Is it? The death toll is average to low compared to the rest of Europe: http://ec.europa.eu/transport/road_safety/pdf/gis/mapcare_fa...
And it's low compared to the rest of the world: https://en.wikipedia.org/wiki/List_of_countries_by_traffic-r...
The main reason for how people in the West of Europe seem to perceive Italian driving has traditionally been Rome: http://www.telegraph.co.uk/news/worldnews/europe/italy/31986...
My personal experience travelling in both Sicily and Rome was that people don't pay attention to lanes and don't care about traffic lights at all, and they're not afraid to drive quickly around tight corners and down narrow streets – this is not unique and is similar to how some areas of the UK drive, for example rural Essex and rural Wales have a lot of this.
Italy may have an unfair reputation as being a dangerous place to drive, but it does have that reputation in Western European countries.