Italys insurance industry could benefit from growth opportunities in the countrys healthcare sector as well as providing more natural catastrophe coverage, Swiss Re said this week.
In The Italian insurance market: opportunities in the land of the Renaissance, the reinsurer said both recent and expected legislative changes meant the country's insurance industry was likely to play a more prominent role in supporting the country's economic and demographic challenges.
Kurt Karl, Swiss Re' chief economist, said: 'The financial crisis has resulted in fiscal tightening and spending cuts which are accelerating the reduction and rebalancing of the welfare system in Italy, leaving a significant protection gap not only in healthcare and old-age provision, but also in natural catastrophe coverage.
'The insurance industry must prepare itself to take charge of its new, expanded role in Italy to support the state, private entities, and individuals in addressing some of their greatest economic challenges ever.'
In particular, the report highlighted the fact that Italy has the second largest percentage of elderly people as a share of those of working age in the world - behind Japan.
Despite this, the Italian state pension system has been 'heavily trimmed', meaning that as the responsibility for retirement saving is increasingly falling to individuals. This means insurers are being called on to play a more prominent role, Swiss Re said.
Swiss Re also noted the 'underdeveloped' non-motor insurance market in Italy, which it said was partly due to the public not wanting to buy insurance coverage unless it is mandatory.
However, recent legislative changes have made certain types of non-life insurance, such as professional liability, mandatory.
Italy has also traditionally had low levels of property insurance take-up, with heavy reliance on the state as the insurer of last resort. But, the recent earthquake in Emilia has offered a stark reminder that Italy is highly exposed to natural catastrophes and over-reliant on post-disaster government intervention.
'Given the state's reduced ability to cover costs in the future, non-life insurance will have room to expand and meet Italy's new protection needs,' Swiss Re said.