Italy’s Natural Disaster Insurance Mandate: Guidance for Insurers

8 July 2025 / 3 min read

Under Italy’s 2024 Budget Law, all legal entities registered in Italy will be required to obtain insurance coverage for floods, earthquakes, and landslides. The phased rollout, set for full implementation by early 2026, is designed to narrow the protection gap—especially for small enterprises—and reduce the state’s financial burden in disaster recovery, as seen after events such as the 1976 Friuli earthquake.

While businesses are obligated to purchase coverage, the challenge lies with insurers to provide it. Insurers are already facing significant challenges as they endeavour to scale up their coverage for and understanding of perils to which they may have previously had little exposure. Failure to provide coverage may result in penalties ranging from €100,000 to €500,000. Despite these regulatory pressures, insurers also see the mandate as a catalyst for growth, unlocking new market opportunities.

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Key challenges for insurers

Italian insurers face multiple operational and technical challenges as they scale to meet the new mandate:

Data deficiencies: Limited historical exposure to flood risk has resulted in insufficient data for accurate underwriting. Verisk’s models, such as its Italy Inland Flood model, can help provide insurance rating information.
Accumulation risk: With expanded coverage across diverse perils and regions, understanding spatial accumulation is critical. Verisk’s tools quantify risk aggregation across flood, severe thunderstorm, and earthquake scenarios.
Regulatory compliance: With oversight from Italy’s Institute for the Supervision of Insurance (IVASS), insurers must validate their models. Verisk has extensive interaction with European regulators and, through its European research team, supported the adoption of Verisk models for regulatory purposes, including in Italy.

Verisk’s catastrophe risk solutions

Verisk offers a comprehensive suite of catastrophe models tailored to Italy’s regulatory and risk environment. The recently launched Italy Inland Flood Model complements existing models for earthquake and severe thunderstorm risk.

Key features of the Verisk Inland Flood Model for Italy:

Full peril coverage: Includes fluvial and pluvial flood risks at 25m resolution with the ability to separate perils for differentiated policy terms.
Accounts for climate change that has already happened: Verisk rigorously assessed long-term climate trends while developing the model, and it reflects climate change that has already happened, aligning with regulatory expectations.
Flexibility to account for exposure specifics and adaptation features: Capability to model the impact of secondary modifiers (e.g., basements, flood defences) for precise risk differentiation and accounting for adaptation credits in pricing accordance with the budget law.
Real-world validation: Stochastic catalogue reflects recent events such as the 2023 Emilia-Romagna floods, enhancing model credibility.
Flexible implementation: Available for in-house use; Verisk also offers consulting support—e.g., pricing (average annual loss) datasets or postcode-level insights—for insurers with limited cat modelling experience.

Complementary Verisk models for Italy:

Verisk’s Severe Thunderstorm Model is based on a 10,000-year event catalogue covering more than 350,000 hail events across Italy and built using a hybrid approach of physical modelling and historical validation.
Verisk’s Earthquake Model takes a probabilistic modelling approach as part of its model for the Pan European region, accounting for time dependence and spatio-temporal variation in vulnerability.

Why partner with Verisk?

Verisk delivers more than models—it provides insurers with:

Deep technical expertise across a range of perils proven model reliability
Scalable consulting support to fill internal skills gaps