Shortfall in Italian risk insurance protection of EUR 8,200 billion
A study conducted by elipsLife and Prometeia has revealed a level of underinsurance in case of death or permanent disability that concerns 82% of salaries in Italy. Based on an estimated overall protection requirement for the Italian market of about EUR 10,000 billion, the results indicate that while EUR 1,500 billion would be covered by social security and EUR 300 billion are already insured, EUR 8,200 billion have no alternative coverage.
The Italian public welfare system, the so called first pillar, is today insufficient to protect against the financial impact of severe events such as death and permanent disability. On the other hand, only about 3% of the overall protection requirement for the Italian market is insured with collective and individual life policies. This leaves 82% of Italian Gross Salaries without any biometric risk insurance. According to the research, these salaries would be most effectively insured under the second pillar.
“Insurance against severe events should be available to employees and should be guaranteed in the most efficient way possible. Corporate insurance solutions are most effective in covering this risk as they leverage mutuality and lower anti-selection risks,” notes Massimo Carassinu, CEO of elipsLife Italy. “Employers can therefore offer an important social benefit to their employees and affiliates. And this is at the core of elipsLife’s proposition.”
The aim of elipsLife’s research is to provide a detailed analysis of how the Italian market is structured, with a particular focus on the protection offered by the social security system (the first pillar), company benefit schemes (the second pillar) and private insurance policies (the third pillar).
“To correctly estimate the protection gap by employee profile in Italy,” explains Stefano Frazzoni, partner and head of the insurance business line at Prometeia, “we estimated individual financial requirements, based on demographic, economic and family situations, and compared these with first- and second-pillar provisions.”
The analysis demonstrates how a sudden, serious event would significantly affect the present and long-term economic balance of a family counting only on the first pillar for support. The annuities guaranteed by the social security systems, such as the Istituto Nazionale della Previdenza Sociale (INPS), the Istituto nazionale Assicurazione Infortuni sul Lavoro (INAIL) and Casse di Previdenza, are on average less than EUR 9,000 gross per year. If we consider that the total cost of raising a child from birth to eighteen years old alone can vary from EUR 114,000 to EUR 271,000, depending on family income, the annuities guaranteed by the first pillar would indeed be inadequate to address the risk.
Furthermore, professionals, self-employed and low-income employees, public employees and young families with few years of contributions are the categories which are most exposed to the financial consequences of biometric risks. In fact, only 3% of the workforce – generally senior managers in the industrial, commercial and services sectors – are able to benefit from the group insurance cover provided by national contractual agreements (second pillar).
According to the study, insurance against high-severity events, for example death or total permanent disability, should be a widely available safeguard and should be as efficient as possible. For employees in particular, the second pillar is the most important instrument of protection and social security. For professionals who do not have second-pillar coverage, mandatory pension funds could constitute an effective alternative to meet the protection needs of their families.
The full findings of the study are available on the elipsLife website.
Note for the editorial offices
elipsLife is an international insurance company serving institutional customers (B2B business). It focuses on all biometric insurance products covering the financial consequences of illness, accident and loss, in particular occupational and private pension provision for the risks of death and disability. elipsLife operates in Europe and the US. In Europe, elipsLife has a market presence in Switzerland (Zurich), Liechtenstein (Triesen), Benelux (Amstelveen), Germany (Cologne), Italy (Milan) and Ireland (Dublin). The US market is serviced from Schaumburg, Illinois. elipsLife is a wholly-owned subsidiary of Swiss Re, the leading global reinsurer in the Life & Health insurance segment.
Disclaimer
This document contains forward-looking statements that are based on current assumptions and reflect opinions on the developments targeted by the company as well as interpretations of the general state of the economy and the development of the markets. Such statements should be approached with the necessary care, as they depend on a number of fast-changing factors and therefore harbour much uncertainty. Actual results can deviate substantially from these forward-looking statements. elipsLife is not obliged to update forward-looking statements to take account of changed circumstances. This document does not constitute an offer or solicitation to buy or sell products or securities. It does not serve as the basis for any agreement and may not be used in any such context.