CAT NAT Policies
What They Cover and Why They Will Be Mandatory from 2025
Insurance policies against natural catastrophic risks (CAT NAT) are becoming a key topic in the Italian insurance market. The 2024 Budget Law introduced significant changes in this area, but with the "Decreto Milleproroghe," the obligation has been postponed to March 2025. Additionally, in the absence of an implementing decree, the mandate is not yet in effect. Let’s explore what this entails and what the next steps are.
What are CAT NAT insurance policies and what risks do they cover?
CAT NAT insurance policies are insurance products designed to provide protection against damages caused by extraordinary natural events. Among the most common risks covered are:
Earthquakes: Structural damage to buildings and facilities caused by seismic shocks.
Floods: Damage caused by river overflows or torrential rains.
Landslides: Consequences of landslips and ground movements.
Tidal waves and tsunamis: Destruction caused by abnormal waves generated by seismic events.
These policies can include coverage for both direct damage to properties and indirect damage, such as business interruption or temporary relocation costs.
When Do They Apply?
The CAT NAT insurance policy can be activated in the event of natural disasters classified as "catastrophic" according to current regulations. For the coverage to be valid, the event must be documented by official entities such as the Civil Protection or the National Institute of Geophysics and Volcanology (INGV). Additionally, it is essential to comply with the terms of the contract, including any deductibles and coverage limits.
New Measures Introduced by the 2024 Budget Law and Updates
According to Article 1, paragraphs 101-111 of the 2024 Budget Law (Law No. 213 of December 30, 2023), all businesses with a registered office in Italy or a permanent establishment in the national territory were required to take out insurance contracts to cover damages to assets recorded in the balance sheet by December 31, 2024. However, the Decreto Milleproroghe has postponed the deadline to March 31, 2025.
The covered events include:
Earthquakes
Floods
Landslides
Inundations
Overflows
It is important to note that, in the absence of an implementing decree, no insurance solutions currently exist that allow businesses to comply with this requirement. As a result, the obligation is not yet in effect, and the insurance market is awaiting further regulatory clarifications.
Why the Mandatory Requirement?
The decision to make CAT NAT policies mandatory stems from several reasons:
Increasing vulnerability of Italian territory: Italy is among the European countries most exposed to natural risks.
Reducing the burden on public finances: The mandatory requirement aims to lessen dependence on state emergency interventions by encouraging private entities to protect themselves.
Citizen protection: Many families and businesses lack sufficient resources to cope with the damages caused by natural disasters.
Although the mandate has been postponed and is not yet in force, it is advisable to start gathering information and preparing in advance by selecting the most suitable coverage for your needs.
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