The insurance sector is doing well, very well indeed

The insurance sector is doing well, indeed it is increasingly solid judging by the numbers. So why aren’t the prices of car insurance and insurance policies falling for Italians? And why did the agents present a complaint to the sector authority, Ivass, denouncing pressure from the companies to “modify” the policies to the detriment of consumers by increasing the deductibles, lowering the limits and eliminating guarantees?

Eurovita crisis overcome (remaining an isolated case), first rate cut made and inflation falling. And the sector is healthy, according to the numbers in the annual report of Ivass, the insurance supervisory institute. At the end of 2023 the operating result was 8 billion euros. The solvency index of Italian companies (the level of capitalization) has risen to 258% (+12% on 2022), in line with the European average. And the Life sector is also raising its head again, after the losses of recent years. In 2023, due to high rates, redemptions had grown by 63% and premium collection decreased by 3%. But this segment is returning to profitability this year.

Yet all this does not translate into lower premiums for customers. On the contrary. Auto liability insurance increased by 7.9% in 2023 compared to the year before. And in the first quarter of 2024 there was a +7.2% on an annual basis. Now it’s slowing down. In May the average premium is 400 euros, slightly lower than pre-pandemic levels. “We expect the slowdown trend to continue in the coming months,” said the president of the sector authority, Luigi Federico Signorini. But this is not very reassuring. It means that the increase is slowing down, that is, price growth is proceeding more slowly, but not that we are at the end of the increase, in fact today there are cities where premiums exceed 500 euros. In Naples it costs 568 euros, in Prato 564.

Then there is the home sector. For climate damage policies this is an average +10% in the last two years. And this is where there is more concern. The insured, in particular “catastrophe” policies (earthquakes, floods, etc.) increased (+6.6%) reaching 38 billion euros, but the “combined ratio” is just under 100. Beyond this threshold it means that the ratio between the incidence of claims and management costs is negative for the insurance, i.e. the company makes a loss.
And so the companies, in order not to risk losing out, pass the uncertainty on to their customers. They increase premiums or, as reported by the agents’ union a few weeks ago, they change deductibles and limits for the worse. This happens especially for home policies, but also for life and health policies. For cars/motorcycles there is a tendency to raise the annual premium, while in other sectors the strategy is to keep the amount due stable, but to change the other contractual conditions. Ivass has criticized companies, for example, for the now common practice of asking policyholders to provide technical information that is difficult to obtain. And not having them could then reveal, when using the policy, the “quibble” that makes the coverage inactive. And the responsibility would therefore lie with the customer who did not provide complete data. The companies respond by calling the accusations “unfounded”.
And in the meantime, despite the costs, there is more insurance for illness and accidents, damage to the house and car. In ten years it has gone from 32 to 40%. And there is reassuring data regarding scams: savings from foiled frauds were 2023 million euros in 2022 (there are no data yet for 2023).

The most worrying situation is therefore that of policies linked to climate events. On the consumer side because they are increasingly expensive and urgent. On the company side because they are increasingly less profitable as the number of cases and therefore claims increases. What are the solutions? Ivass talks about Preventivass and Insurance Arbitrator. The first exists and is the tool used to compare car insurance estimates. 85 million quotes were generated in the last year. So it works, although with different limitations, such as the fact that it does not allow you to compare the most used ancillary policies such as those for theft and fire. And the Insurance Arbitrator? The “figure”, which should resolve disputes between customers and companies in certain and inexpensive ways, has not yet been formally established. This has been discussed for years. But there are still no certainties.