OCTOBER 28, 2015 07:27 AM (EDT)
A.M. Best Special Report: Italian Insurance Sector Maintains Strong Growth Despite Sluggish Economy
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FOR IMMEDIATE RELEASE
LONDON - OCTOBER 28, 2015 07:27 AM (EDT)
Italy’s insurance market remained buoyant in 2014 and is well-placed to continue to grow in 2015, driven by demand for life products, according to a new report by A.M. Best. A second consecutive year of double-digit expansion in gross written premium (GWP) in 2014 came despite a difficult economic environment, although the Italian government is gradually making headway with its reforms to stimulate productivity.
In the report, titled, “Italian Insurance Sector Maintains Strong Growth Despite Sluggish Economy,” A.M. Best notes in 2014, total GWP rose 20.7% to EUR 143.3 billion, building on the 13% increase achieved in 2013. This was a consequence of strong life insurance growth, with low interest rates pushing investors away from traditional products (such as bank deposits and investment funds) and toward alternative investment solutions. The Italian insurance market is dominated by life products, representing 77.1% of total GWP in 2014.
A.M. Best expects total GWP will grow during 2015, sustained by demand for life products in particular. Alvise Argenton, financial analyst, said: “While an increase of GWP in the region of 20% or above may be harder to achieve in 2015, A.M. Best expects another year of double-digit growth. Since the global financial crisis of 2008, Italy’s economy has been struggling and gross domestic product (GDP) has contracted for five out of seven years. The International Monetary Fund (IMF) predicts real GDP growth will be 0.7% in 2015 and 1.2% in 2016, although political instability, high debt and a large shadow economy are contributing to the slow recovery.”
A.M. Best expects the motor market could benefit from the improving economic conditions, with new car and motorbike registrations rising. Furthermore, there has been a decrease in car accidents and casualties – a trend that has been observed over the last few years. However, regulatory developments in the motor market could negatively affect insurers with the “D.d.l. Concorrenza” legislation, including measures to improve transparency and further facilitate competition, with particular reference to the motor insurance market. The bill’s ultimate aim is to bring current rates closer to levels observed in other European countries and could depress premium rates.
The report also examines how consolidation has involved non-life and life companies, with overseas insurers and private equity firms seeking to gain a foothold in Italy. Yvette Essen, director, research & communications – EMEA, and report author, said: “A.M. Best notes that this consolidation reflects the strong growth of the life market as investors seek alternative products. Meanwhile, although the non-life sector has experienced a contraction in its top line, it has posted good net results and is profitable.”
To access a complimentary copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=243100 .
A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.