Starting January 1, Italian businesses must purchase insurance coverage against the growing risks of climate-related disasters, including floods, landslides, and forest fires. The law is a response to the increasing frequency and severity of natural disasters in Europe, which have caused substantial financial losses over the past decade.
According to the European Climate Agency, the cost of natural disasters across Europe rose by an average of 2.9% annually between 2009 and 2023. Events such as forest fires in Greece, droughts in Sicily, and devastating floods in Central Europe and Spain highlight the escalating risks faced by businesses.
Small and medium-sized enterprises (SMEs), which form the backbone of Italy’s economy, have been particularly vulnerable, often lacking adequate financial safeguards against such disasters.
To implement the law, the Italian government has established a €5 billion fund to assist businesses and insurers in adapting to the mandate. Insurers are required to offer coverage to all companies, regardless of risk, under the new rules. However, this aspect has raised concerns about the financial strain on insurers and the potential for a single major disaster to deplete the fund.
There are potential roadblocks to the legislation’s rollout. Critics warn that insurers might abandon high-risk areas, as seen in the U.S., or face unsustainable losses. Italian insurer Assicurazioni Generali recently reported €930 million in weather-related losses in just the first nine months of 2024.
