Introduction
Which companies are subject to the insurance obligation?
Which assets are to be covered?
What obligations are imposed on insurance undertakings?
Insuring grant
Public reinsurance
On 30 December 2023 the Italian Parliament issued the Budget Law for the 2024 fiscal year.
Article 1(10) to (111) provides – for the first time – a specific obligation for companies to buy policies covering earthquakes, floods and landslides. Companies have to fulfil the obligation by 31 December 2024.
Which companies are subject to the insurance obligation?
The following companies are obligated to buy these policies:
- those with their registered office in Italy;
- those with their registered office abroad with a permanent establishment in Italy, which have to be registered in the Companies Register pursuant to article 2188 of the Civil Code.
Agricultural companies are excluded.
Which assets are to be covered?
The assets covered are tangible fixed assets consisting of land and buildings, plants and machinery, and industrial and commercial equipment. If a company breaches the insurance obligation it will be excluded from receiving public contributions, including those provided in calamitous and catastrophic events. Companies don't have to buy policies if their real estate is encumbered by building abuse or has been constructed without the required authorisation, or the building is encumbered by abuse arising after the date of construction.
What obligations are imposed on insurance undertakings?
Insurance undertakings must enter into policies covering catastrophic events. Violating this obligation is punishable by an administrative fine imposed by the Institute for the Supervision of Insurance (IVASS) (between EUR100,000 and EUR500,000).
Insurance companies may offer coverage either:
- by directly assuming the entire risk; or
- in co-insurance or in consortium through a plurality of undertakings.
In the latter case, the consortium must be registered in the Italian Information Centre (CONSAP) Register and authorised by IVASS, which assesses its capacity.
The applicable deductible cannot exceed 15% of the damages and insurance premiums must be proportional to the risk.
By decree of the minister of the economy and finance and the minister of business and made in Italy, further implementation and insurance schemes may be introduced in order to determine, inter alia, which catastrophic events are to be insured and which are the limits to be provided.
Reinsurance by SACE SPA (an Italian insurance-financial group, directly controlled by the Ministry of Economy and Finance, specialised in supporting businesses and national economic fabric) is authorised to reinsure private market insurers up to 50% in respect of the indemnities they have to pay in case of a catastrophic event, in any case not exceeding EUR5 billion for each of the years 2024, 2025 and 2026.
It is to be noted that the obligation to purchase mandatory catastrophe policies has been already entered into force in the absence of the decree from the minister of the economy and finance and the minister of business and made in Italy. In November 2023, further to the issuance of the Draft Budget Law, the President of ANIA (the National Association of Italian Insurance Companies) had already stressed that it would have been advisable to wait for the indications of the ministries first, which should be hopefully provided soon. In particular, indications on limits are expected.
For further information on this topic please contact Karin Tayel at DLA Piper Studio Legale Tributario by telephone (+39 02 80 61 81) or email ([email protected]). The DLA Piper Studio Legale Tributario website can be accessed at www.dlapiper.com.
