A fair balance between national and second-level bargaining, which links salary increases to the operating result of companies to recover at least ten points of productivity in the coming years. With the benefits of better results shared between shareholders and employees, as well as the negative consequences. This is the position of Ania, the national association of insurance companies, in the heated debate on productivity. Here is the interview that Dario Focarelli, general manager of ANIA since last September and former chief economist of the Association, gave to Firstonline.
Firstonline – Director Focarelli, the negotiations on productivity are close, there are twenty points of competitiveness to recover from the deficit with Europe, how do the insurance companies stand in this comparison?
We must respond to President Monti's request and arrive at the shared result of a collective and corporate bargaining mechanism that closely links any increase in wages to increased productivity. The bargaining model needs to be rethought, finding the right balance between national and second-level bargaining, which for insurance companies is essentially corporate. We agree with the president of Confindustria Squinzi on the need to recover at least ten points of productivity in the coming years. The negotiation is very close, it is not easy.
Firstonline – In detail for the insurance sector, how do you link wages to productivity?
This is a theme that I have explored for more than twenty years during my experience at the Bank of Italy. Analyzing and quantifying the productivity of the financial system is a very articulated and complex problem: it is not easy to define the insurance product and it is just as difficult to allocate it correctly in the various business lines. However, in the government's request there is a reference to the operating result of the companies. The benefits of an improvement in results, deriving from productivity recoveries, would be shared between shareholders and workers (for example with remuneration or bonuses). The corollary, however, is that otherwise, the negative consequences would fall on everyone to a certain extent.
Firstonline – Is it a viable way?
It's not easy, so far we have agreements where the definitions of productivity are different at the individual company level, very often they are agreements in terms of production/volume/premium rather than results. But it's not impossible, after all it's a sector where second-level bargaining plays a very important role. It must be said that the signing of a general agreement on productivity is only preparatory because specific contents must then be placed within each sector.
first online. In the Stability bill, life policies were saved from Irpef but the sector was affected by other interventions such as the increase in the advance on technical reserves to 0,5% from 0,35% in 2012 and to 0,45% in 2013, what is your opinion?
The additional impact compared to the 0,35% rate is equal to over 600 million in the first year and a further 400 million in the following year. This can only create great difficulties, especially in terms of liquidity, just as we are recording a decrease in funding and an increase, due to the economic crisis, in redemptions. We understand the state's cash needs and know that maintaining the 2013 goal is critical for everyone. But the level at which this indirect taxation, the advance on reserves, has reached is truly excessive: our credit with the state is now equal to 4,5 billion and would rise to 6 billion in two years.
Firstonline – How do you plan to get around?
It is clear that the sector undergoing conversion is trying to convince the Government and the Parliament why the increase is one-off for 2013 and to have a recovery mechanism for this advance, albeit over time, especially when start the virtuous circle of debt repayment. In some way it is a debt that the State contracts, albeit in particular forms and must be repaid.
Firstonline – Can there be consequences on life insurance policies?
In the long run, it is possible that the return for policyholders will decrease, albeit marginally. Considering that it is currently already difficult to offer good returns against rates on government bonds that are still very high, this is news that does not facilitate premium collection.
Firstonline- The latest data indicate new Life business down 15% in the first eight months, how will you end the year?
The figure is linked to the fact that for a long time we had very high yields on government bonds and there was a slight shift in flows towards these bonds. As regards the final part of the year, we expect that, in the presence of a reduction in the spread and in rates on government bonds, funding will accelerate and the overall reduction will fall to 4-5%. But there are two big question marks over this scenario.
Firstonline – Which ones?
The first question mark is whether there will be any effect from the reserve intervention. The second, certainly more important, is that we hope that the spread will return towards 200 basis points, a value that the Bank of Italy estimates to be consistent with macroeconomic fundamentals, but we are still at 350. the marketing of policies following the reduction in government bond yields.
Firstonline- The latest rules are added to those on the development-bis decree, in particular the rule that allows insurance intermediaries to adopt forms of mutual collaboration even if they act as sole agents, which the companies have harshly criticized.
As far as the question of the so-called "free collaboration" of intermediaries is concerned, we are absolutely against it for various reasons. The first is absolutely common sense: the customer will find himself having to pay two intermediaries instead of one and it is impossible to demonstrate that by lengthening the distribution chain, the customer pays less. Then there is a very important industrial issue: insurance companies distribute with an essentially agency network and the value of the network is in part the value of the company. If an agent sells the products of a company other than his own he probably does himself harm in the long run, because he will lose the customer, but he certainly does it to the company.
Firstonline – But another company will benefit by favoring competition.
It is possible, but I return to the first point: no one in good faith can say with certainty that the consumer will benefit from it. Also because the law provides for an even more incredible obligation, as well as impossible to achieve: that there is a common platform between the companies to where one agent has contact with the company of the other agent, a complete stranger, and does so via computer. It is as if in a bank they not only sell you the loan from another bank but they do it online directly through the computer systems of the other institution. For all these reasons, this text should be deleted.
Firstonline – How does this rule compare with other countries?
This would be a unique case, as it would add to the fact that Italy is the only country in the world to explicitly forbid the exclusivity clause (the so-called single mandate) in relations between companies and agents. In other countries collaboration is not prohibited, but single-mandate is foreseen and it is unthinkable that, in the face of a contractual relationship, one of the two subjects violates this relationship without even informing the other party. We, on the other hand, are very keen not to undermine the relationship of trust between the agent and the company.
Firstonline – Do you have an alternative proposal to find a compromise between the liberalization needs of the legislator and those of protection of the agency network?
Right now, our job is to make people understand the reasons for the sector. For example, it is often said that there is little customer mobility with negative repercussions on prices. I recall that a study by Capgemini shows that Italy is the second country in Europe, after England, for customer mobility. Do you think there is little mobility? It is possible that this is true but that mobility has a direct effect on price is very difficult to demonstrate, indeed the causal link is perhaps different.
Firstonline – In what sense?
Consumers tend to first receive the news of an increase and then tend to move. So much so that in the United Kingdom there is much more mobility and prices in recent years have increased much more than in Italy. So the fact that there is significant mobility in Italy proves that there is a price problem, but that we want to cure the price problem with mobility is probably the wrong recipe. We are convinced that it is cured by reducing claims and their costs and therefore we need to work on all the factors that in some way have an effect on the overall cost of claims.
Firstonline – Going back to Life policies, it seems to me that we are going in the opposite direction to the one hoped for some time ago of tax relief to encourage diffusion with a view to complementing the state welfare system.
In the stability bill there is a restriction in terms of deductibles on healthcare funds which benefit from a deduction from income but there is no restriction on supplementary pensions. On the other hand, deductions of up to 1.291 euros are now permitted on life policies, while the bill provides for a deductible of 250 and an overall ceiling for all deductions - including those envisaged for mortgages - of 3000 euros. These are life insurance policies with cover in the event of death and long-term care: over 6 million taxpayers report this expense. We must therefore underline that tightening on these deductions penalizes the demand for safety and protection of citizens. From this point of view, the next government will have the opposite problem, how to redraw the boundaries of state welfare and how to convince citizens to make choices of responsibility and to go and cover themselves some of the risks that the state for some reason does not cover more.
