This page hosts contributions from the Generali Group’s specialized research and analysis centres: Group Insurance Research and Group Macroeconomic and Financial Research.
The Focal Point is designed to address on an ad hoc basis varying topics of high relevance for financial markets. Its focus is medium-term in order to support the Tactical Asset Allocation process with relevant investment ideas.
The Working Papers Series hosts the preliminary results of research projects, published to stimulate discussion and elicit comments. The views expressed in the papers are those of the authors and do not involve the responsibility of the Generali Group. Any errors or omissions are responsibility of the authors.
28 Sep 2016
We challenge the common wisdom that the income elasticity of insurance be higher, ceteris paribus, in developing countries (the so-called S-curve hypothesis). Focusing on non-life insurance, we show that the available evidence is contradictory and heavily dependent on methodology. Based on a recent approach to consistent inference on the income elasticity of insurance, we show counterexamples to the theory. Although not supporting it in general, we argue that it could still be relevant for explaining the behaviour of particular lines of business.
03 Jan 2015
We extend the standard model of optimal insurance to partial or total borrowing, describing the negative effect of the borrowing- lending spread on demand. Our evidence shows that demand for non-life insurance is in fact decreasing with the interest rate on borrowing. We conclude that credit conditions are a significant driver of non-life insurance development, and an important limiting factor in the particular case of Southern Italy.
The development of Italian private pension plans shows little progress, in spite of generous fiscal incentives. We show that few subjects contribute and even fewer fully exploit the fiscal advantage. Our analysis underlines that in evaluating fiscal incentives Italian savers are influenced by a wide range of heuristics. So there is room for skillful public and private decision makers to reach the goal of increasing the private pension pillar taking advantage of the way people really take their decisions.
This paper analyses the impact of the evolution of the regulation dealing with systemically important insurance groups, using an event study methodology. The results show that investors were able to detect which companies were to be designated well ahead of the publication of the list. Most important, after an initial positive reaction, consistent with the expectation of a “Too-big-to-fail” implicit subsidy, the disclosure on how the capital charges for systemic insurers will be calculated led to sizeable negative abnormal returns for the entities concerned.
25 years after a seminal paper, we reassess the income elasticity of non-life insurance by means of homogeneous and heterogeneous versions of the Common Correlated Effects estimator, reversing the findings from the earlier literature. The evidence supports the existence of a cointegrating behaviour between insurance consumption and GDP and the view of non-life insurance as a normal good.
We assess the role of expectations on pension income and financial literacy in the decision to join a pension fund. The results confirm past evidence on the role of income and education and find a strong role played by financial literacy. We therefore provide further evidence for the role of public powers in enhancing participation by providing information and financial education.
Giovanni Millo and Gaetano Carmeci (University of Trieste) (2013) "A sub-regional panel data analysis of life insurance consumption in Italy"; published on the Journal of Risk and Insurance 82(2), June 2015
An innovative empirical approach to the long-standing research question on the determinants of life insurance development is proposed and applied to the peculiar Italian situation in order to shed light on the determinants of aggregate life insurance consumption.
Giovanni Millo and Gaetano Carmeci (University of Trieste) (2011) "Non-life insurance consumption in Italy: a sub-regional panel data analysis"; published on the Journal of Geographical systems 13(3), September 2011
The consumption of non-life insurance is analyzed across Italian provinces in order to assess its determinants. The regressors included in the specification are shown to successfully account for spatial dependence. Insurance turns out to depend on income, wealth and some demographics, as already established, but also on trust, judicial efficiency and borrowing conditions. These findings help in explaining the gap between Central-Northern Italy and the South of the country.
Civil law inefficiency is a potential limiting factor both for economic development at large and for that of insurance. We contend that the excessive length of civil trials, reducing the present value of the claim in case of litigation, is an important obstacle to the development of the non-life market. We test this hypothesis on data from Italy, where the average trial lasts very long but there is also a big geographical variance. The data support our hypothesis.
We study the effect of moral hazard involved in non market contracts on the demand for marketed contracts. We provide a rigorous definition of Social Network and Social Capital by means of an equilibrium concept typical of the Network literature.
This research aims at assessing the drivers of insurance consumption and testing whether these observable economic, social and demographic factors are able to fully account for regional variability in insurance density or, on the converse, diffusion effects of some kind, such as cross-border or global spillovers, are present.
Portfolios of Italian families are rather incomplete, averaging just two stocks per family over the Nineties. This lack of diversification may be due to different reasons: liquidity constraints, transaction or information costs; or individual preferences. In the paper the reasons for incompleteness are investigated on the basis of an asset allocation model. Only the italian version of this work is available.
Our annual publication "Insurance Dossier" explains key statistical information on the Italian insurance market. Other studies on the industry are also presented.
17 Jun 2016
Economic growth in Euro area continued but remained frail sustained by the recovery of the internal demand with positive impact on insurance sector in almost all European Countries. The macroeconomic scenario characterized by very low bond yields, especially in the core European markets, was still a burden for the life insurance; the only notable exception was Spain where gross written premiums, after years of a negative trend, increased versus the previous year thanks to the performance of the risk business (+7.6%) driven by the recovery of the housing market. The new wave of uncertainty that affected financial markets at the end of the year re-oriented life insurance demand, previously focused on unit linked products, towards traditional product with guarantees.
30 Jun 2015
During 2014 the improvement in financial conditions created opportunities for the insurance business in most of the European markets, where premium income and profitability were broadly on the rise. In the Euro area, life insurance premiums experienced substantial growth in several markets, maintaining and even overtaking the good performance of 2013. However, there are two exceptions to this trend: Germany, where growth slowed down and where the persistence of a low interest rate environment negatively affected the appeal of guaranteed and may represent a threat to companies financial stability, and Spain, where there was only a moderate level of growth in the life premiums in contrast to substantial contraction in past year. Low investment return combined with Solvency II Requirements have rapidly shifted the product mix in favor of Unit Linked policies.
30 Jun 2014
In 2013, the European insurance industry posted overall positive results. Life insurance premiums increased while the performance of non-life insurance was on average in line with that of 2012. In Italy, in 2013, total turnover was up 13.3%. In particular, life premiums (direct Italian business) grew by 22.5%; new business was up 31.3%.
28 Jun 2013
Market uncertainty and volatility heavily affected the performance of insurance industry in 2012. Life insurance turnover continued to contract in many of the main European markets due to the same factor which depressed premium growth in 2011, namely low household savings ratio and the unappealing level of guaranteed yields, especially in comparison with those of bank products, which were also supported by aggressive marketing strategies. These factors are clearly at play in the Italian market, where premiums were down 3.8%. Much of the fall was recorded in the first part of the year: the rebound in confidence following ECB action in September boosted collection in the final quarter of the year.
29 Jun 2012
In 2011 the performance of the Italian insurance industry was heavily affected by the difficult financial and economic situation in Europe. Premium income in the life sectors dropped all over Europe compared with the previous year, as the difficult economic conditions facing families seriously hindered their propensity to save. On top of that, the decline in guaranteed returns due to pre-crisis low interest rate environment, combined with the effect of strong competition from other savings products, especially those distributed by banks, contributed to further wors-en the life insurance performance. This trend was apparent on the Italian market, where life premium income fell by 12.3% (reaching 18.3% if we take into account direct Italian premium income) and where bancassurance channel recorded an over 25% decline in premiums .
29 Jul 2011
The stabilisation of the financial markets during 2009 promoted the growth The strong recovery of premium income recorded in the life sector in 2009 continued on all the main markets in 2010. Growth was again driven by low risk products which offer a minimum guaranteed return; demand for these products benefited from a rather steep yield curve and the volatility of the stock markets, which in many countries penalised the growth of linked products. The Italian market was once again the most dynamic, with 9.2% growth.
30 Jul 2010
The stabilisation of the financial markets during 2009 promoted the growth of insurance premium income on all the main European markets, with the single exception of the UK. The growth in premium income was driven by the life sector which, in a European economic and financial context characterised by very low short-term interest rates, recorded increased demand for accumulation life policies with a low financial risk content and far more attractive returns.
27 Jun 2008
2007 represents the second consecutive year of decline on the Italian insurance market after over 20 years’ non-stop growth. Direct insurance premiums have fallen by 7%, compared with a decline of 2.9% in 2006. The trend must be considered in relation to the 11.4% decrease in the life sector, whereas non-life maintained a modest growth trend of 1.3% (2.4% in 2006).
31 Aug 2007
The Insurance Dossier, now at its 11th issue, aims as usual at providing an overview of the main trends of the Italian insurance market and their interpretation, in a national and international context. The Dossier, published as an insert to Assicurazioni Generali’s corporate magazine “Il Bollettino”, was originally designed to explain market trends to the company’s employees and staff, but has gradually turned into an independent publication, addressing observers and analysts in the industry. In 2006, after nearly 20 years’ non-stop, sometimes tumultuous growth, the Italian insurance market showed a 2.9% decline in revenues, thus reversing the trend exhibited on the main European markets. This trend is explained by the decline in life insurance premiums (down 5.6%), while premiums in the non-life sector grew slightly (up 2.4%).
31 May 2006
The Insurance Dossier was first published ten years ago, following the endorsement by Italy of the so-called EU’s Third Generation Directives. Conceived as an attachment to the Assicurazioni Generali corporate magazine “Il Bollettino”, and aiming primarily to explain market trends to employees and staff of the Company, particularly to those spread throughout the country, the Insurance Dossier has gradually turned into an independent publication, addressing observers and analysts of the sector.
29 Apr 2005
The 9th issue of the Insurance Dossier has largely remained unchanged as compared to last years. Readers are provided with a description and interpretation of current trends in the Italian and European markets as for turnover, distribution channels, leading players, profitability. As in the last editio n, the profitability of the Italian market has been derived from the results published by listed groups and is the first indication of the year for the Italian market.
30 Jun 2004
The eighth issue of the Insurance Dossier is presented in a double version. From now on, the yearly publication edited by Assicurazioni Generali Research Department on the main trends of the Italian insurance market will have two issues. This first short version is published in Spring and gives a brief outline of the main issues concerning the Italian insurance market, such as premiums, operators, profitability and premium income forecasts. Since all the necessary information is not yet available (e.g. the financial statements of all the operating companies), estimates have been made and data have been processed on a sample of companies. The second issue will be released in Autumn. It will basically have the same contents as the traditional issue of the Insurance Dossier, though a more thorough and in-depth analysis of the relevant data will be made over a time span of at least five years.
30 Jun 2003
This 7th issue of the Insurance Dossier has been published by the Research Department of Assicurazioni Generali after less than two years. During this forced break we were pleased to receive inquiries and demands for further insights, as well as several distinguished requests to continue our work which have spurred the publication of this new issue. Contents have largely remained unchanged as compared to previous issues. Readers are provided with a description and interpretation of current trends in the Italian insurance market and its different aspects such as turnover, distribution channels, main operators, profitability and many more. Greater emphasis has been given to the analysis of trends characterising European markets, which are increasingly connected at economic and legislative level; an insight on current trends in European distribution has therefore been added.
The investment View offers the “House View” of Generali Investment Europe on the global economy and financial markets. It is based on the consolidated views coming out of the quarterly investment meetings. Starting with a global view, the publication includes a macro-economic analysis of the most important areas (USA, Euro-area, Japan and Great Britain). In the second part, the asset classes bonds, equities and currencies are analyzsed and forecasted. The Investment View closes with an overview on the forecasts and the resulting model portfolios.