Italy Q3 Market Dynamics
Landscape
Italy has been hit by third and fourth waves of COVID-19 in 2021, with the latter abating by late September. The impact of the virus has been constrained by vaccinations: by mid-September almost two thirds of the population had been fully vaccinated. Additionally, although the government has ended full lockdown measures, its policies have been some of the most stringent globally, requiring those in indoor public places to prove either vaccination, a recent negative test result, or a recent recovery from the virus. In September the government extended the ‘green pass’ requirement to all workers.
Preliminary GDP figures showed 2.7% growth in the second quarter, while in September the annual inflation rate hit 2.6%. Growth has outperformed expectations and the OECD forecasts 5.9% GDP growth for the year after a fall of 8.9% in 2020. The government is seeking to boost recovery with a National Recovery and Resilience plan incorporating public sector reforms and green infrastructure. Like other places in southern Europe, in the summer Italy saw an extreme heatwave triggering wildfires.
Key Indices - Italy
Market Dynamics
Italy Featured Products Q3 2021
Q3 Automobile Summary
Overall (Stable) Loss trends remain below the historical average, although there is a trend back toward the mean as the successful vaccination roll-out leads to an increase in overall activity. Market conditions are generally favourable as there is sufficient capacity to create competition on pricing.
Rates (Flat) Although loss trends are below average, rate reductions are not common. Flat pricing is the norm.
Capacity (Abundant) Q3 experienced increased capacity; however, starting in November, a reduction is expected.
Underwriting (Flexible) Technology - including telematics - is becoming increasingly important for large fleets, and innovative solutions are emerging which aim to address the change in driver behavior.
Limits (Stable) Expiring limits can be achieved for most placements.
Deductibles (Stable) Expiring deductibles can be achieved for most placements.
Coverages (Stable) Expiring coverages can be achieved for most placements.
A Look Ahead (Stable) Current market conditions are expected to continue.
Q3 Casualty/Liability Summary
Overall (Stable) The market is generally stable; however, insurers are adopting increasingly firm stances when it comes to claims negotiation and having strong local underwriting relationships is more important than ever.
Rates (+1-10%) Where available capacity has decreased premium costs have modestly risen.
Capacity (Ample) A contraction of capacity continues, resulting in an increase in the re-marketing of risk, especially in certain industry segments (e.g., Pharmaceuticals & Life Science).
Underwriting (Prudent) Underwriting authority continues to shift from local underwriters to central teams, resulting in increased underwriting rigor and stringency.
Limits (Stable) There is increased limits scrutiny, particularly on certain industries (i.e. Pharmaceuticals & Life Science) and relevant US exposures
Deductibles (Stable) Expiring deductibles can be achieved for most placements.
Coverages (Stable) Covid-19 (or broader pandemic) exclusions or sub-limits are continuing to be introduced at renewal, combined with a general review of all policy extensions.
A Look Ahead (Stable) Current market conditions are expected to continue.
Q3 Financial Lines Summary
Overall (Challenging) The market continues to be challenged, with limited appetite from insurers, which has resulted in significant price increases, shortfalls in capacity, and coverage limitations, which is especially pronounced for financially challenged companies. Claims negotiation continues to be lengthy and technically focused which can delay acceptance and confirmation of coverage.
Rates (+11-30%) Ongoing poor underwriting performance and capacity constraints have led to a continued challenging pricing environment.
Capacity (Constrained) While capacity is constrained overall, new capacity, specifically in the D&O market, is helping to alleviate pressure in certain segments and industries.
Underwriting (Stringent) Underwriting is rigorous and stringent – often requiring detailed submission information, with information around ESG and Cyber preparedness now becoming increasingly important.
Limits (Decreasing) Limits are decreasing as insurers look to reduce their client-specific exposure.
Deductibles (Increasing) Deductible increases continue to be imposed. Coverages (Restricting) Most coverages are generally stable; however, there is a focus on adding exclusionary Cyber language.
A look ahead (Challenging) Current market conditions are expected to continue.
Q3 Property Summary
Overall (Challenging) The market remains cautious but is continuing to moderate from the hard market conditions experienced in the recent past. There is a growing trend toward centralization of underwriting, capacity management, and claims management, especially for larger and more complex risks/claims.
Rates (+11-30%) Price increases continue; however, to a lesser degree, especially for risks already adjusted during the 2020 renewal cycle.
Capacity (Constrained) Insurers continue capacity management strategies, with a continued tightening across all industry segments, although this is less pronounced than in 2020.
Underwriting (Stringent) Underwriting authority continues to shift from local underwriters to central teams, resulting in increased rigor and stringency. Natural Catastrophe exposure continues to be an area of concern for underwriters.
Limits (Stable) Limits are stable overall; however, insureds continue to evaluate the trade-off between price, coverage terms and limits purchased.
Deductibles (Increasing) Deductibles are trending upward, which is serving to help offset premium increases for insureds and is having a favourable impact on insurer claims experience.
Coverages (Restricting) Exclusions for Cyber and Communicable Disease have been broadly introduced and there is more scrutiny on atmospheric events.
A look ahead (Challenging) Current market conditions are expected to continue.
Q3 Trade Credit Summary
Overall (Stable) Lack of claims is having a material impact on the credit insurance market, causing some companies to considering self-insurance and those that purchase insurance expecting very competitive pricing. Insurers, however, remain concerned about companies’ ability to repay debt incurred during COVID, which influences the appetite and underwriting attitudes of credit insurers.
Rates (+1-10%) Price increases continue, but pricing overall is improving, with recent examples of insurers actively competing on price to win new business.
Capacity (Ample) Capacity is sufficient, particularly for sectors which have been less affected by the impacts of COVID 19.
Underwriting (Prudent) Insurers are requiring substantial amounts of information and paying particularly close attention to how the market evolves, especially as the effects of COVID-19 and supply chain bottle necks have yet to be fully understood.
Limits (Stable) Limits are stable and sufficient to meet the needs of most insureds.
Deductibles (Stable) Low deductibles are being introduced to reduce credit exposures and pricing.
Coverages (Stable) Coverages are sufficient to meet the needs of insureds. Limitations are not generally being required.
A look ahead (Stable) Credit market development will follow claims trends, and, for the commodities section, exposure changes.