Table of Contents:
The current context of the insurance market
In recent years, the Italian insurance sector has experienced a phase of profound transformation, characterized by unforeseen events and a constantly evolving economic environment. Recently, the failure of the German insurance group Fwu has shaken the market, involving about 100,000 Italian savers. This event has led to growing concern among policyholders, prompting them to reconsider their life policies and make early redemptions
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A significant increase in redemption
According to the Institute for Insurance Supervision (Ivass), in 2023, life insurance redemptions reached a total value of 85 billion euros, an increase of 59% compared to the previous year. This increase was accompanied by a redemption rate that reached 10.7% for revaluable policies and 11.3% for unit-linked policies. These data highlight a significant change in the behavior of the insured, who now seem to prefer immediate liquidity over the long-term stability of
life insurance policies.
The causes of the increase in redemption
The reasons behind this phenomenon are multiple. First, after a long period of low interest rates, bond yields started to rise in 2022, attracting the attention of investors. In addition, inflation reached 8.1%, prompting savers to seek more profitable alternatives to traditional insurance products. Ivass points out that the increase in interest rates has encouraged many policyholders to discard their policies to invest in more advantageous financial instruments
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The consequences for insurance companies
This increase in redemption is not without consequences for insurance companies. A large number of redemptions may expose companies to liquidity risk, forcing them to demobilize securities before their natural maturity. This demobilization, in a context of rising rates, may result in capital losses, further damaging the financial stability of companies. Ivass also highlighted a significant correlation between the redemption rate and the return on BTPs, suggesting that savers tend to redeem their policies in search of more profitable investment opportunities
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The differences between distribution channels
An interesting aspect that emerged from the Ivass study concerns the differences in redemption rates between policies distributed through banking channels and those sold through agents or brokers. The policies distributed by banking institutions recorded an increase in the redemption rate of 6.2 percentage points in 2023, compared to an increase of 2.5 points for those sold through other channels. This suggests that the distribution network plays a crucial role in the behavior of the insured and in their redemption decisions
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