Italian life insurance sector sees negative inflows in 2023: Fitch

Fitch Ratings’ analysis of the 2023 Italian Insurance Dashboard reveals a significant downturn in net inflows for the Italian life insurance sector for both traditional savings and unit-linked products.

According to analysts at Fitch, this decline occurred due to “the rise in interest rates, making alternative investments, such as Italian government bonds and savings products from banks, more attractive.” As a result, the overall money coming into the industry decreased.

Additionally, surrender rates surged in 2023 to levels not seen since 2012. However, Fitch predicts this trend will slow down in 2024 as interest rates decrease.

In the non-life sector, underwriting margins declined mainly due to record natural catastrophe claims affecting property lines, along with increased reinsurance expenses.

However, there was a reduction in claims growth in motor insurance, offsetting some losses. Looking ahead, Fitch anticipates stable claims growth in 2024, allowing the sector to recover lost underwriting margins through increased pricing.

Most Italian insurers maintained or improved their solvency ratios in 2023, particularly those with large life insurance activities. This was partly due to tighter credit spreads for Italian government bonds and strong earnings.

Looking forward to 2024, Fitch highlights several key areas to monitor, including easing lapse risk, the resurgence of traditional savings products, rising average motor insurance premiums, continued exposure to natural catastrophe risks, and the maintenance of strong solvency ratios, provided the spreads of Italian government debt does not deteriorate significantly.

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