InsurancePropertiesRiskClosing the Gap: The Urgent Need for Comprehensive Catastrophic Loss Insurance in Italy

11 December 20230

Home mortgage insurance coverage in Italy is an issue of growing importance, especially in light of the increasing risks posed by natural disasters. The Italian market offers a variety of insurance options, but there are also significant gaps and challenges for homeowners.

Insurance coverage for fire and burglary

In Italy, banks usually require fire and burglary insurance coverage when purchasing a property with a mortgage. This is a standard practice designed to protect the property from specific types of damage.

Life insurance policies for borrowers

It is also common for counselors to recommend life insurance policies for young couples. These policies cover the life of the borrower, providing financial security for the family in the unfortunate event of his or her death. This ensures that the family does not face the double burden of losing the breadwinner and potentially the home.

The gap in catastrophic loss coverage

Despite these existing insurance practices, there is a significant gap in catastrophic loss coverage that is often overlooked, especially by the younger generation in Italy. Given recent weather events and their impact, insurance coverage for catastrophic damages is becoming increasingly necessary. The vulnerability of Italian municipalities to natural disasters such as landslides and floods further underscores this need. More than 90 percent of Italian municipalities are at risk, exposing more than 12 percent of the population to these risks.

Economic impact of natural disasters

The economic impact of landslides and floods in Italy has been significant. From 2013 to 2019, these events caused about 20.3 billion euros in damages, with regions such as Emilia-Romagna, Campania, Tuscany, Abruzzo, and Liguria being the hardest hit. Notably, only a portion of this damage was compensated by the state, highlighting the financial vulnerability of the affected regions and the importance of adequate insurance coverage.

Low rates of insurance against natural disasters

Despite these risks, insurance policies against catastrophic risks remain rare in Italy: only about 4.5 percent of properties are insured against natural disasters such as landslides, floods or earthquakes. This figure is significantly lower than in other European countries, where insurance against such risks is more common.

Climate change and mortgage default

Another aspect to consider is the impact of climate change on mortgage defaults. As the frequency and severity of natural disasters increase, so does the risk of property damage and the resulting financial strain on homeowners. This, in turn, could lead to higher mortgage default rates, further underscoring the importance of adequate insurance coverage.
Today, banks themselves should be sensitive to this urgent problem, offering their customers comprehensive insurance coverage, but obviously at low and bearable costs, without bleeding especially young couples dry.

Home insurance options and considerations

Italian home insurance companies offer several affordable policies, but choosing the right coverage is complex. Several factors, such as property size, value, location, and specific risks, influence coverage and premiums. In particular, most policies have exclusions, and it is essential to read the clauses carefully to understand what is covered and what is not.


In summary, although Italy has a number of insurance options for homeowners, there are significant gaps, especially in coverage for catastrophic losses. The increasing frequency and severity of natural disasters, along with the economic impact of such events, highlight the need for more comprehensive insurance solutions. Homeowners need to be aware of available options and carefully consider the specifics of their insurance policies to ensure adequate protection against a range of risks.

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