The outlook in Italy’s insurance market is beginning to change. This has been reflected by ratings agency Fitch, which has revised its projections from negative to stable, with expectations that insurers profit and capital adequacy will be able to bear the brunt of the country’s economic shortcomings. It also suggests that the Italian insurance market has managed to reduce its overall credit risk, which is impressive, considering that Italian insurers’ ratings are so closely linked to national debt, as a result of their large holdings in Italian Government debt.
One of the big players responsible for the market’s success is Società Reale Mutua di Assicurazioni (Reale Mutua). Year-on-year the company has managed to reduce premiums for non-life policies, while offering higher returns on life plans, and, as of this year, it has begun providing dedicated product packages. Due to the nature of mutual insurance, the importance of building a dialogue with policyholders is amplified. Furthermore, by facilitating discussion, the process of creating and implementing new platforms, which satisfy the needs of policyholders, helps improve their effectiveness.
The success of online banking apps, which provide greater speed and accessibility to their customers, is something that the company has adapted and refined to suit the needs of its members. By developing these systems in partnership with its members, the company created a restricted area on their website, where policyholders can access their entire insurance history, as well as producing a dedicated app for checking policies, handling claims and managing the main due dates for car insurance policies. They even provide a loyalty scheme, which they launched in 2011, for long-standing customers.
Customer loyalty
Luca Filippone, Vice Director of Reale Mutua, told World Finance how the scheme aims to reward loyal members with exclusive services and offers. “More importantly and strategically, Reale Mutua is developing a multi-channel and multi-access CRM [customer relationship management] platform that will make it possible to differentiate workflows and SLAs [Service Level Agreements] to accommodate the needs of customers and their life cycle,” says Filippone. “This will be used by all corporate functions that directly or indirectly communicate with insured members on a day-to-day basis.”
How technology is utilised determines whether it is a successful tool or a wasteful investment. In insurance, a recent innovation has been the use of black boxes, also known as telematics car insurance. These little boxes provide insurers with sophisticated methods for monitoring motorists driving behaviours, allowing underwriters to assess policyholders, rewarding careful drivers with lower premiums. There has been an uptake in the use of telematics technology, as it has cut prices by nearly 25 percent. Unsurprisingly, young drivers in particular have jumped on board with the new money-saving device. Italy is the market leader for black boxes associated with motor insurance policies according to a study published by the Italian Association of Insurance Companies (ANIA).
“With the introduction of these devices, we have succeeded in turning some problem areas typical of this sector into an opportunity, differentiating our offering and making important progress towards tailoring tariffs,” says Filippone. “Looking to the future, the integration of systems that use home automation and biological parameter monitoring technology, which are increasingly being employed, might open up new opportunities for growth.
“Technology will also enable us to improve relations with our customers, through new multi-access platforms that will allow us to manage all aspects of interaction and use all the devices currently available on the market,” says Filippone.
Filling the void
Italians, as a whole, are under-insured by comparison to their European counterparts. Roughly, only five percent of the population has supplemental health insurance, compared to almost 90 percent in France; and just 20 percent of Italian households have taken out home insurance, while in the UK and the Netherlands, 75 percent of homeowners have opted in.
In order to fill the insurance void, Reale Mutua has embarked on a strategic plan: focusing on developing multichannel business models in order to take advantage of its retail networks; innovating its market approach, concentrating on developing welfare products in a bid to counteract the harmful effects of Italy’s economic outlook; investing in new technologies, allowing for the digitilisation of their existing processes; and looking for acquisitions in both the domestic and European markets to increase economy of scales and their market share.
If Fitch’s outlook is anything to go by, the Italian insurance market will be one that will continue to grow in the new year, even if the rest of its economy continues to struggle.
