A small agri-food processing company on the Ionian coast of Calabria saw its main warehouse go under water in just a few hours. The mandatory catastrophe policy was there, regularly stipulated, and covered floods and inundations, as required by the implementing decrees of the 2024 budget law. The expert, however, classified the event as “runoff” from intense rainfall and insufficient drainage, a phenomenon which in many general conditions falls among the exclusions: the water did not come from a flooded watercourse, but from a sudden accumulation on the road surface and in squares. Result: damaged goods, interruption of activity for weeks, compensation canceled due to a question of technical definitions.
Cyclone Harry and the litigation boom
The passage of Cyclone Harry over the southern regions has left behind not only devastated ports, gutted beach resorts and blocked roads, but also a trail of insurance disputes which is becoming, day after day, a second front of the emergency. In the coastal areas of Calabria, Sicily, Puglia and Basilicata, many companies discovered too late that their policies, although formally “catastrophic” and in compliance with the new legal obligation, do not cover damage from storm surges, nor the consequences of tornadoes and extreme winds which made warehouses, warehouses and tourist facilities unusable.
It is the paradox of Italy which tries to make insurance against natural disasters compulsory, but clashes with a climate that runs faster than rules, contracts and risk awareness. Introduced by the 2024 Budget Law (L. 213/2023) and regulated by Ministerial Decree 18/2025, mandatory catastrophe policies require companies registered in the Register, with the exclusion of agricultural entrepreneurs, covered by an ad hoc mutual fund, to insure their assets against three large families of events: earthquakes, floods (floods and overflows) and landslides. The obligation concerns immovable property (buildings and land) and instrumental movable property (plants, machinery, industrial and commercial equipment) recorded in the balance sheet, with premiums proportionate to the actual risk and deductibles or overdrafts that cannot exceed 15 percent of the damage.
System costs, obligations and numbers
The deadlines have been staggered over time: large businesses as early as 2025, medium and small businesses by the end of 2025, with specific extensions for tourism and catering until March 2026. Premiums start from a few hundred euros per year up to several thousand depending on the value of the insured assets and the area. An Unimpresa simulation for mandatory policies on companies with 500 square meters of headquarters and 15 employees indicates: 1,500/3,000 euros per year in low risk areas, 3-6 thousand euros in medium risk areas, up to 12 thousand euros in high risk areas.
On a regulatory level, the system is conceived as a “bilateral” obligation: companies must take out insurance, but companies cannot avoid signing policies that comply with legal requirements, under penalty of fines of between 100 thousand and 500 thousand euros. There is no direct fine for non-compliant companies, but the consequences can be equally serious: exclusion from contributions, subsidized loans and public compensation in the event of disasters, starting from funds from the Ministry of Business.
Ivass, the Institute for Insurance Supervision, has started a data collection on the contracts stipulated to analyze the types of risk covered, the premiums paid, the insured value, the main clauses (deductible, indemnity limit, overdraft) and the presence of additional coverage (for example, in the case of all risk policies).
From the first data collected in September 2025, it appears that in Italy there are approximately 290 thousand active insurance companies against catastrophe risks, with premiums of almost 300 million euros and an insured value, including land, plants and buildings, of approximately 1,900 billion euros. The problem is that companies are required to cover at least earthquakes, floods and landslides, but nothing prevents companies and businesses from keeping outside the perimeter a long series of phenomena which, in practice, are becoming increasingly frequent: storm surges, tornadoes, extreme hailstorms, flooding from “water bombs” which send the urban sewage system into a tailspin.
The exclusions that make the difference
Not only that: many mandatory covers stop at direct material damage to insured assets, leaving uncovered items that are crucial for the survival of the business such as downtime, lost revenues, and temporary relocation costs.
The typically Italian issue of building abuse also complicates the picture. The legislation on catastrophe policies provides that properties with unremedied abuses or without the necessary authorizations cannot be insured for the purposes of the obligation.
Several companies affected by events in recent years have discovered after the fact that their warehouse was actually not insurable: during the liquidation phase, the company cross-referenced plans and the land register, detecting discrepancies such as to render the contract null and void.
How to really protect yourself from climate risks
So how do you cover yourself from risks?
Within this context, the real discriminating factor is not just having a mandatory catastrophe policy or not, but how this is structured and integrated. The first level of attention concerns the perimeter of the events covered. Harry’s experience, like that of other recent events, suggests that it is now essential for coastal businesses to check for specific safeguards for storm surges and seawater penetration, as well as the extension to flooding from heavy rain, sewer back-up and so-called water bombs.
For factories in areas exposed to strong winds, the game is played instead on the definition of the anemometric thresholds that trigger compensation: clauses that set limits that are too high risk eliminating coverage precisely in the most plausible scenarios. The second piece concerns the nature of the damages reimbursed. Mandatory legislation looks at direct material damage, but for a company the heaviest bill often comes later: days or months of downtime, lost orders, fixed costs that continue to run.
Integrating the Cat Nat policy with a business interruption guarantee, which recognizes a daily allowance or compensation based on the lost operating margin for a pre-established period, is, for many small and medium-sized businesses, the difference between a serious accident and an event capable of definitively compromising business continuity. Likewise, it is crucial to check whether the contract includes demolition and clearance costs, technical design costs and regulatory compliance, which often emerge only during the reconstruction phase and can significantly impact the financial needs.
The risk of underinsurance
Then there is the issue, not very intuitive but recurring, of underinsurance. To contain the premium, many businesses declare values of buildings and systems that are not updated, without taking into account the increase in materials and reconstruction costs. When the damage arrives, the proportional rule comes into play: if a warehouse that is currently worth a million is insured for 500 thousand euros, a damage of 100 thousand euros will only be compensated for half. It is one of the most frequent cases in post-event assessments and represents, in the context of natural disasters, a multiplier of fragility.
To avoid this, experts suggest thinking about the value of new reconstruction and periodically updating the sums insured, especially after years characterized by strong inflation in construction prices.
The real question for businesses
The lesson that comes from the Harry case, in short, is twofold. On the one hand, the obligation to have catastrophe insurance marks an important cultural transition: the idea that climate risk can no longer be entirely socialized and that companies must equip themselves with a structural risk management tool. On the other hand, the mere presence of minimum legal coverage is not enough to guarantee that that company will actually be able to get back on its feet after yet another wave of extreme bad weather. In the middle there are definitions, exclusions, deductibles, limits, the choice to add guarantees for atmospheric events, storms, indirect damages, ancillary costs.
For entrepreneurs, the real question is no longer “Do I have compulsory catastrophe insurance or not?”, but “What does it really cover?”. It means verifying the full construction regularity of the buildings, promptly listing all the operational offices, detached warehouses and critical assets, asking the broker to translate the effect of deductibles and overdrafts into numerical scenarios, and above all negotiating the extensions that fill the gap between the event imagined by the law and what the climate now really puts on the table.
In a country where the obligation is already a reality but extreme events continue to surprise, the difference between those who reopen and those who close increasingly passes through those small lines that, until yesterday, few people bothered to read.
