The Role of Private Insurance in a Society which Prolongs the Life Cycle

1. Introduction

Throughout the European Union there is a general crisis of the welfare state, a phenomenon which is seen by many as a very real change of identity for the traditional paradigm of the Social State, leading to a new balance. Europe has very low birth rates and society’s ageing process imposes the need for urgent measures for confronting what in the next decades could prove to be unsustainable problems for national states: the health-welfare service, and social security. Private operators must be brought into this context, particularly the insurance companies who — as suppliers of services — will gradually take on an ever more active role in the forming of a system which will be capable of guaranteeing adequate levels of protection, security and wellbeing. Besides a great sense of responsibility, the handling of this change will require from the insurance companies a clear awareness of the framework within which they will be called to work. This is the matter to which I direct this paper.

2. The demographic scenario

The starting point for our investigation are the statistics concerning the process of growth of senility in the population, by which a progressive increase both in the number and the average age of the elderly is understood: this phenomenon is common at a European level, though there are different dynamics.
In effect, as shown by Figure 1, in the countries of northern Europe in which the process began earlier, the number of the very old, i.e. those over 80 years of age is higher (29% France, 25% UK and Germany) while in the southern European countries, such as Italy, Spain, Greece and Portugal, the portion of the population over 65 years (18% compared to 16% in the other three countries) is already high, but the portion of those over 80 is currently still relatively low (22%).

Figure 1: The Process of growth of senility in the population
Source: ISTAT and Eurostat.

As far as Italy in particular is concerned demographic projections for 2050 point to a serious demographic problem: if in 2000 those over 65 years old in our country formed 18% of the population (within this group 22% was made up of the ‘very old’) the projections for 50 years later tell us that that figure will double, rising from 18% to 34% while the relative percentage of octogenarians will rise to 41%. This means, ultimately, that in 2050 one Italian out of three will be over 65 years old and among the elderly 4 out of 10 will be over 80 years old.
A first consequence of such demographic evolution will be an increase in the level of dependence of the pensionable population on those in work, because as shown in figure 2, while in 2000 those over 65 years of age formed 27% of the population comprising those between 15 and 64 years, in 2050 this percentage will rise to 61%, a figure which will prevent the State from having sufficient revenue to pay a large enough pension to maintain the present standard of living. In this regard Italy will face a much greater problem than that of the rest of Europe, where Germany, France and the United Kingdom, though doubling their level of dependence, will reach percentages from 42% to 49%.

Figure 2: high rate of dependece a problem for pensions
Source: ISTAT and Eurostat.

A second aspect which demands the attention of those concerned with social politics is that around the middle of the century the ageing of Italian society will bring with it a noticeable increase in the number of those who are not self-sufficient. From the current two million, the number of disabled will rise to 4.9 million (figure 3). The exponential increase in those who are not self-sufficient will result in a great need for assistance.

Figure 3: increase of risk of loss of self-sufficiency: a problem of Assistance
Source: ISVAP – Quaderno n. 11, The cost and financing of assistance to the non self-sufficient elderly in Italy.

Fausto Marchionni: ceo and Director General, FONDIARIA-SAI Group.

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