Ken Research has announced recent publication titled “Reinsurance in Italy, Key Trends and Opportunities to 2020”. This report analyses reinsurance growth and opportunities in the country covering competitive landscape, economy and demographic analysis and significance of natural and man-made hazards and their impact on the Italian insurance industry. It discusses major market segments and future outlook of the industry.
There is no active reinsurance market in Italy. Since 2008, the reinsurance has only been provided through international reinsurance firms by setting up branch offices in Italy. The major companies are Swiss Re, Munich Re, SCOR, Mapfre Re, RGA and General Re etc.
The average fertility rate is 1.37. The life expectancy of people is over 80 years. This means that the population in Italy is ageing rapidly and putting a pressure on the welfare system, pensions and moreover the supply for the younger generation to increase the tax revenue is decreasing.
The Italian industry is thrives on its manufacturing and service sector. The services sector accounts for almost three quarters of total GDP and has 65% employment. The industry sector accounts for one fourth of GDP and 30% employment, the manufacturing sector is dominated by small and medium run enterprises run by families. The agriculture takes the smallest share in the economy of Italy.
BREXIT: London was the hub for the insurance market in Europe. Being a part of EU, the insurance business was relatively smooth between Italy and UK. It was that allowed UK Insurers establish branches in other Member States as well as Italian Insurers to open branches in UK under the so called “Home Country Control” system, meaning that the Home Country Supervisor had the exclusive responsibility for any regulatory and prudential supervision of the Insurer within the EU. But now, the UK not being a part of EU, their insurers and intermediaries will need to obtain new authorizations in order to offer cross-border services to Italian clients. The UK Insurers will use Articles 28 and 29 of the Italian Insurance Code (“IIC”) to obtain new authorization in order to carry out business under the right of establishment, according to the prohibition to carry on business under the freedom of services. The same will need to be done by the Italian counterparts. This would lead to several regulatory uncertainty in the already established contracts and hamper the establishment of future contracts.
The ageing population of Italy is putting a big pressure on the social security system of the government. Also, the debt ratio of the nation is widening, thus both these factors could lead to a fall in the income of the Italians and thus the investment in the insurance and reinsurance companies can fall significantly in the upcoming years. The acute low interest rate in Italy has affected the investment opportunities and can severely affect the insurance companies whose liabilities consist of a fixed investement return.
Topics covered in the Report
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Ankur Gupta, Head Marketing & Communications