Procedure for the partial advance settlement of damage following catastrophic events of natural origin or resulting from human activity for which a state of reconstruction of national importance has been declared.
While the entire insurance market was still wondering about the scope and some unclear aspects of the new legislation on compulsory insurance coverage for so-called NatCat risks, the Italian Parliament issued a new law, which came into force on April 2, 2025 (the day after its publication in the Official Gazette on April 1, 2025) governing the matter of post-disaster reconstruction. Law no. 40 of March 18, 2025 is classified as a “framework law on post-disaster reconstruction”.
Based on our very first exam of the law, we would like to highlight Section 23 (Procedure for the partial advance settlement of damages) which provides:
1. "The person who has taken out an insurance policy to cover damage to goods, both movable and immovable, instrumental to the exercise of the business activity, deriving from the events referred to in Article 1, paragraph 1 [e.g. natural disasters], located in the territories for which a state of reconstruction of national importance has been declared pursuant to Article 2,may request immediate settlement, up to a limit of 30 percent of the total amount of the damage eligible for compensation under the insurance policy, as estimated by a sworn appraisal by a qualified technician. The request is sent to the insurance company, at the address indicated in the contract, within ninety days of the event, even in derogation of the terms provided for in the insurance contract.
2. Within fifteen days of receiving the request referred to in paragraph 1, the insurance company shall carry out an inspection to verify the state of the premises and the actual condition of the capital goods, as well as the direct causal link between the existing damage and the catastrophic events.
3. Within five days of the inspection referred to in paragraph 2, if no disputes arise regarding the damage and its causal link to the events referred to in Article 1, paragraph 1, in the territories for which a state of reconstruction of national importance has been declared pursuant to Article 2, the insurance company shall pay the entitled an amount equal to 30 percent of the damage eligible for compensation under the insurance contract. If the inspection is not carried out within the period referred to in paragraph 2, the insurance company shall settle the claim within twenty days from the date of receipt of the request. This is without prejudice to the causes of nullity, voidability and termination of the contract. The procedure referred to in this article cannot be excluded by the will of the parties and the insurance company cannot make exceptions in order to delay or avoid the service.
4. The procedure provided for in paragraphs 1, 2 and 3 does not prejudice, after the payment of the sum referred to in paragraph 3, the performance of the procedures for verification and settlement of the damage provided for in the insurance contract.
5. The provisions of this article apply to insurance contracts covering damage to goods, both movable and immovable, instrumental to the exercise of business activities, deriving from the catastrophic events referred to in article 1, paragraph 1, located in the territories for which a state of reconstruction of national importance has been declared pursuant to Article 2, stipulated after the date of entry into force of this law and to insurance contracts stipulated before that date for which, on the same date, the contractual terms for sending the claim notification have not expired".
We believe that this regulation is undoubtedly of interest, with particular reference to cases in which a natural disaster or a disaster caused by human activity can impact the insurance coverage taken out by insurers with companies located in areas for which a state of reconstruction of national importance has been declared. At first glance, the regulation does not seem to refer only and exclusively to the cases that fall under the so-called mandatory NatCat coverage, as the generic reference to insurance policies for the coverage of damage to goods, movable and immovable property, instrumental to the exercise of business activities, deriving from the events referred to in Article 1, paragraph 1 [i.e. ” disastrous events of natural origin or caused by human activity for which the state of emergency of national importance declared pursuant to Article 24 of the Civil Protection Code, referred to in Legislative Decree No. 1 of January 2, 2018, has ceased or been revoked, and for which the conditions set forth in Article 2 of this law apply”] appears to be much broader than the scope of the law on compulsory coverage for catastrophic events.
It should also be noted that the legislation in question introduces a mechanism for immediate settlement (up to a limit of 30% of the total damage eligible for compensation under the policy) very fast, as the legislator intends that within 110 days of the calamitous event (90 days, plus 15 days for the inspection and a further 5 days for the settlement, or 90 days, plus twenty days if the inspection is not carried out) the insurance company should be obliged to pay the compensation if the requirements of the law are met (such as, the presentation of an expert report sworn by a qualified technician and in the absence of disputes regarding the damage and its traceability to the events foreseen by the law), without being able to make exceptions with the aim of delaying or avoiding payment.
This regulation obviously deserves further study, but at first glance it seems to us that the guiding principle can always be traced back to the desire to create public-private partnership systems for dealing with and managing natural disasters, as in the case of the regulations issued with reference to NatCat policies.
