June 29 (Reuters) – Farmer Lamberto Mongardi in the northern Italian town of Lugo was hit twice by torrential rains that hit the area last month. Not only was much of his property washed away, but he found that his own insurance was not covered. Flood damage.
Mr Mongardi’s story is all too common in Italy, where many people do not insure their property at all and the state receives insurance money in the event of a disaster that hits Rome’s cramped finances. This is one of the reasons I rely on it.
“I trusted the person who arranged the insurance,” Mongardi said, but found that the lack of flood and earthquake protection was hidden in a small part of the contract. He added that he wonders what his policies really cover.
Between 1980 and 2020, only 5% of insured climate-related catastrophe losses were recorded in Italy, compared with the European average of 27%, according to the European Central Bank.
Industry watchdog IVASS said “the insurance deficit is clear”, citing bureaucratic complexity, high premiums and a large number of small businesses preferring to take risks rather than spend more.
Compensation for those affected by Italy’s frequent earthquakes, landslides and floods is a significant burden for the eurozone’s second most indebted country, squeezing resources available for other things. there is
Earthquakes in central Italy in 2009 and 2016 caused more than €30 billion ($33 billion) in damages to public accounts, equivalent to about 1.7% of the country’s output.
Following May’s floods in Emilia-Romagna, which killed 15 people, Prime Minister Giorgia Meloni allocated €1.5 billion for the region, adding another €200 million to the €490 million state fund for natural disaster relief. increased.
“We have to overcome the reluctance of businesses and families to take out insurance against natural disasters,” Minister of Industry Adolfo Urso said. The government is working on financial incentives to encourage it, he added.
As of March 2022, only 5% of households were insured against natural disasters, according to the insurance association ANIA.
‘Vulnerable to everything’
Rising temperatures make the problem even more urgent.
“Climate change catastrophes in Italy will become more frequent and more intense,” said climatologist Luca Mercari.
“We are vulnerable to everything from forest fires to melting mountain glaciers to rising sea levels along our 8,000-kilometer (5,000-mile) coastline.”
Massimiliano Gianzanti, president of the farmer’s group Confagricortura, said the group was trying to instill an “insurance culture” and had pushed farmers to take out insurance to get European Union subsidies. .
“Unfortunately, our call was not heeded,” he said.
Elsewhere in Europe, and even more so in the United States, increased private insurance means less strain on public funds.
For example, in the UK and Spain, homebuyers are required to take out comprehensive building insurance in order to take out a mortgage. All homeowners in France are required to have insurance.
Only 10.5% of Italian farmland was insured in 2021, according to industry watchdog IVASS. In the same year, crop coverage in the United States reached a record high of 74 percent, according to the USDA.
Many Italians accuse insurers of being stingy and not paying their premiums.
“In 2014 my farm was flooded, but I received very little from my insurance, so I decided to cancel my insurance,” said a farmer from Imola, Emilia-Romagna, whose fields were flooded this year. Andrea Ferri, who was spared, said:
“Cultural Issues”
Insurers say the increasing frequency of climate-related events has made assessing risks and costs more complex and costly.
They note that few people are displaced and those who do are mostly in high-risk situations. This creates a vicious cycle of reduced profits and increased risks for insurance companies, forcing them to raise insurance premiums and forcing other insurance companies to stop offering insurance.
“In Italy, insurance is seen as a tax, especially for small businesses,” said Simone Lazaro, chief underwriting officer at Verona-based insurer REVO (REVOI.MI). “It’s a cultural issue.”
Other countries have also found their own solutions.
In the UK, where flooding is the main natural hazard, people living in flood-risk areas living in houses built before 2009 are eligible for insurance subsidies thanks to a reinsurance scheme called Flood Re, launched in 2016. I can receive it.
This reinsurance is partly funded by levies on all building insurance sold in the UK, which raises £135m (approximately $172m) annually.
In Spain, a similar system has been in place since 1941 as a backstop for insurance companies in the event of a natural disaster, but only for those who already have their own insurance.
The fund has a total value of approximately EUR 9 billion and is funded by a premium to each private insurance policy.
Italian insurance association ANIA said it hoped “to build partnerships between the private and public sectors, as seen in many European countries”.
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Additional reporting by Gavin Jones, Belén Carreno, David Milliken, Lee Thomas, Maria Martinez and Elisa Anzorin Editing by Gavin Jones and Mark Potter
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