Catastrophe insurance policies: when nature presents the bill, the State rewrites the rules

Earthquakes, floods, landslides. Italy is a fragile country, everyone knows that.

But this time, the legislator has decided not to stand idly by: in an unprecedented move, it has required all Italian companies to take out insurance against natural catastrophes. No more leaving unforeseen events to chance.

It is a quiet revolution, born almost under the radar with the 2024 Budget Law (Law No. 213/2023) and then expanded through a series of interministerial decrees, emergency legislation and staggered deadlines. An ambitious system that promises much but is not without grey areas.

The source of the obligation

Article 1, paragraph 101, of Law No. 213/2023 is clear: all companies registered under the Companies Register — whether Italian or foreign entities with a permanent establishment in Italy — must take out an insurance policy against earthquakes, floods, landslides, inundations, and river overflows. No exceptions, apart from agricultural enterprises, which follow a separate track.

What must be insured? Practically everything: land, buildings, plant, machinery, industrial and commercial equipment, whether owned, rented, or leased. The only ground for exclusion is demonstrating that those assets are already covered by an analogous policy. Although what “analogous” means is far from clear.

Interministerial Decree No. 18/2025

The interministerial decree of the Ministry of Economy and Finance and the Ministry of Enterprises and Made in Italy, No. 18 of 30 January 2025, defined the main mandatory features of the policies in question. The key points:

• Premium: the premium must be proportionate to the risk and must therefore be calculated taking into account the location and vulnerability of the insured assets and the preventive measures adopted by the companies; moreover, it must be updated periodically.
• Deductibles, excesses, and indemnity limits: these are set on a differentiated basis according to the sums insured; greater flexibility is afforded to so-called large companies (i.e., enterprises which, at the balance-sheet date, simultaneously, have turnover exceeding EUR 150 million and 500 or more employees).
• Exclusions: assets subject to building code violations or constructed without the required authorisations are excluded from coverage; damage arising from deliberate human conduct or from civil liability for damage caused to third parties by the insured assets is likewise excluded; damages from armed conflict, terrorism, sabotage, civil unrest, nuclear energy, weapons, radioactive or explosive or chemical substances, pollution or contamination.
• Role of SACE S.p.A.: to help to manage the risk, SACE is authorised to provide reinsurance coverage for up to 50% of indemnity payments (subject to annual caps for 2024, 2025 and 2026) together with a State guarantee on a first-demand basis, without recourse, explicit, unconditional and irrevocable.

The timetable: everyone in, but not all at once

Millions of companies to insure overnight? Impossible. The Government recognised as much and, through Decree-Law No. 39 of 31 March 2025 (converted into Law No. 78/2025), opted for a phased introduction of the obligation.

The larger, the earlier; the smaller, more time allowed.

Here is the calendar:

Category / Deadline

• Large companies (over 250 employees)
  31 March 2025, with a 90-day transitional period until 30 June 2025
• Medium-sized companies (50–250 employees)
  1 October 2025
• Small and micro companies
  31 December 2025
• Fisheries/aquaculture companies and tourism/hospitality/food-service companies
  31 March 2026

As of today, therefore, all companies subject to the obligation should have complied.

Penalties for non-compliance

Those who have failed to comply risk being shut out of public funding. Grants, subsidies and financial incentives drawn from public resources may all be forfeited.

Insurance companies, too, are under pressure: if they refuse or circumvent their obligation to underwrite, IVASS may impose administrative fines ranging from EUR 100,000 to EUR 500,000.

Assessment and outlook

For the first time, the legislator has chosen not to leave the management of the consequences of increasingly frequent natural disasters solely to private initiative or to emergency interventions after the fact, but rather to build a structured system founded on risk-sharing and on making companies accountable.

The phased introduction, by companies’ size, and the involvement of SACE S.p.A. as a public reinsurer are choices designed to prevent the insurance market from being caught unprepared by a sudden and massive surge in demand.

Unresolved issues remain, however. The notion of an “analogous” policy that exempts a company from the obligation is still vague, and the concrete consequences for non-compliant companies — currently limited to loss of access to public funding — may prove insufficient to ensure universal compliance. At the same time, the penalty regime for insurance companies that refuse or circumvent the obligation to underwrite, with fines of up to EUR 500,000 imposed by IVASS, signals that the legislator does not intend to tolerate pockets of resistance on the supply side either.

The challenge is twofold: on the one hand, ensuring that coverage is effective, adequate and affordable for companies, especially for the small and micro companies that form the backbone of the Italian productive system; on the other hand, ensuring that this reform does not remain a mere bureaucratic compliance exercise, but becomes the first building block of a broader culture of prevention and catastrophe-risk management in Italy.