The Italian government is preparing a reform of the compulsory motor vehicle liability insurance (Rc Auto) system, with legislative changes expected to take effect by the end of winter. Once the bill is enacted, the government will have a four-month window to issue the necessary legislative decrees to overhaul the sector.
Timeline for Insurance Reform
The legislative clock begins upon the entry into force of the Competition Bill. Initial projections suggest that if the bill receives approval by October, the delegation for the insurance reform will expire around the end of February. This timeline provides a strict deadline for the government to finalize adjustments to the sector, specifically targeting the bonus-malus system and the direct compensation mechanism. The Ivass (Institute for the Supervision of Insurance) and the Antitrust Authority, which launched a joint fact-finding investigation into these insurance issues last June, are operating under these contingent deadlines to provide recommendations for the upcoming regulatory changes.
Overhaul of the Bonus-Malus System
The current bonus-malus system, which adjusts insurance premiums based on a driver’s accident history, has faced criticism for losing its effectiveness. Twenty years after the Bersani Law allowed family members to inherit the same merit class, many motorists have reached the top tier, leaving insurance companies with less data to differentiate risk. Consequently, insurers have introduced "internal classes" that are often considered opaque by regulators. The government’s proposed reform aims to integrate a wider range of data and more sophisticated risk-evaluation methods. The goal is to reward virtuous driving behaviors while reducing the influence of indirect variables, such as the geographical location of the policyholder.
Efficiency in Direct Compensation Procedures
The reform also focuses on the direct compensation system, a mandatory procedure where a policyholder’s own company handles the claim and is later reimbursed by the at-fault party’s insurer. Currently, this reimbursement is calculated based on fixed tables known as "forfait," rather than actual repair costs, which can lead to market distortions. The Competition Bill mandates a revision of how these forfait values are calculated to ensure greater transparency and competition. Lawmakers aim to improve the efficiency of these procedures without jeopardizing the overall stability of insurance premiums.
Frequently Asked Questions
Why is the bonus-malus system being reformed?
The system has become less effective because many drivers have reached the highest merit class due to previous legislative reforms. As a result, insurance companies have implemented "internal classes" that lack transparency, prompting the government to seek a more data-driven approach to risk assessment.
How does the direct compensation process change?
The government intends to revise the methodology used to calculate "forfait" payments. By adjusting these fixed values, the reform aims to create a more competitive and transparent market for claim settlements while maintaining the financial stability of insurance providers.
What is the role of Ivass and the Antitrust Authority?
These bodies are conducting a fact-finding investigation to identify specific flaws in the current insurance market. Their findings and recommendations will serve as the technical foundation for the legislative decrees the government must adopt within four months of the Competition Bill’s enactment.