Mandatory Insurance Against Catastrophic Risks

The 2024 Budget Law (Art. 1, paragraphs 101-111 of Law 213/2023) introduced a requirement for all businesses to take out insurance coverage against catastrophic risks.

This measure was implemented to ensure adequate financial compensation for businesses operating in Italy that may be affected by natural disasters, thereby reducing the financial burden on both the State budget and private entities.

 

Scope of the Obligation

To fall within the scope of the mandatory insurance requirement, businesses must:

• Have their registered office in Italy or, if based abroad, operate through a permanent establishment in Italy;
• Be registered in the Companies Register, as required under Article 2188 of the Italian Civil Code.

Exemptions apply to:

• Agricultural enterprises under Article 2135 of the Italian Civil Code, which are already covered by the National Mutual Fund for Meteorological and Climatic Catastrophic Damage;
• Businesses whose real estate assets are subject to unauthorized construction or building code violations, whether existing at the time of construction or arising subsequently.

 

Insurance Coverage Requirements

The obligation requires businesses to insure assets classified under Article 2424, paragraph 1 of the Italian Civil Code, specifically:

• Land and buildings;
• Plants and machinery;
• Industrial and commercial equipment.

The policy must cover damages caused exclusively by the following events, as explicitly defined by law:

• Earthquakes
• Floods
• Landslides
• Inundations and overflows

Failure to comply with this obligation will result in the denial of public grants, subsidies and other public financial incentives.

The Ministry of Economy and Finance (MEF) and the Ministry of Enterprises and Made in Italy (MIMIT) have been tasked with issuing an implementing decree to define the operational details of the insurance framework.

 

Implementation Timeline

Initially, the deadline to comply with this obligation was set for December 31, 2024. However, due to delays in the implementing regulations, the “Milleproroghe” decree extended the deadline to March 31, 2025.

For businesses in the fishing and aquaculture sectors, the deadline has been further extended to December 31, 2025.

On February 27, 2025, the long-awaited implementing decree (Ministerial Decree 18/2025) was published in the Official Gazette, setting out the specific rules and operational details for the new catastrophic risk insurance requirements.

 

Key Provisions of the Implementing Decree

The decree provides critical clarifications, including:

• The definition and identification of catastrophic events covered by the insurance;
• The criteria for determining and periodically adjusting insurance premiums;
• The underwriting obligations of insurance companies;
• The maximum coverage limits applicable to policies.

Under Article 3 of the decree, catastrophic events are defined with a 72-hour continuity rule, meaning that any subsequent occurrences within 72 hours of the initial event are considered part of a single claim.

Insurance premiums must be proportionate to the business’s risk exposure and may be adjusted downward if the company implements risk mitigation measures.

 

Insurance Coverage Limits and Deductibles

To balance the obligation to provide coverage with insurers’ solvency needs, the decree sets tolerance thresholds for insurers, aligning with their overall solvency requirements.

In terms of deductibles, the decree establishes the following structure:

• For insured sums up to €30 million, the deductible cannot exceed 15% of the indemnifiable loss;
• For insured sums above €30 million and for large enterprises, the deductible is subject to free negotiation between the parties.

Regarding coverage caps, the decree sets out the following principles:

• For insured sums up to €1 million, the maximum indemnity equals the insured sum;
• For amounts between €1 million and €30 million, the maximum indemnity is limited to 70% of the insured sum;
• For amounts above €30 million and for large enterprises, policy limits are subject to free negotiation between the parties.

 

Conclusions

The introduction of mandatory catastrophic risk insurance represents a major regulatory shift for businesses operating in Italy. While the implementing decree provides much-needed clarity, companies must now carefully assess their risk exposure, negotiate suitable policies, and ensure compliance by the revised deadlines to avoid penalties.