The life insurance market - Italy (2023)

1.2 The global market

the size of the global life and nonlife insurance market is estimated to be around $**** billion in **** and is expected to grow at a CAGR of more than * percent during the forecast period. Direct insurance providers are engaged in the primary underwriting and risk-taking of annuities and insurance policies. The main types of insurance are:

life insurance property and casualty insurance health and medical insurance

Life insurance refers to insurance that covers the package of life benefits for the individual.

Value of the global life insurance market World, ****-****, US$ billion Mordor Intelligence

Regional Analysis

The U.S. represents the largest insurance market in the world, reaching the value of nearly US$* trillion in **** with total premiums. The U.S. market share has increased from ** percent to ** percent, due to strong premium growth in nominal terms(***).[***]

Global insurance industry market share World, ****, % Assinews

1.3 The local market

The value of the Italian life insurance market is **.* billion euros in ****. Life premiums are down-**% from the previous year and **.*% are through bank and post office branches , **.*% through agencies , and **% through promoters. **.* percent involve revaluable life policies and **.*% unit-linked policies.

Market composition - life insurance Italy, ****, % Ivass

Within the Life Branch it is possible to distinguish different types of contracts:

Branch I: human life insurance; BranchII: nuptial and birth insurance; BranchIII: life insurance connected with investment funds or index funds; BranchIV: long-term health insurance; BranchV: capitalization operations; BranchIV: pension fund management.

1.4 Impact of Covid-19

The pandemic led to a significant impact on the insurance industry in Italy, especially in life insurance. In **** , Covid-** brought with it significant uncertainties related to income and the spread of the virus, which negatively affected premium income from Branch I life insurance policies, leading to a *.* percent decrease(***) policies grew by *.* percent annually to €**.* billion. In essence, the uncertainty brought about by Covid in terms of economics and profitability has led to a review of outflows deemed less necessary, and among these are life insurance policies. However, many insurance policies have begun to offer coverage in case of death due to Covid-**.[***]

Some insurance companies, such as MetLife, offer life and health policies that do not exclude the consequences of epidemics or pandemics contracted after the policy is taken out, making them effective even in case of Covid-** by providing:

coverage for complications due to Covid-** vaccination: MetLife policies cover any health complications related to vaccination against Covid-**. To qualify for compensation, adverse reactions must fall within the events covered by the policy (***). protection in case of virus contraction: there are specific MetLife policies that cover the consequences of infectious diseases, including Covid-** (***). In case of death or disability caused ...

2.1 Demand characteristics

In Italy, there is a decrease in average monthly household spending on life insurance compared to the **** value; this reduction is due to a consumer perception that the product may be of little use compared to their needs. In ****, however, there was a positive industry figure, with a **.* percent growth in the value of spending. Consumers choose life insurance to ensure financial support for their beneficiaries in the event of death. This form of protection ensures that loved ones receive a monetary benefit, known as an insurance benefit, which can help cover expenses such as: mortgages, debt, education, or daily expenses in the absence of the deceased's financial support.

Average monthly household expenditure item in life insurance Italy, ****-****, in current &euro Istat

2.2 Demand drivers

The succession of changes and crises has increased Italians' perception of risk. Unforeseen events are part of the consumer's mental space, and he necessarily has to deal with them himself. Although the pandemic was indeed a shock now overcome, wars and geopolitical tensions increase the feeling of uncertainty, while the return of inflation generates a status of alert, giving concrete and everyday meaning to instability. In this context, financial issues are predominant; * out of ** Italians feel vulnerable and exposed to risks.

The "generational" segmentation of sensitivity to different risks represents a very interesting and qualifying aspect, which allows us to note how, by age group, concerns change profoundly.

Concerns by age Italy, ****, % Ania

Although there is a strong perception and awareness of risk exposure, not all those who are aware of it choose to use an insurance policy for various reasons, such as even lack of resources or other life priorities. The data show that ** percent of those who say they feel exposed do not pursue any type of insurance coverage.

Protection gap (***) Italy, ****, % Ania Regarding theintermediation between the insurance industry and customers, the analysis highlights how the relationship between customer and company is now multichannel and digital: off-line is still ...

2.3 Geographical distribution of demand

To visualize the geographic distribution of demand, a map was created with monthly household spending on life and accident insurance. The North presents the highest figure, with *.** €/month, in the center spending is *.** €/month while, in the South, households spend an average of only *.** €/month.

3.1 Market structure and size

The analysis of the size of the insurance market is carried out based on data belonging to the category related to the activities of insurance agents and brokers (***). Specifically, three different magnitudes are considered:

number of active enterprises number of employees legal form of active enterprises

Number of active enterprises

During the time period taken into analysis (***), there is no significant change in the number of operating enterprises, remaining basically stable. From **** to **** , a growth of*.**% was observed. Stability in the number of firms operating in the insurance agency sector may mean that we are facing a mature or well-established market. However, competition and innovation remain key to long-term success in the insurance industry.

Number of companies active in the insurance industry Italy, ****-****, thousands Istat

Number of people employed

The figures for the number of employed people also tend to remain stable; there has been a * percent growth in the last year. In general, stability in the number of people employed in the insurance industry is not necessarily a negative symptom. It may indicate that the industry is able to maintain an adequate workforce to serve customers without having to make significant expansions or reductions. Number of people employed in ...

3.2 Value Chain

3.3 Distribution channels

The passage of product distribution through agents and brokers is a traditional practice in the insurance industry. These brokers play a key role in the insurance market, connecting insurance companies to customers' needs. Insurance agents are often affiliated with a specific insurance company, where they are responsible for selling the company's products. They play an advisory and customer service role, helping them understand their needs and showing them the most suitable policies. Insurance brokers, on the other hand, are generally independent and have access to a wide range of insurance companies. They provide objective advice and help customers compare different options to find the policy best suited to their needs.

There has been a decline in the direct insurance share over the years, which suggests that more and more people are relying on insurance agents and brokers rather than seeking policies directly from insurance companies. This is given by both the wide range of choice and the increasing complexity of policies.

In life insurance, the share of sales in Italian direct business through bank and post office counters is gradually decreasing, reaching ** percent in **** and representing the most widely used channel in the life sector. In addition, there is an increase ...

3.4 Main actors

Overall, the insurance industry landscape has a number of players who play crucial roles. Insurance companies are at the center of this system and offer insurance policies to cover specific risks whether they are related to life, health, tangible assets, or other categories. Insurance intermediaries, such as agents and brokers, facilitate the connection between policyholders and companies, offering advice and helping to choose the most suitable policies.

[***]

Poste Vita S.p.A.: the life insurance company of the Poste Italiane Group, was founded in **** and in **** became the leading insurance company in Italy in terms of premium income. In ****, with premium income of **.* billion, it confirms its leadership in life insurance. In ****, the Poste Vita Insurance Group was established. In fact, Poste Vita S.p.A. is joined by the non-life company Poste Assicura S.p.A. with products designed for personal and asset protection. Intesa Sanpaolo Vita: is the parent company of Intesa Sanpaolo Vita Insurance Group and was formed in January **** through the merger of EurizonVita, Intesa Sanpaolo Vita (***), Sud Polo Vita and Centrovita Assicurazioni. The Intesa Sanpaolo Vita Insurance Group encompasses the best experience and expertise in the market, offering insurance investment and retirement savings solutions that ...

4.1 Type of Offering

Life insurance (***) is a contract entered into between the policyholder and the insurance company that, in return for the payment of a premium, guarantees the beneficiary an annuity or lump sum in the event of the death of the insured or his or her survival at a certain date. Three determining figures are distinguished in the life insurance policy contract: the policyholder: who enters into the contract and pays the premium; the insured: that is, the person to whom the event (***) is related and on whom the outcome of the insurance contract depends; the beneficiary: who receives the sum paid out in the event of the insured's death. Before the contract is signed, the insurance company gives the prospective client a questionnaire to fill out, which should include information useful for making an assessment of the possibility of insuring and calculating the risk.[***] Types of life insurance Three types of life insurance are available:

life insurance policy; life insurance in case of death; mixed policy;

Case life policy

This type of insurance allows for an annuity, when the insured remains alive after a certain age threshold (***). There are three possible choices of life insurance policies:

contract with immediate annuity: premium paid ...

4.2 Prices

The final cost of a life insurance policy varies depending on several factors, such as age of birth, the health condition of the person who decides to take out the policy, technical costs of life insurance (***). So, since it does not have a fixed cost, life insurance varies depending on the type and factors.

Temporary death policy: insures beneficiaries a sum of money for a specified period of time following the death of the insured person. The policy must, however, be active at the time of the death. Whole life death policy: the insurance covers the entire time period from the signing of the contract to death. In this case, the beneficiaries of the policy will receive a predetermined annuity or lump sum in the event of the person's demise.

With regard to the price of life insurance policies, one must consider the value of fixed expenses, concerning: opening, management, loadings, and taxes applied on the disbursement of the lump sum and annuity. Regarding the life insurance policy premium, costs are calculated taking into account:

age, health condition and lifestyle; capital you want to insure; duration of the contract; management costs (***); additional guarantees; penalty fees (***).

Life insurance has an annual cost ...

4.3 Artificial intelligence and the insurance industry

Artificial Intelligence can be considered a useful tool in the design, development, and use of data and algorithms for maximizing sustainable value creation and reducing risks to individuals and society. The technology can be applied to many different sectors and industries, and well-known insurance companies such as Generali make use of it on a daily basis; specifically, AI is used in the financial sector to detect and report suspicious activity, such as the unusual use of payment and investment instruments, thus facilitating the work of anti-fraud departments. In addition, AI applications can be used to facilitate trading operations by simplifying sections concerning the estimation of supply, demand and price of securities.

There are numerous benefits that can be derived from the use of Artificial Intelligence, both in terms of speed and efficiency and accuracy.

Artificial Intelligence in the insurance landscape

In the insurance industry, artificial intelligence systems are being used with increasing frequency to provide customized consumer products and services at competitive prices. If not properly designed, however, artificial intelligence systems can lead to significant risks to people's lives, such as financial exclusion and discrimination. For this reason, there are specific risks and ethical dilemmas to consider, seeking to provide human ...

5.1 Rules and regulations

Life insurance regulations are a key pillar in the financial legislative landscape, as they regulate the dynamics and obligations for both insurance companies and policyholders. This legislation was designed with the aim of protecting the interests of policyholders by establishing clear criteria regarding insurance contracts. In addition to the basic rules contained in the Civil Code, the most important text to consider is the Private Insurance Code. In addition, rules dictated by IVASS (***) should be considered.

Arts. ****-**** C.C.: The rules on insurance are contained in a particular specific section that includes articles ****-****.Article **** stipulates that life insurance may be taken out on the life of the policyholder himself or on that of a third party. UnderArticle ****, the contract may be excluded in favor of a policyholder or a third party, and the one in whose favor it is taken out becomes the beneficiary. In the event that the policyholder fails to pay the premium for the first year, the insurer, according toArt. **** has the right to take action within * months; if the policyholder then fails to pay subsequent premiums within the grace period, the contract is terminated as of right and the premiums already paid remain vested in ...

6.1 Segmentation

Italian enterprises

Foreign enterprises

• Poste Italiane
• Assicurazioni Generali
• Mediolanum
• UnipolSai Assicurazioni
• Allianz Italy
• Axa groupe
• CNP Assurances (La Poste)