Following a heavy year of losses, renewing aggregate reinsurance will likely be a challenge for Italian insurers, according to insights from investment bank Berenberg.
Analysts believe the greatest challenge insurers in Italy will face in 2024 is pricing for non-motor insurance, following the exceptionally high €2.5bn hailstorm losses in the country experienced this year.
As reinsurers try to recoup their share of the 2023 natural catastrophe losses, insurance rates could rise by more than 15% as a knock-on impact of higher reinsurance costs.
Regarding Generali, Berenberg analysts said: “On reinsurance, Generali is aware of the continuing hardening of the market, and also of the implicit payback discipline applied by reinsurers, which means that reinsurance costs are set to rise.
“However, this should remain manageable, as Generali offers reinsurers a very diversified portfolio, and we believe this means reinsurance rate rises are likely to be in the mid-single-digit percentage range.”
Nonetheless, because of the costly hailstorms that hit the north of Italy, Berenberg believes that Generali will likely lose its aggregate reinsurance cover.
Additionally, smaller insurers with just Italian non-life exposure are likely to be subject to much higher reinsurance rate rises, and this may make reinsurance unaffordable for them, analysts warned.
With UnipolSai, the insurance arm of Italian financial group Unipol, facing similar challenges, insurance general manager Enrico San Pietro, has discussed a plan to replace the group’s aggregate reinsurance cover with a mechanism that would provide equivalent cover at a similar cost.
