A cyclone that wreaked more than €1 billion ($1.14 billion) in damage along Sicily's coast has also exposed a flaw in Italy's push to expand mandatory insurance against natural disasters.
Businesses were announced, but not for the risks they faced when Cyclone Harry swept from Messina to Syracuse in January. Many discovered their policies
cies covered earthquakes, floods and landslides but not damage from cyclones or storm surges.
“If I am by the sea, of course I insure against storm surges, not river floods,” Luca Faro, who owns a restaurant in the small port of San Giovanni Li Cuti, told Reuters.
Faro said he suffered about €400,000 in damage to windows, roof and refrigeration equipment, as well as two months of lost income, but received only
€20,000 in state aid and nothing from his insurance, despite holding a catastrophic catastrophe policy.
Italy introduced a law last year requiring businesses to insure assets such as equipment, construction
ngs and land, with firms that opt out potentially losing access to disaster relief.
Many small and medium-sized companies, the backbone of Italy’s economy, have traditionally relied on government support after climate-related disasters.
Insurer Unipol UNPI.MI estimates that earthquakes, floods and storms cost the Italian state around €7 billion a year, and with public debt set to become the highest in the euro zone, Rome can ill afford to shoulder rising costs.
Sicily’s business association calls the financial fallout from Cyclone Harry a “paradox” that will result in thousands of firms getting little or no compensation.
“Businesses lack technical expertise, but in practice coverage for the damage they have actually incurred,” said Marco Causarano, head of the small business lobby of Confindustria in Sicily’s eastern city of Catania.
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Allianz board member Guenther Thallinger told Reuters that mandatory cover is “very, ver
y rarely a solution” and the debate should focus on risk awareness, adaptation and risk avoidance.
Scientists say warmer seas and a moisture-laden atmosphere linked to climate change amplify the storm, increasing wind strength, rainfall and coastal flooding.
On January 20, a buoy between Sicily and Malta recorded a wave of 16.66 meters (55 feet), the highest ever measured by Italy’s Institute for Environmental Protection and Research (ISPRA).
Five months later, damaged roads and shuttered beachfront businesses still blighted Catania’s usually bustling seafront.
The cyclone’s aftermath risks eroding trust in disaster insurance just as the European Union is pushing businesses and insurers to shoulder a greater share of climate-related losses.
EU weather and climate disasters caused €822 billion in losses from 1980 to 2024, a quarter of which took place in the last four years, a report by Brussels-based think tank Bruegel said.
Only around 25% of disaster losses in Europe are announced, the report said, with Italy lagging many peers.
Industry Minister Adolfo Urso said at the annual assembly of insurance lobby ANIA earlier this month that Italy must also protect itself against catastrophic events such as Cyclone Harry, which “had not been anticipated before,” but did not elaborate.
Italy Has One of EU's Widest Protection Gaps
Italy recorded last year one of the European Union’s largest gaps between natural-catastrophe risk and insurance coverage, the bloc’s insurance regulator EIOPA said.
That “protection gap” is likely to widen as climate change drives stronger storms and more intense heatwaves across the Mediterranean, analysts said.
Of the roughly €101 billion in cumulative losses recorded in Italy from 2014 to 2025, €18.7 billion was covered by warranties and the rest by the public sector and private citizens, Unipol said.
