Loss-free programs were down 5 percent to 10 percent at the January 1, 2011 reinsurance renewal in Italy. Those affected by losses experienced average increases of 10 percent, on average. For per risk working layers, general third-party liability and fire risk rates were stable. Motor third-party liability rates rose 15 percent to 20 percent year over year, driven by the V Directive and new parameters used by courts to assess permanent disability.
Because the reinsurance industry was profitable in 2010 in Italy and rates are not under pressure, there was stability in the excess points. Additionally, there was demand for more capacity, particularly because of improved data quality. Reinsurers generally showed plenty of interest in Italian catastrophe excess of loss as a way to diversify risks written in Northern Europe and the United States.
All major companies in the Italian market are in the process of studying internal models in preparation for the introduction of Solvency II in 2013. Smaller and medium-sized carriers are still evaluating whether the use of internal models is more advantageous than the standard formula for determining the Solvency Capital Requirement (SCR).