In Italy motor liability insurance still costs too much compared to the European average, but the situation is improving. In 2015 the average price of policies fell by 7,5% and the difference with the main EU countries (France, Germany and Spain) was reduced to 150 euros, from 234 in 2011. Salvatore Rossi pointed out on Wednesday, number one of IVASS, presenting the annual report of the Insurance Supervisory Institute in Rome.
The progressive diffusion of the black box, a device that prevents fraud and therefore allows companies to obtain a discount, has also contributed to the drop in the prices of motor liability insurance. This type of contract has now reached one sixth of the total.
According to IVASS, a contribution could then come from the Competition Law, which aims to "contain system costs, combat fraud, strengthen transparency and comparability of products", underlined Rossi.
Then there is the new Integrated Anti-Fraud Archive launched by IVASS, which means moving "from bow and arrows to a long-range cannon" in the field of combating fraud, with benefits in terms of costs and premiums. The new tool brings together one and a half billion pieces of individual information on vehicles, registrations, licenses, policies, injured parties, witnesses and experts.
INSURANCE FULL OF GOVERNMENT BONDS, BUT DIVERSIFIING IS THE BEST CHOICE
As emerges from the IVASS data, Italian insurance companies continue to prefer investments in government bonds (about 300 billion, 45% of assets), especially Italian ones (94% of the total). This is a significant share, but it does not create problems from a supervisory point of view, even if "diversifying is always the best choice", explains Rossi, recalling however that "the Italian government bond market is traditionally very liquid and has represented for at least three decades the natural source of coverage for Italian companies active in the life sector”.
The President of the Authority also acknowledges that Italian companies have begun to increase the share of corporate bonds in their portfolios, going from 90 billion in 2013 to 120 billion at the end of 2015.
Furthermore, in an attempt to diversify, Italian companies are not taking excessive risks, the so-called "search for yield" that the Monetary Fund has signaled in other countries, especially by small companies.
However, there is also another type of diversification on which to focus: that of the products to be offered to customers in the life branch. “A company that only offers unit linked is no longer an insurance – continues Rossi -. The sector is starting to reflect on how to reconcile the income solidity of companies active in the life business with the need to continue to offer customers properly insurance products and not mere asset management without guarantees. And IVASS is ready to adopt regulatory changes to encourage the creation of new products”.
ROE IS GOOD: ITALIAN COMPANIES HAVE RESISTED TO LOW RATES
As for balance sheets, Italian insurance companies are in good health, with a Roe that last year came close to 10% in the life sector and exceeded 7% in the non-life sector. Profits reached 6 billion, “and it is the fourth consecutive year that profits have remained around those levels – Rossi points out -. Our companies have thus far managed to escape the calm of interest rates quite well, sailing at a good pace. The persistence of such low interest rates over time, however, cannot fail to worry the Italian companies and IVASS which supervises them in the long run”.
THE EUROPEAN STRESS TEST WILL BE SEVERE
More will be known at the end of the year, with the results of the stress test on European insurance companies launched by Eiopa, which according to Rossi will be "particularly severe": the objective, however, is "to measure systemic risk at a European level" and therefore not there will be "report cards" for individual companies. The results, therefore, "will be disclosed not company by company, but only by country and size range".
BREXIT: GREAT UNKNOWN, SHOWN BY THE VOLATILITY OF THE MARKETS
Finally, Rossi referred to the Brexit danger: "It is a huge unknown, whose outcome and effects are very complex to measure and identify, as demonstrated by the extraordinary volatility on the markets". As far as Italy is concerned, some estimates indicate that “it would find itself less exposed to the Brexit risk than other European countries, but really these are considerations that leave the time they find. In any case, it is to be hoped that the will to stay will prevail among British voters,” she concluded.
