According to Morningstar DBRS, an independent provider of credit ratings and financial analysis, the Italian insurance sector is on track to sustain its strong performance into 2025.
Key drivers include a significant recovery in life insurance premiums, steady growth in non-life segments, and higher investment returns.
However, challenges such as elevated life insurance surrenders and increased exposure to catastrophe risks in non-life coverage remain areas of concern.
Life insurance premiums surged 20% year-on-year in the first nine months of 2024, reaching €80.6 billion, with the market expected to exceed €100 billion by the end of 2024 and maintain high levels in 2025.
This rebound was driven largely by Class I guaranteed products, which remained attractive to cautious investors, and a renewed appetite for Class III unit-linked products, which grew 47% year-on-year after a steep decline in 2023. Bancassurance continued to dominate as the primary distribution channel, accounting for nearly two-thirds of life premiums.
Non-life premiums also experienced robust growth, climbing 8% year-on-year to €33.8 billion, led by an 11% rise in motor insurance premiums.
Insurers implemented pricing adjustments to address inflation, while health and property insurance saw double-digit growth. The introduction of mandatory catastrophe insurance for businesses, effective January 2025, is anticipated to further boost non-life premiums.
While surrenders in the life insurance market remained high, growth slowed to 9% year-on-year in 2024 compared to 66% in the prior year.
Morningstar DBRS noted that commercial incentives, such as increased guaranteed returns on Class I products, played a role in curbing surrenders. Despite these measures, the incidence of surrenders relative to premiums declined to 73% by Q3 2024, down from over 100% in late 2023.
Profitability within the sector has been strong, with the return on equity for life insurers rising to 14.1% in 2023, up from a negative 1% the previous year.
For non-life insurers, profitability remained steady, with an ROE of 8.3% supported by resilient performance in motor insurance and sustained premium growth. Morningstar DBRS highlighted the importance of Italy’s robust Solvency II ratios, which stood at 253% in mid-2024, providing a strong buffer against market shocks.
Morningstar DBRS predicts continued momentum for the sector in 2025, with life premiums remaining high and non-life growth supported by under-penetrated markets and new regulatory requirements. Despite ongoing challenges such as surrenders and claims volatility, the sector’s strong solvency and profitability provide a stable foundation for future resilience.
