The Italian life insurance segment is
expected to increase in written premium value from €73.86bn
(US$102.8bn) in 2011 to €83.24bn in 2016, at a CAGR of 2.4% over
the forecast period, according to a report, Life Insurance in
Italy, Key Trends and Opportunities to 2016, which is
available at the Insurance Intelligence Center (IIC).
This rise in written
premium value is forecast to be buoyed by an expanding aging
population and anticipated improvements in Italy’s economic
condition, says the report.
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A key consumer driver
for the Italian life insurance segment going forward is set to be
Italy’s aging population.
This is because the
average life expectancy in Italy increase from 81 in 2008 to 82 in
2011.
The average life
expectancy in Italy is expected to reach 83 by 2025, and this
increase, along with the country’s overall economic improvement and
government initiatives to encourage the life insurance development,
are likely to generate more demand for Italian retirement-related
life insurance products.
Italy’s life insurance
segment is mainly driven by the disciplined investment of
individuals in traditional life insurance policies.
The segment recorded its
highest premium generation of €90.1bn in 2010.
However, the segment
contracted as a result of the global economic crisis in 2008 and
due to the European sovereign debt crisis in 2011.
The global economic
crisis also affected the sales of life insurance products,
especially unit-linked policies, which declined from €16.8bn in
2008 to €8.09bn in 2009.
Growth
prospects
The written premium
value of the Italianlife insurance market increased from€61.41bn in
2007 to €73.85bn in 2011, ata CAGR of 4.7% during the period
2007-2011.
The individual life
category registered the largest share of 87.2% of the segment’s
written premium in 2011, with a value of €64.38bn.
Group life was the
second-largest category, with a total written premium of €4.39bn in
2011.
Looking ahead, the
individual life insurance category is expected to retain its
position as the largest category in the life insurance segment
between 2012 and 2016.
It is anticipated to
register a written premium value of €70.1bn in 2016 compared to
€67.8bn in 2014.
Furthermore, the group
life category is forecast to remain the second-largest category,
with an expected written premium value of €4.9bn in
2016.
Bancassurance is the
leading distribution channel for life insurance products in Italy,
followed by agencies and direct marketing.
This is because
bancassurance enables insurance companies to access the large
customer base of Italy’s highly developed banking players, which
supports the sale of more life insurance products.
The life insurance
written premium generated through bancassurance valued €33.15bn in
2011, says the Insurance Intelligence Center report.
It notes that strong
consumer confidence in banking players was significant in driving
the growth of the bancassurance channel during
2007-2011.
Insurance agencies
remained the second largest distribution channel during 2007-2011
and are expected to remain so between 2012 and 2016.
The written premium
generated through agencies increased from €9.29bn in 2007 to €12.41
bn in 2011, at a CAGR of 7.5%.
This figure is expected
to reach €14.14 bn in 2016, after recording a CAGR of 2.6% over the
forecast period.
Italian insurers are
also expected to promote e-commerce to reduce their commission
costs over the years 2012-2016.
Regulatory
requirements
Companies operating in
Italy can belong toeither insurance, reinsurance or financial
conglomerates.
Any insurance
intermediary that operates or is willing to operate in Italy must
be approved by the Institute for the supervision of private
insurance and public interest (ISVAP).
Intermediaries are
entitled to list themselves on the Single Register of Insurance
Intermediaries.
The registration of
intermediaries is dependent on whether they are individual persons
or companies.
Both types of insurance
intermediaries must opt for professional indemnity insurance of at
least €1m that is applied to each claim and an aggregate of €1.5m
per year for all claims.
Insurance companies in
Italy are subjected to a tax known as Imposta Regionale sulle
Attività Produttive (IRAP) at 3.9%, which varies according to
regional legislation.
The IRAP tax is the sum
of the results of the life and non-life insurance businesses from
their profit and loss account, and their less certain
non-deductible items such as expenses related to personnel and
depreciation of receivables.
However, interest
expenses incurred in any tax year are deductible for up to 96% of
the amount. In Italy, like the rest of the European Union, the
impending Solvency II regulatory regime is also set to be the
biggest shakeup in the insurance sector for decades.
Implementation of
Solvency II’s sweeping changes across the EU’s 27 member states is
due for 1 January 2014, but whether this deadline will be met is
fraught with uncertainty.
The Insurance
Intelligence Center report notes that Solvency II is likely to
spark a significant increase in merger and acquisition activity in
the insurance industry.
One solution for the
myriad of small insurers in Europe could be a change in their
models. As a result, many are likely to opt for white label
products supplied by strong organisations and become distribution
shop windows.
Though Solvency II is by
far the most onerous regulatory change facing insurers in the EU,
also looming is a ruling by the European Court of Justice
abolishing the use gender when assessing insurance risk. This is
due to become effective on 21 December 2012.
Competitive
landscape
Italy’s life insurance
segment contains bothdomestic and foreign insurers. There were85
life insurance companies operating inthe Italian life insurance
segment in 2011,of which 61 were domestic insurance companiesand 24
were the branch offices ofmultinational insurance companies
frommainly European countries.
The number of domestic
life insurance companies in the Italian insurance industry dropped
from 64 in 2010 to 61 in 2011, which is mainly due to a number of
mergers and acquisitions in the country.
For example, in July
2012 Unipol announced that it had acquired control of the Fondiaria
Sai Group.
The Italian life
insurance segment is concentrated, and the 10 leading insurers
accounted for a market share of 82.8% of the segment’s total
written premium value in 2011.
The leading Italian life
insurance company was Gruppo Generali, which accounted for the
largest share of 16.8% of the total life insurance written premiums
in 2011, followed by Gruppo Intesa San Paolo with the
second-largest share of 14.9%, and Gruppo Assicurativo Poste Vita
with the third-largest share of 12.9% in 2011.
For more information on
Life Insurance in Italy, Key Trends and Opportunities to
2016, contact the Insurance IntelligenceCenter on +44 (0)20
7406 6596 or info@insurance-ic.com
