Italy Enacts Mandatory Catastrophe Insurance Law, Insurers Turn to Automation

Italy has taken a significant step in addressing the increasing risks posed by natural catastrophes, particularly floods and quake. With the introduction of a new law mandating obligatory flood and earthquake insurance, the country aims to protect businesses from the growing threat of extreme weather events. However, this new legislation presents a challenge for insurers who must quickly adapt to handle the expected surge in demand for flood insurance policies. To meet these new requirements, insurance companies are now turning to cutting-edge automated platforms designed to streamline quoting, distribution, and risk management.

The New Law: A Response to Rising Catastrophe Risk

In recent years, Italy has seen a notable increase in severe floods, landslides, hail and other weather-related disasters. The frequency of these events has not only devastated local communities but also highlighted the urgent need for more comprehensive risk management solutions. In response, the Italian government introduced legislation requiring mandatory flood insurance coverage for business owners. This is designed to ensure that all businesses have access to financial protection in the face of natural disasters.

While the law provides a safeguard for those at risk, it also puts pressure on insurers to offer quick, accurate, and affordable policies in a short amount of time. Given the scale of this new obligation, traditional methods of distributing quotes and binding policies are no longer sufficient.

Automation with Verisk’s Rulebook: The Key to Handling Peak Demand

To tackle this challenge, insurers are embracing technology in the form of fully automated insurance platforms. Verisk’s Rulebook is built to manage the complexities associated with natural catastrophe insurance, enabling insurers to keep up with the law’s requirements while managing their accumulation. One of the most significant advantages of Rulebook is its ability to dramatically accelerate the entire quote generation and policy binding process, ensuring that customers receive coverage quickly and efficiently.

By leveraging automation, insurers can avoid manual processes that would otherwise slow down their ability to offer quotes—particularly during peak periods when demand is highest. In the wake of natural disasters, the volume of inquiries for insurance can spike dramatically. Rulebook allows insurers to handle such peaks without compromising on accuracy or service quality.

Tailored Risk Management: Rule-Based Automation

At the heart of Rulebook is a sophisticated rule-based engine that allows insurers to input specific parameters for different types of risk. For example, insurers can set rules based on geographic location, historical flood and earthquake data, and the severity of potential future events. These customisable rules allow insurers to provide highly tailored quotes that reflect the unique risk profile of each customer. The ability to quickly adjust these parameters ensures that insurers can remain agile and responsive, even as risk conditions evolve.

Another critical feature of the platform is its ability to manage accumulation risk—i.e., the risk that a single event could lead to multiple claims across the insurer's portfolio. Insurers can input rules that help them spread risk evenly across their customer base, preventing excessive exposure in any one region. This capability is particularly important in a country like Italy, where certain regions are more prone to floods and other natural catastrophes than others.

Seamless Distribution and Quoting

Perhaps the most significant advantage of the automated platform is its role as a distribution engine. The platform can handle thousands of quotes simultaneously, ensuring that insurers can efficiently manage the expected spike in requests. For insurers, this means being able to generate quotes quickly and accurately, even during times of peak demand following a catastrophe. For customers, it means receiving insurance offers almost instantaneously, allowing them to make timely decisions about their coverage needs.

Additionally, the platform is designed to integrate with multiple distribution channels, from traditional insurance brokers to digital platforms and online aggregators. This flexibility allows insurers to reach a wide audience and provide customers with an easy, seamless way to obtain flood insurance.

Preparing for the Future: A Tech-Driven Insurance Market in the face of complexity

The introduction of this new law in Italy reflects a broader trend across the global insurance industry, where natural catastrophe risks are becoming more prominent due to climate change. As a result, insurers worldwide are looking for ways to leverage technology to better manage these risks – in a platform that can handle the complexities of specialty insurance. In Italy, the mandatory flood insurance law is serving as a catalyst for innovation, pushing insurers to adopt digital tools that improve efficiency, transparency, and customer service. And these tools will allow for the automated offering of much more complex policies – while managing the accumulation better than ever before.

By investing in these automated platforms, Italian insurers are not only ensuring compliance with the new law but also positioning themselves to succeed in a future where speed, accuracy, and risk management are critical to meeting the demands of both regulators and customers.

Conclusion

The new law mandating flood insurance in Italy is a crucial step towards protecting citizens from the growing threat of natural catastrophes. However, the law also places significant demands on insurers to provide rapid and reliable coverage. With the help of Verisk Specialty Business Solutions’ fully automated platforms, insurers can meet this challenge head-on – independent of how complex it will become, offering tailored quotes and managing risks with unprecedented efficiency. These platforms will not only help insurers navigate the immediate challenges posed by the new law but will also set the foundation for a more resilient, tech-driven insurance market in Italy.

As climate risks continue to rise, automation and digital innovation will play an ever-increasing role in how insurers respond to the needs of their customers. In Italy, the future of flood insurance is here—and it's automated.