INAIL MONOPOLY (Advisory opinion)
PRESS RELEASE
The Antitrust Authority raises the issue of the INAIL monopoly.
Exercising its consultative powers under the Antitrust Act, the Authority has submitted its observations to parliament and to the government on current industrial and occupational illness and accident insurance legislation, and on a number of government Bills that will have major repercussions on the role of INAIL - Italy's occupational accident insurance agency.
The authority's position is that while government intervention is essential to guarantee the fundamental right of all employees to adequate financial resources in the event of industrial accident, this does not necessarily require a statutory monopoly. What is needed is a statutory framework that will comprehensively, cost-effectively and efficiently safeguard employees' the constitutionally guaranteed right. The government must lay down the conditions that will guarantee insurance cover to all employees, even when employers may have evaded the statutory obligation to insure their employees, and establish the minimum benefits that will provide employees with "adequate resources to meet their living requirements". Government must correct possible distortions that the market might create as a result of which some employees in highly at-risk occupations might be inadequately covered, or might only be able to obtain insurance cover for an excessively high premium.
Compliance with these principles does not necessarily demand a monopoly regime because, as the alternative experiences of several European Union countries has shown, where the system is not managed under a monopoly but also insurance companies competing on the market.
Social functions should only be run under a statutory monopoly, according to the case-law of the European Court of Justice, when this is indispensable - in other words, when it is not economically viable to leave it to private enterprise. This is usually the case with activities based on the principle of mutuality, which uses the 'unfunded' system, where there is no direct relationship between contributions and benefits, which creates a financial shortfall paid out of general tax revenues.
With specific reference to industrial accident insurance, after examining Italian legislation it emerges that there are not sufficient elements of mutuality to prevent the system from being run cost-effectively as a business, because the INAIL is required to perform what is essentially an insurance system, which means that the financial equilibrium is guaranteed by the premiums paid by the insured.
Italy's experience, furthermore, shows that the public monopoly cannot even be justified in terms of efficiency because the potential economies of scale which might be obtained by increasing the capacity to increase the number of insured are thwarted by the lack of pressure from the competition which should induce companies to seek optimal production solutions for the benefit of the consumers.
In this connection, for example, INAIL's industrial insurance premiums are those established in 1988, and they are therefore no longer consistent with present-day risks. The fact that INAIL's industrial risk insurance is highly profitable, so that the agency can use its substantial assets to offset losses in its agricultural insurance business confirms that the premiums are no longer proportional to the hazards and risks. This anomaly is seriously affecting the national economy, because it places a burden on industrial companies which is not properly theirs, and which should be borne by the whole community, covered out of general tax revenues.
The Authority therefore hopes that the whole question of government intervention in the field of industrial accident and illness insurance will be reconsidered to liberalize the market. This can be done by giving private sector insurance companies access to this market if they have the requisite assets and are subject to the special regulatory constraints needed to properly protect workers. The Authority considers that any legislation which designed to further extend the exclusive preserve of INAIL instead of triggering a liberalization process is contrary to the principles indicated above.
Rome, 11 February 1999