It will be for the sake of risk. Or for a culture of management of the unexpected that is still not widespread. But in Italy there is an untapped potential for protection needs which, according to Accenture experts, could translate into 90 billion euros a year in insurance premiums. And that emerges increasingly in a context of economic uncertainty and welfare to be redesigned in a more sustainable direction. Among families, more and more difficult to manage unexpected expenses. But also between companies. Together with the need to manage pensions, health and safety for all more efficiently.
"There is an insurance emergency in the economic emergency affecting Italy today", notes the consultancy firm. Which must lead to "immediately launching a path of development of the Italian system thanks to a generous assumption of responsibility by the insurance companies, to be completed with structural reforms, for a more solid and safer country".
HERE'S WHERE TO INTERVENE There are five main areas from which to start to intercept protection needs:
1) supplementary social security, which is not yet sufficiently developed, with subscriptions still at 23% of workers compared to a European average of 40%;
2) the health costs sustained out of pocket by citizens, which are over 80% of private health expenditure while they are less than 70% in similar markets in Europe;
3) the low level of protection of a safe haven asset such as a house, in Italy there are less than 30% of families insured compared to over 70% of the European average;
4) The protection of the person and his income, used by 14% of families while the European average stands at over 40%;
5) The protection of businesses, especially SMEs, which are covered on average for only one third of the risks actually incurred: the corporate premiums/GDP ratio for Italy is 0,9% compared to 1,5% in other markets.
"The conditions are all present for insurance companies to play a central role in Italy too in defending citizens, businesses and the State", says Andrea Poggi, Executive Partner and Head of Strategic Consulting at Accenture who brought together the main exponents of the insurance world today in Milan and institutions of the sector on the occasion of the tenth edition of the Insurance Day.
INDUSTRY NUMBERS
But insurance companies are obviously not being asked to play the role of a white knight. Instead, it is an opportunity for the industry in a context "in which insurance companies have uncertain growth and shrinking profitability and insurance distribution shows economic sustainability at risk".
These are the numbers of the sector in the Accenture analysis (based on Ania-Swiss Re data). The Italian insurance market comes from a two-year period 2008-2010 of significant growth in terms of traded volumes (with a compound annual growth rate of approximately 17%). This is due to the driving force of the life business (+28,5%) capable, in the period of "uncertainty" and with the strong contribution of the banking channel, of intercepting the financial flows of households. More problematic, on the other hand, was the situation in terms of profitability which, for two years, was negative (negative operating result of the sector by almost €2 billion in 2008 and €726 million in 2010) due both to problems under the technical profile (CoR Non-Life steadily above 100 in the two-year period 2009-10, boom in life surrenders in 2008) and the impact of financial management during the crisis.
As regards the current year, the data for the first six months show an inversion of trend compared to the two-year period 2008 - 2010. The traditional engine of growth of the insurance market, the Life business, seems to have stopped (-31,1% in new life business in the first seven months of 2011 compared to the same period last year); the Non-Life business confirms the impossibility of driving the market dynamics, albeit in moderate growth thanks to the push of the tariff adjustments on the motor vehicle and with an improving technical management (-3,3 pp in the combined ratio compared to the first half of 2010 with the return below "quota 100", considering a panel of primary operators in the sector).
In the situation of "stable uncertainty" at the macroeconomic level that we live in, it is increasingly difficult to predict market trends - says Poggi - and to estimate the effects of this context on the insurance market. It is presumable to expect that this further crisis could have an aggravating impact in 2011 in terms of profitability, for example due to write-downs on government securities of countries at risk in the portfolio and possible massive redemptions by Life customers. On the other hand, developments in terms of traded volumes need to be understood. The situation is difficult but it will be even more so if nothing is done. But in this scenario of discontinuity and emergency, considerable opportunities can be seized both for the Italian insurance system and for the entire country system”.
But how? The Italian insurance system, is the path indicated by Accenture, should contribute to satisfying the need for urgent protection in a different way by reducing waste and risks. An objective that can be addressed through industrial actions on the traditional levers of the insurance business, in particular: the evolution of the distribution model, the offer of easy-to-understand, modular and standardized solutions for the broadest customer segments and the improvement of customer service .
