Country Profile
ITALY
www.lloyds.com/ItalyMI
May 2014
chris.brown@lloyds.com
© Lloyd’s 2
MAIN EXPORT PARTNERS: Germany 13%, France 11%, US 7% (2013)
MAIN IMPORT PARTNERS: Germany 15%, France 8%, Chin...
© Lloyd’s 3
Insurance: Yes on a Freedom of Service Basis (except motor third party liability, surety and life insurance on...
© Lloyd’s 4
Change of government in February 2014 does not affect political stability in the six-month outlook. Incoming p...
© Lloyd’s 5
2012 MAJOR DIRECT INSURERS
(Gross Written Premiums in EUR m)
2012 DIRECT GROSS PREMIUMS
(Gross Written Premium...
© Lloyd’s 6
Lloyd’s
Country
Representative
SOURCE: Market Intelligence based on *Gross Signed premiums; Xchanging (2014); ...
© Lloyd’s 7
2014 INDUSTRY EVENTS 2014 LLOYD’S EVENTS
 Lloyd’s ILLCA Meet the Market Event, October
 Managing Agent Recep...
© Lloyd’s 8
APPENDIX
MACRO-ECONOMIC & BUSINESS ENVIRONMENT DATA
Source: IMF (www.imf.org/external/data.htm), World Bank (h...
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Country Profile ITALY May 2014

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Country Profile
ITALY
www.lloyds.com/ItalyMI
May 2014

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Country Profile ITALY May 2014

  1. 1. Country Profile ITALY www.lloyds.com/ItalyMI May 2014 chris.brown@lloyds.com
  2. 2. © Lloyd’s 2 MAIN EXPORT PARTNERS: Germany 13%, France 11%, US 7% (2013) MAIN IMPORT PARTNERS: Germany 15%, France 8%, China 8% (2013) MAIN EXPORTS: Engineering products, textiles and clothing, production machinery MAIN IMPORTS: Engineering products, chemicals, transport equipment FULL NAME / CAPITAL CITY: Italian Republic / Rome LANGUAGE: Italian Source: Disaster Statistics based on: Prevention Web (2014); Export Statistics based on CIA World Factbook; Doing Business Indicators based on World Bank & World Economic Forum KEY FACTS GDP (PPP): US$ 1,085bn (Global Rank #12) POPULATION: 61.4m (Global Rank #24) IMF CATEGORISATION: “Developed” 2012 Rank 2013 Rank Change in Rank EASE OF DOING BUSINESS: 87 73 14 COMPETITIVENESS: 43 42 1 FREEDOM FROM CORRUPTION: 68 67 1 DISASTER YEAR ECONOMIC COST (US$ x 1000) Earthquake 1980 20,000,000 Flood 1994 9,300,000 Flood 2000 8,000,000 Earthquake 1997 4,524,900 Extreme Temp. 2003 4,400,000
  3. 3. © Lloyd’s 3 Insurance: Yes on a Freedom of Service Basis (except motor third party liability, surety and life insurance on an Establishment basis) Reinsurance: Yes Coverholders: Yes LLOYD’S TRADING POSITION Italy www.lloyds.com/crystal All data, sources & data limitations are available for download at www.lloyds.com/comparecountries * 2013 total non-life based on CAGR projection Percentile Rank (1-100) 2012 Purchasing Power Parity (PPP) basis in International $ bn Purchasing Power Parity (PPP) basis in International $ GOVERNANCE INDICATORS SIZE OF ECONOMY WEALTH PER CAPITA Premiums in US$ m TOTAL NON-LIFE DIRECT INSURANCE MARKET* NON-LIFE DIRECT INSURANCE MARKET Premiums in US$ m; by OECD Class LLOYD’S GROSS SIGNED PREMIUMS Gross Signed Premiums in US$ m; by country of origin KEY STATISTICS ES FRIT Spain FranceItaly 2012 82 88Government Effectiveness 66 Political Stability and Absence of Violence/Terrorism 63 43 64 Control of Corruption 58 82 90 Regulatory Quality 75 78 83 Rule of Law 62 Voice and Accountability 74 83 90 80 90 1,729 1,805 2,109 0 500 1,000 1,500 2,000 2,500 3,000 2006 2013 2018f IT ES FR 29,433 29,812 34,224 0 10,000 20,000 30,000 40,000 2006 2012 2018f IT ES FR 50,701 45,519 47,886 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 2011 2012 2013 IT ES FR 617 590 650 0 100 200 300 400 500 600 700 800 2011 2012 2013 IT ES FR 25,956 7,183 6,312 3,847 662 1,559Motor PA & Health Property Liability MAT Miscellaneous Italy 2012 US$ 45.5bn
  4. 4. © Lloyd’s 4 Change of government in February 2014 does not affect political stability in the six-month outlook. Incoming prime minister Matteo Renzi will inherit a weak coalition government in a handover of power that avoids an early election. A cabinet reshuffle will result in a smaller executive, albeit with larger Democratic Party (Partito Democratico: PD) representation. The incoming administration will have the same junior coalition partners in the New Centre Right (Nuovo Centrodestra: NCD) and Civic Choice (Scelta Civica: SC), as well as the same 10-seat majority in the Senate (upper house). An early test of government legitimacy will come at the European Parliament elections in May. Pro-employment labour market reforms likely in H2 2014. Proposals for a new Jobs Act creating a single employment contract system, with initially reduced protection for younger workers, were tabled in January. The changes would lower some labour costs for businesses and introduce less restrictive hiring and dismissal rules. In exchange, the proposals call for improved unemployment benefits to protect laid-off workers (including temporary workers). The intended time frame for the new labour laws, including enactment of a labour code, is eight months. Most of the proposals are likely to be passed, although the unions would block deep labour-market liberalisation. December 2013's Constitutional Court ruling that aspects of Italy's electoral law are unconstitutional means it is highly unlikely there will be a new election until the electoral system is revised. If parliament were dissolved without a new system having been adopted, the default position would be a return to the previous mixed proportional representation system, rather than a continuation of current electoral law. This would produce short-lived governments, hung parliaments, and political instability. The government does not have the political strength to broker a quick deal to rewrite the electoral law. With the support of the PD and opposition Forza Italia (FI), the government could pass new electoral legislation in April. An election is still likely in late 2014 or early 2015. Incoming administration plans four-month emergency programme to revive the business environment. Renzi is embarking on a drive to deregulate the labour market, simplify tax administration, change the structure of regional governments, and carry out institutional changes to overhaul Italy's inefficient Senate. The new cabinet has promised progress within 100 days of entering office. However, the proposals are likely to face delays and will not lead to a sudden improvement in productivity or employment conditions GROSS DOMESTIC PRODUCT (GDP) (nominal GDP levels in billion US$; Real GDP change) For daily updates visit: > www.ihsglobalinsight.com BUSINESS ENVIRONMENT INFORMATION (provided by IHS Global Insight, April 2014) TOP-10 SECTORS (BY VALUE ADDED) (value added in billion US$ & 2014 Change in real %) BUSINESS ENVIRONMENT TOP SECTORS 2013 Value Added 2014 Percentage Change 1. Retail trade - total 39.2 2.1 2. Wholesale trade 30.3 4.0 3. Banking & related financial 27.2 4.8 4. Public Admin. & Defense 21.0 3.0 5. Insurance & pensions 13.8 4.5 6. Land transport 11.8 3.8 7. Business services 10.6 4.9 8. Real estate 10.5 2.3 9. Health and social services 10.2 3.5 10. Construction 10.1 2.6 Top-10 Total 184.7 1.7% 0.6% -2.4% -1.8% 0.4% 1.0% 1.2% 0.9% 0.9% -3% -3% -2% -2% -1% -1% 0% 1% 1% 2% 2% 0 500 1,000 1,500 2,000 2,500 2010 2011 2012 2013 2014 2015 2016 2017 2018
  5. 5. © Lloyd’s 5 2012 MAJOR DIRECT INSURERS (Gross Written Premiums in EUR m) 2012 DIRECT GROSS PREMIUMS (Gross Written Premiums) Source: Regulator > www.ania.it Source: Regulator > www.ania.it The size of the non-life Insurance market in 2012 was US$ 45.5bn: Despite being one of the largest insurance markets in Europe, the Italian market is underdeveloped with the dominance of motor business, few large financial groups and agents. However, insurance premiums are growing faster than GDP, especially in smaller business classes. Limits remain low, risk retention is a continuing feature and many lines of business suffer from low penetration. International foreign insurers: Foreign company involvement in the market is strong and foreign ownership accounts for around a third of all non-life companies. Modest Broker market: Brokers play a relatively modest role in the Italian non-life sector as the major distribution channel can be found in the agent network. Foreign-owned reinsurance market: Following numerous acquisitions in recent years, the local reinsurance market is effectively foreign-owned, with no pure Italian reinsurers. In 2010, the Reinsurance market grew by 11%. Outlook: Regulatory and legislative developments are expected to pose challenges to the operations and structures of the life and non-life market in Italy. Insurers are likely to raise motor insurance rates, which have been insufficient in returning and underwriting profit. BUSINESS CULTURE GUIDE > http://www.kwintessential.co.uk (View Resources > Culture Guide) QUICK LINKS / USEFUL SOURCES Insurance Market Profiles > www.iii.org/international/profiles The Italian Insurance association > www.ania.it The Insurance Supervisory Institute > www.ivass.it Lloyd’s Agency Network > www.lloyds.com/agency Lloyd’s Claims Team > www.lloyds.com/claims INSURANCE ENVIRONMENT 7724 6970 4333 3988 2034 1627 1603 1333 810 684 GENERALI FONDIARIA-SAI ASSICURATIVO UNIPOL ALLIANZ SE REALE MUTUA CATTOLICA ASSICURAZIONI AXA GROUP AMA VITTORIA ASSICURAZIONI SARA 25,956 7,183 6,312 3,847 662 1,559Motor PA & Health Property Liability MAT Miscellaneous Italy 2012 US$ 45.5bn
  6. 6. © Lloyd’s 6 Lloyd’s Country Representative SOURCE: Market Intelligence based on *Gross Signed premiums; Xchanging (2014); unaudited figures based on country of origin and processing by calendar year; see Appendix for details Mrs Nicoletta Andreotti* Corso Garibaldi, 86 20121 Milan Italy TELEPHONE: +39 0 26378881 EMAIL: informazioni@lloyds.com *New country manager to be employed late 2014 Gross Signed Premiums; Direct versus Reinsurance; in million US$ 2009-2013 LLOYD’S TOTAL PREMIUMS 2013 LLOYD’S HIGH LEVEL CLASSES Gross Signed Premiums; high level classes; in million US$ LLOYD’S BUSINESS 383 357 369 361 443 231 238 247 229 207 0 100 200 300 400 500 600 700 2009 2010 2011 2012 2013 Direct Reinsurance 53.7 22.9 2.5 248.6 17.4 172.6 47.3 57.7 26.9 0.0 0 50 100 150 200 250 300 Accident & Health Aviation Casualty Treaty Casualty Energy Marine Property (D&F) Property Treaty Overseas Motor UK Motor 2013 GROSS SIGNED PREMIUMS* Total US$ 650m Reinsurance US$ 207m Direct US$ 443m *COUNTRY OF ORIGIN PREMIUMS  Policyholders are based or headquartered in this territory;  Premiums may be written outside this territory; X Not necessarily where risks are located X May differ to what is reported to local regulator (dependent on local requirements). A Type 3 office is defined as a Lloyd's office headed by a Country Manager who in addition to meeting regulatory requirements in that territory also proactively supports the business development objectives of the managing agents in that territory. Type 3 Office
  7. 7. © Lloyd’s 7 2014 INDUSTRY EVENTS 2014 LLOYD’S EVENTS  Lloyd’s ILLCA Meet the Market Event, October  Managing Agent Reception (Milan), July  Class of Business Event- Reinsurance, September  Lloyd’s/ANRA event on emerging risks, November MARKET INTELLIGENCE Available Market Intelligence products for this territory include: Country Profile Market Presentation Country Roundup Class Review – Lite (work in progress) LLOYD’S OBJECTIVES  Increase the perception of economic value of Lloyd’s by major brokers and clients by application of our Market Matrix - matching market appetite and strategy with brokers and client‘s needs. Increase underwriters perception of local brokers and clients needs; help moving underwriters ‘out of their box’ and closer to the Italian market realities.  Establish new Country Manager.  Review present portfolio and explore commercial and industrial business development opportunities: Closely work with top brokers with high unexploited potential to understand positions, offer assistance to overcome obstacles and take advantage of the Lloyd’s offer; promote an increasingly efficient management of OMCs registration and maintenance ; plan steps to exploit relationship further/improve efficiency; share positive experience with other Lloyd’s offices for possible replication.  Strengthen and restore relationships with local insurers to improve Lloyd’s position in the market and promote collaboration on specialist insurance business as well as reinsurance. LLOYD’S KEY INITIATIVES 2014 EVENTS & MARKET INTELLIGENCE www.lloyds.com/ItalyMI
  8. 8. © Lloyd’s 8 APPENDIX MACRO-ECONOMIC & BUSINESS ENVIRONMENT DATA Source: IMF (www.imf.org/external/data.htm), World Bank (http://data.worldbank.org/), IHS Global Insight. Notes: GDP data on size and wealth of the economy is reported in Purchasing Power Parity (PPP) terms; this is the most accurate indicator of the true standard of living in each country and therefore potential demand. To calculate this, GDP is converted from local currency to an international $ currency using PPP exchange rates rather than the market exchange rate. The PPP local currency-to-international $ exchange rates are determined such that a standard basket of goods has the same price in international $ terms in each country. This adjusts for the differing costs of goods across countries, when converted at market exchange rates. INSURANCE MARKET DATA Source: Reported data derived by Lloyd’s Market Intelligence team; original source is regulatory bodies, associations, third party information providers. Notes: Data is reported in US$. For more information, see www.lloyds.com/comparecountries. Exchange Rates Note: Where required, data has been converted to US$ using annual average exchange rates as per www.oanda.com. LLOYD’S PREMIUM DATA Source: Reported data derived by Lloyd’s; original source is Xchanging (data therefore contains only premiums processed by Xchanging). Notes: Data is reported is US$, on a calendar year basis and is signed gross premiums. This differs from the data published in the Lloyd’s Annual Report, which is also on a calendar year basis, but is written gross premiums and sourced directly from Syndicates. Differences are therefore (1) timing inconsistencies between signed and written gross premiums; (2) inconsistent use of exchange rates by Syndicates and Xchanging; & (3) incompleteness of Xchanging data set for certain classes of business (a substantial amount of premium is not processed by Xchanging and missing from the REG 258 data set; this comprises, for example, UK Motor). Exchange Rates Note: Data has been converted to US$ using monthly exchange rates provided by Xchanging. Definitions: Gross Signed Premiums: Original and additional inward premiums, plus any amount in respect of administration fees or policy expenses remitted with a premium but before the deduction of outward reinsurance premiums. Calendar Year: Relates to the calendar year in which the premium, additional or return, is processed by Xchanging. This is irrespective of the actual underwriting year of account, which is determined by the inception date of each risk. Country of Origin: Denotes the domicile of the insured party (i.e. the coverholder or policyholder). This is the country from which demand for the insurance / reinsurance emanates, & is irrespective of the country to which the risk is classified for regulatory reporting purposes. Example: A policy holder in the UK insuring a holiday home in France would be classified as a UK risk by “Country Of Origin”, but “French” for regulatory reporting purposes. Similarly a risk incepting on 1st December 2007 would be classified at 2007 “Underwriting Year of Account” but may not be processed by Xchanging until 2008 and so be allocated to the 2008 “processing year”. ACCESSING THE DATA: to access the raw data in this document, and equivalent data for other countries, see www.lloyds.com/comparecountries.  DISCLAIMER: This document is intended for general information purposes only. Whilst all care has been taken to ensure the accuracy of the information, Lloyd's does not accept any responsibility for any errors or omissions. Lloyd's does not accept any responsibility or liability for any loss to any person acting or refraining from action as a result of, but not limited to, any statement, fact, figure, expression of opinion or belief contained in this document.

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