Opportunities and challenges abound in Italy’s market for financial lines which is angled more towards mid-market firms than its European neighbours, writes Marina Chierici, Branch Manager of Alta Signa Italia.
Automation and efficiency will be crucial to unlocking Italy’s growing insurance market for financial lines. Regionally this is a maturing market, with more and more new Italian buyers of lines such as cyber, and directors’ and officers’ (D&O) liability coming online each year, coupled with increasing volumes of renewal business particularly among Italy’s large SME sector.
Indeed, the Italian corporate landscape consists of many more mid-size and smaller companies in the €10m+ revenue range compared with its European neighbours. In effect, the SME sector is a dominant factor in Italy’s economy and this changes the demands and requirements of the local insurance sector, placing a large emphasis on local knowledge, expertise and networks.
As is the case in other EU countries, these SME commercial buyers are not legally mandated to purchase financial lines covers, which in addition to their scale, affects the size of the limits that insurers will engage with.
Nevertheless, while certain sectors have been hit by the pandemic- such as tourism and hospitality - Italy’s SME sector in general has a cleaner claims history in recent years compared with Europe’s large multinationals - so ‘one size fits all’ market-wide pricing trends are not an appropriate mechanism in this region.
However, claims activity has also been artificially suppressed by the suspension of Italian insolvency procedures, together with suspension of loan repayments from companies. These props are being removed from January 2022 and there is concern that some insolvency and loan non-repayments may come to light, and this may lead to some claims.
The right balance
A case by case approach is required, involving expert assessment of the risks a company faces. This clashes somewhat with the growing demand from brokers and insurers for operational efficiency and automation - insurers want a ‘low touch to no touch’ renewals process, automating procedures for quoting, binding and issuing new policies.
In reality this means that a combination of technology and human expertise will be required to tailor existing underwriting products – large, sophisticated and with high limits – for this region.
It also means that intermediaries are more valuable for their advice and local insights. Particularly MGAs like Alta Signa - which is a relatively new model for Italy - are finding strong demand to help brokers strike the right balance between offering excellent service and high placement and processing efficiency. This has certainly been a focal point of my discussions with brokers over recent months.
Essentially, there is a gap in the market for those willing to innovate, compromise and think flexibly
This will necessitate a trade-off between automating to find a good fit for operational efficiency while providing the necessary human touch tailoring to fit individual mid-market clients’ needs.
Alta Signa is developing the technology and systems to move us in the right direction. The main needs of the market are service and capacity, with high quality service in particular being critical. Our team has ambitions to grow sustainably in Italy, in line with increased business flow, and taking the same quality of service we already bring to our other lines.
We take a strict and technical approach to underwriting, focusing on quality of business to fuel a stronger long-term position for our broker and insurance partners.
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