Management of catastrophic events: Italy changes course

The introduction of Italy’s first broad mandatory insurance scheme against catastrophic risks marks a genuine shift in approach: the focus is no longer on the ability to react, but on the capacity to prevent. But what does this mean today for companies and insurers? And what is the critical role played by control and oversight functions?

Context: Italy’s New Framework for Catastrophic Risk Management

With the 2024 Budget Law, Italy has opened a new chapter in the management of catastrophic risks. For the first time, a broad mandatory insurance requirement has been introduced for all businesses operating within the national territory, with the aim of engaging the private sector in the prevention and mitigation of natural hazards that can severely damage corporate assets and disrupt business continuity — with potential repercussions for the Italian economic and social fabric.

Before this reform, insurance coverage against catastrophic risks in Italy remained significantly limited, despite the country’s high exposure to natural disasters, greater than that of many comparable industrialized nations. This gap had long resulted in repeated public interventions to support affected areas, generating increasing financial pressure on public accounts.

This represents a major shift in direction: Italy is moving from a system historically based on ex post public relief measures for disaster-stricken areas to a preventive model centered on broader insurance penetration and enhanced economic resilience.

Following the 2024 Budget Law, all companies will therefore be required to take out compulsory insurance policies covering damage caused by floods, inundations, overflows, earthquakes, and landslides.

In a country with high seismic and hydrogeological exposure such as Italy, mandatory insurance acts as a lever for sustainability and competitiveness, as well as a stabilizing factor for corporate balance sheets. Risk management becomes an integral part of corporate strategy and a key component of responsibility towards stakeholders and local communities.

Regulatory Framework: 2024 Budget Law and Implementing Decrees

With regard to catastrophic risks, the insurance requirement for enterprises was introduced by Article 1, paragraphs 101–112, of the 2024 Budget Law (Law No. 213 of 30 December 2023). The operational provisions were subsequently defined by the implementing Regulation adopted through MEF Decree No. 18 of 30 January 2025.

Later, Decree-Law No. 39/2025, converted into Law No. 78/2025, postponed the effective date of the obligation and introduced a phased implementation based on company size.

Enterprises Subject to the Requirement

The obligation applies to all companies with their registered office in Italy, as well as companies with a registered office abroad that operate through a permanent establishment in Italy and are required to register with the Business Register.

Decree-Law No. 39/2025, as converted into Law No. 78/2025, establishes a staggered entry into force depending on the enterprise’s size.

Deadlines for Purchasing the Mandatory Policies

Large enterprises (turnover > €150 million and ≥ 500 employees): by 31 March 2025, with a 90-day grace period;
Medium-sized enterprises (turnover < €50 million, employees < 250, or balance sheet total ≤ €43 million): by 1 October 2025;
Small and micro-enterprises (turnover < €10 million, employees < 50): by 31 December 2025.

Failure to comply with the mandatory insurance requirement prevents companies from accessing public grants, subsidies, or incentive schemes.

What Companies Need to Do Today

After verifying their size classification in order to determine the applicable deadline, companies must proceed with the purchase of the mandatory insurance policy, which must cover the following assets:

Land and buildings
Plant and machinery
Industrial and commercial equipment

It is essential to carry out a comprehensive risk assessment by analysing:

The site’s geographical exposure and vulnerability;
The historical record of catastrophic events in the area;
The company’s financial capacity to absorb potential losses.

Finally, companies should integrate the insurance coverage into their corporate risk management framework, ensuring consistency with business continuity and sustainability strategies, and plan the policy subscription well in advance to avoid delays that could result in the loss of access to public benefits.

What Insurance Companies Need to Do

For insurers, the entry into force of the mandatory coverage requirement marks a phase of significant technical and organizational transformation.

Adapt product offerings, ensuring clear coverage terms and parameters aligned with the new obligations.
Strengthen catastrophic risk assessment models by integrating climatic, geological, and territorial components.
Define an adequate reinsurance strategy consistent with the portfolio’s newly increased overall exposure.
Review risk governance frameworks to ensure that risk appetite and tolerance limits are updated and aligned with solvency needs.

The Key Role of Control Functions

In accordance with the Decree of 30 January 2025 (Art. 5, para. 5), the Actuarial Function is required to integrate the Underwriting and Reinsurance Opinion by providing specific evidence regarding risk acceptance practices.

At the same time, the Risk Management Function (Art. 5, para. 4) must describe in its annual report the methodologies and models used to define risk tolerance limits, ensuring alignment between the company’s strategy, available capital, and stress-testing scenarios.

“Actuaries play a strategic role in transforming the uncertainty arising from complex climate scenarios into multivariate analyses that incorporate all relevant risk factors. This enables insurance companies not only to comply with regulatory requirements, but also to proactively steer business decisions related to catastrophic risk coverage.”

- Luciano Mari, Partner Actuarial Services Forvis Mazars in Italia

The Contribution of Forvis Mazars

As climate-related financial risks gain increasing importance, regulatory expectations and stakeholder demands are pushing companies to integrate them into their risk-management systems. However, every organization faces different exposures determined by factors such as industry sector, geographical location, business model, and risk appetite.

For this reason, effective integration requires a truly proportionate and tailored approach—one that reflects the company’s specific vulnerabilities to physical and transition risks associated with climate change.

Drawing on its international experience and its established expertise in countries where risk transfer to insurance companies is more advanced, Forvis Mazars is equipped to provide insurers with qualified support in managing and monitoring the risks they underwrite through:

Ex-ante and ex-post assessments of underwritten risks;
Development of methodological frameworks for risk management and monitoring;
Design of risk-appetite and tolerance models aligned with solvency requirements;
Support for climate governance and the integrated management of transition risks.

The goal is twofold: ensuring regulatory compliance and turning the mandatory insurance requirement into an opportunity for sustainable and resilient growth.