Enz e Schwarz (2009)]

Some statistical data: entity of Some statistical data: entity of damagesdamages

Possible reasons for damages Possible reasons for damages increasing increasing

• Increasing of catastrophic events due Increasing of catastrophic events due to climate changeto climate change

• Default of preventive measures Default of preventive measures

• Frauds in the process of damage Frauds in the process of damage liquidationliquidation

Insurance and control of Insurance and control of damages increasingdamages increasing

In general insurance coverages play a relevant In general insurance coverages play a relevant role in controlling the increasing of damagesrole in controlling the increasing of damages::

• Preventive measures are imposed by the insurer to the Preventive measures are imposed by the insurer to the insured party;insured party;

• Insurers take efficient damage liquidation processes; Insurers take efficient damage liquidation processes;

• Through the mechanism of subrogation, insurers could Through the mechanism of subrogation, insurers could take action against responsible persons for damages;take action against responsible persons for damages;

Obstacles and Challenges in Obstacles and Challenges in Catastrophic Events InsuranceCatastrophic Events Insurance

Accidents costs:Accidents costs:

According to the estimations of Ania According to the estimations of Ania (the Association of Italian Insurers) (the Association of Italian Insurers) the amount of annual damages for the amount of annual damages for natural catastrophic events in Italy is natural catastrophic events in Italy is likely to run into likely to run into 2.852.525.404 euro euro per yearper year

(Ania datas: damages to real estates in Italy)(Ania datas: damages to real estates in Italy)

The interplay between State The interplay between State and Insurersand Insurers

Of course catastrophic events are insurable….but high damages costs necessarily mean high premiums.

Opportunity of a State interventionOpportunity of a State interventionwith regard to premium payment.with regard to premium payment.The solutions adopted by Italian The solutions adopted by Italian

ParliamentParliament

State intervention in State intervention in agricultural insurance plansagricultural insurance plans

According to Act 29th march 2004, n. 102According to Act 29th march 2004, n. 102::

every year the Italian Ministry of Agricultureevery year the Italian Ministry of Agricultureprovides an agricultural insurance plan.provides an agricultural insurance plan.

it provides State contribution in premium payment it provides State contribution in premium payment for those catastrophic events included in the annual for those catastrophic events included in the annual plan on agricultural insurance.plan on agricultural insurance.

it escludes State intervention(provided in art. 5 Act it escludes State intervention(provided in art. 5 Act 102/2004) for those catastrophic events included in 102/2004) for those catastrophic events included in the annual plan on agricultural insurancethe annual plan on agricultural insurance

Agricultural Insurance Plan Agricultural Insurance Plan 20122012• Multirisk policiesMultirisk policies

• Increasing of the number of events Increasing of the number of events included in facilitated insurance coveragesincluded in facilitated insurance coverages

• Change of mentality with respect to Change of mentality with respect to catastrofic eventcatastrofic event

+ 11% sales+ 11% sales

DL 59/2012 the Reform of DL 59/2012 the Reform of Italian civil protection Italian civil protection

According to art. 2, the Government should According to art. 2, the Government should have to define some instruments to have to define some instruments to facilitate insurance coverage of real estate facilitate insurance coverage of real estate in case of catastrophic events:in case of catastrophic events:

Extension of present real estate coverages to Extension of present real estate coverages to catastrophic eventscatastrophic events

Total (or partial) exclusion of State interventionTotal (or partial) exclusion of State intervention

Fiscal facilitationsFiscal facilitations

The Law of conversion The Law of conversion (L. 100/2012)(L. 100/2012)

Art. 2 DL 59/2012 has been cancelled Art. 2 DL 59/2012 has been cancelled by the law of conversion due to by the law of conversion due to financing problems.financing problems.

Thinking to a Thinking to a solution…solution…

Some proposals…Some proposals…• Insuring public finance against natural Insuring public finance against natural

disasters (David Hoffman – Patricia Bruckoff, disasters (David Hoffman – Patricia Bruckoff, 2006)2006)

• The case of Hurricane InsuranceThe case of Hurricane Insurance..The state of Florida has found a solution to insure The state of Florida has found a solution to insure hurricane risks at reasonable premium levels with the hurricane risks at reasonable premium levels with the creation of Citizens Property Insurance Corporation (an creation of Citizens Property Insurance Corporation (an insurer of last resort) and the Florida Hurricane insurer of last resort) and the Florida Hurricane Catastrophe Fund (Mario Jametti- Thomas Von Ungern- Catastrophe Fund (Mario Jametti- Thomas Von Ungern- Sternberg, 2009) Sternberg, 2009)

• Public reinsurer (the proposal of Ania)Public reinsurer (the proposal of Ania)

What’s new about Italian civil protection• Increasing of preventive measures,

emergency management plans and communication;

• Increasing of coordination acted by the department of civil protection with regard to public and private local institutions;

•Regional plans and funds of civil protection towards a new role for local communities ?

Opportunities for insurers …Opportunities for insurers …

• Crisis of indemnification under public law.Crisis of indemnification under public law.

Increasing of interest for insurance coverage (not Increasing of interest for insurance coverage (not only property insurance, but also health insurance only property insurance, but also health insurance related to catastrophic event, cost of an adequate related to catastrophic event, cost of an adequate first assistance).first assistance).

Thanks for your attentionThanks for your attention