The Italy insurance outlook for both life and property and casualty insurers remains stable, Moody’s Ratings said in a report published in October 2026. The credit rating agency cited improved life insurance liquidity, sustained underwriting profitability and strong capital positions.

Key Takeaways

  • Life insurance net inflows rose to €3.6 billion in the first half of 2026 as fewer customers surrendered policies.
  • Moody’s expects property and casualty underwriting to remain strong in 2027, although rising claims costs could pressure margins.
  • A business catastrophe insurance mandate could support premium growth but also increase insurers’ exposure to concentrated losses.

Italy insurance outlook supported by life inflows

Moody’s assessment was unchanged from the previous year. In life insurance, fewer policy surrenders helped cash flows improve during the first six months of 2026, while technical reserves continued to grow.

Total life insurance premiums fell 1.2% from a year earlier, but net inflows rose 26.7% to €3.6 billion. Moody’s said fewer withdrawals strengthened liquidity and reduced pressure on insurers’ finances.

The agency expects unit-linked products to account for a growing share of new policies. These products generally place investment risk on policyholders and require less regulatory capital than traditional guaranteed savings products, although insurers’ fee income and new business can become more sensitive to market fluctuations.

Claims costs temper property insurance outlook

Moody’s expects strong property and casualty underwriting results in 2027, with non-motor insurance remaining an important earnings contributor. It attributed the sector’s performance to earlier premium increases, fewer claims and limited catastrophe losses.

Motor insurance profitability also improved in the first half of 2026, partly because of adjustments to reserves for claims from previous years. However, Moody’s expects profitability growth to moderate as premium increases slow and claims costs remain a constraint.

Prices for vehicle spare parts and construction materials continue to rise, while more severe individual claims are increasingly offsetting the benefit of fewer claims, the agency said.

Catastrophe cover offers growth and risk

Italy requires businesses to insure certain assets against specified natural catastrophe risks. Moody’s expects the mandate to increase uptake, particularly among small and medium-sized enterprises, and support non-motor premium growth.

The number of SMEs with the required cover rose more than threefold between June 2025 and April 2026 to approximately 233,000, Moody’s said. Even so, only 15.8% of businesses covered by the mandate had obtained the required protection by April 2026.

Wider coverage could also leave insurers facing claims across many policies from a single disaster. Moody’s said premiums, policy limits and reinsurance arrangements would be important in managing that exposure.

Capital rules and investment risks

Moody’s described Italian insurers’ solvency ratios as generally high and their own funds as largely good quality. It expects the Solvency II review to reduce capital requirements for some insurers, particularly those with long-term liabilities, while additional compliance requirements raise costs.

The European Insurance and Occupational Pensions Authority’s Solvency II review measures include guidelines on liquidity vulnerabilities and changes to the calculation of the risk margin. The revised framework is due to take effect on January 30, 2027.

Interest rates and Italian sovereign bond spreads remain risks for insurers’ investment portfolios, especially in life insurance. Higher rates can improve investment returns, but can also make bank deposits more attractive to savers and cause unrealized losses on fixed-income holdings.

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