In Italy, the average price of motor liability policies fell in 2014 "by almost 8%, continuing the downward trend that began the previous year". This was stated today by Salvatore Rossi, president of IVASS and general manager of the Bank of Italy, during the annual report on the activity carried out by the insurance supervisory institute.
The data emerges from "our IPER survey on the actual prices of motor liability policies - specified Rossi -, therefore not on the list prices, which are not very indicative". But why are the prices going down? First of all, because accidents are decreasing: “The ratio between accidents and vehicles on the road has fallen again, to 6%, also due to the effect of the recession – explained the head of IVASS -; it was at 7,4% in 2011. The drop in micro-injuries was very significant: -17%. They have shrunk to a third of what they were in 2011”.
On the competition front, on the other hand, "the mobility of customers between one company and another has increased - continued Rossi -, exerting strong pressure to lower prices: one policyholder out of six changed company last year, achieving a reduction a price equal to an average of 22% compared to the previous contract, while those who remained loyal to their company benefited from a price reduction, yes, but only by 5%”.
In general, in Italy "there has been considerable progress" on the motor liability front, but "for many years we have been the country with the highest rates in international comparison", above all due to "the enormous presence of fraud", he recalled Rossi again.
INSURANCE FOR THE RISK OF LOSS OF SELF-SUFFICIENCY IN ADVANCED AGE
As regards the relationship between insurance and social security, the President of IVASS spoke of the "risk of losing self-sufficiency in old age": a phenomenon that "is spreading" and that "public health has difficulty coping with" , leaving "considerable potential market spaces for insurance companies". However, the help of the State would be necessary, which according to Rossi would be interested in moving in this direction, because "fiscal incentives for this type of insurance are a good deal for the Treasury, to the extent that it stimulates otherwise unrealized transactions, also allowing savings on the side of public health services".
INSURANCE AS SOURCES OF CREDIT: THE PROJECT DIDN'T WORK
During his report, Rossi also admitted that so far the Italian insurance system has not seized an opportunity offered by the law, "that of help finance businesses by investing in mini-bonds and securitized loans, or by providing credit directly. The investment potential in these forms is 60 billion euros", but "the space opened up by the new regulations has not been used" and this means that "the companies have not been offered suitable products, or that prudence has prevailed in them in venturing into unfamiliar terrain”.
SOLVENCY 2: IN ITALY ONLY 3% OF THE MARKET WOULD NEED CAPITAL INCREASES
On the regulatory side, the new Solvency 2 regime will enter into force in 2016 and its structure is not yet definitive, "however, from the first supervisory reports consistent with Solvency 2 and referring to 31 December 2014 - continued the number one of the IVASS – overall reassuring indications have emerged: the eligible own funds are commensurate, for the entire system, with more than twice the regulatory requirement and the companies that according to these data would need capital increases represent 3% of the market in terms of prize collection".
THE DIGITAL REVOLUTION
“Even in the insurance world, as in the banking world – added Rossi – the new digital ecosystem in which we are all immersed puts at risk the traditional, labour-intensive ways of subverting the core business, assimilating it to a commodity whose production it should be automated to be efficient and profitable. The key point, for insurance companies as for banks, is knowledge of the customer; that knowledge that the digital world, populated by social media, according to some makes it easier to acquire with automatic procedures than through the human employee-customer relationship".
ITALIAN INSURANCE COMPANIES: IN 2014 INCOME +20%, INVESTMENTS +12%
As for the numbers recorded last year by the Italian insurance system, Rossi underlined that inflows were "definitely better than the European average": just under 150 billion euros (almost 9% of GDP), for a growth 20% compared to 2013. "The crisis of the two-year period 2011-2012 is over - commented Rossi -, but the increase is all in the Life sector: policies for damages, in particular those for motor liability, remain on a trend line descending".
Finally, “investments by insurance companies also increased in 2014 – concluded the President of IVASS -. Their total amount at the end of the year had reached 630 billion euros, almost 12% more than in 2013”.
