According to Fitch Ratings, the outlook for Italian insurance is improving for non-life compared with 2023 actuals, while life remains neutral.
Fitch’s non-life sector is improving due to the expectation that widespread tariff increases to more than offset persistent high inflation-related claims costs, with motor claims frequency also expected to remain stable at below pre-pandemic levels.
Alberto Messina, Director, said: “Fitch expects the underwriting result for the motor market to improve, primarily due to widespread tariff increases aimed at offsetting the inflation-related rise in claims cost. We expect non-motor business to
continue to grow profitably, particularly in health insurance, albeit at a slow pace due to the unfavourable macroeconomic environment.
“We expect Italian life insurers’ capitalisation to remain sensitive to Italian government spreads in 2024. New business mix will be skewed towards hybrid products, a combination of traditional savings and unit-linked. We expect sales of traditional savings to resume as a result of higher interest rates, while those of unit-linked to remain low.”
Moreover, the rating agency also anticipates profitable growth in non-motor premiums to continue in 2024, though at a slower pace, due to commercial efforts of the banking and insurance industry and the low penetration of nonmotor business in Italy.
In addition, the neutral outlook for the life sectors reflects Fitch’s view that high interest rates support life insurers’ investment income and continue to exert pressure on net inflows.
Fitch also expects solvency ratios to remain strong in 2023 and 2024, which will be supported by high interest rates and profitability, although they will remain sensitive to government credit spreads, according to the agency.
Lastly, Fitch notes that all but one Italian insurers’ Outlooks are Stable, which reflects the sector’s resiliency to the
macroeconomic conditions, as well as the Stable Outlook of Italy’s sovereign rating, which represents a large, albeit reducing, portion of Italian insurer’s investments.
