AM Best reviews outlook on Italian non-life sector

AM Best

AM Best has revised its outlook for the Italian non-life insurance segment from negative to stable.

AM BestThe firm said that it was ameliorating its position due to the sector’s limited exposure to catastrophe losses and resilient risk-adjusted capitalization. It added that it expected for the challenging economic environment to be a ‘significant headwind’ for Italian non-life insurers this year.

Previously, the ratings agency had said that its negative classification for the sector in 2022 had been because of economic uncertainty, declining underwriting profitability, and an elevated risk profile.

AM Best wrote: “In 2022, AM Best expects reduced non-life insurance premium growth, which will be very dependent on the economic condition of the country. The high level of uncertainty around the economy could negatively impact consumer sentiment.”

It added: “Although the latest forecasts for Italian GDP project modest growth for 2022, there remains significant uncertainty, particularly around the potential appearance of new variants of the COVID-19 virus. Disruptions in energy and commodity markets continue to drive up inflation and disrupt global supply chains, which is increasingly likely to constrain economic growth.”

K2 International


It went on: “Inflation is being exacerbated by the conflict in Ukraine and the international sanctions imposed on Russia, and there is heightened concern about a potential recession. In order to combat inflation, the European Central Bank is likely to tighten its monetary policy; however, any premature measures are likely to cause a slowdown in the economy, which in turn could reduce the growth prospects for non-life insurers in Italy.”

AM Best’s outlook revision comes three months after Fitch Ratings said that the non-life sector in Italy (and the UK) differed from the rest of Europe.

Back then, the agency said that the non-life sector in those countries was deteriorating due to increased claims frequency, particularly on the automotive side.

During lockdown restrictions, motor fell sharply due to low driving activity, and was well below normal levels, However Fitch expected it to return to pre-pandemic levels in 2022 as the economic recovery continues.

However, Fitch said the country’s premium rates were unlikely to keep pace. He wrote that he believed insurers were reluctant to push up premiums given the competitive pricing environment and customer expectations of rebates following low claims during the pandemic.

Print Friendly, PDF & Email

Source link


What do you think?

5k Points
Upvote Downvote

Written by admin

Leave a Reply

Your email address will not be published.

GIPHY App Key not set. Please check settings

Your life insurance plan can help to sufficiently safeguard your estate planning needs- here’s how

Amana Takaful Life Insurance bounces back in Y2021 with a significant turnaround – Adaderana Biz English