Profitability of Italian insurers under pressure as inflation bites

Italian non-life insurers reported strong, albeit deteriorating 1H22 underwriting profitability, as measured by the combined ratio, mainly due to the increase in claims frequency and average claims cost, reports Fitch Ratings. 

The rating agency expects the year end-2022 combined ratio to have deteriorated from year end-2021, although it is expected to remain below 100%.

Premium rates for motor third-party liability policies fell further in 1H22, as a result of both strong competition and customers’ expectation for further rebates. Fitch expects average premiums to stabilise in 2022.

Average premium rates for motor third-party liability policies continued to fall in 1H22 to €303 from €312 in 1H21.

This was mainly due to strong competition and customers’ expectation for rebates, although the coronavirus-related discounting initiatives following the implementation of the lockdown measures in Italy were discontinued in early 2021. Strong competition is also fuelled by ever-higher penetration of telematics devices installed.