Policy-making is a complex endeavor, especially in a modern society driven by uncertainty. Concluding on December 6, 2024, the laboratory course led by Professor Luciano Fasano at the University of Milan offered students not only a theoretical framework but also hands-on practice to tackle the challenges of policy-making.
This course was organized in collaboration with the journal www.nationaldailypress.it and featured Dr. Marco Fossati from Intesa Sanpaolo Protezione, a subsidiary of the Intesa Sanpaolo Assicurazioni Group.
Student Practice: From Simulation to Reality
Through group discussions and simulations, students deeply explored the complexities of policy-making. Two key lessons stood out:
1. The Necessity of Balancing Decisions
Students discovered that crafting policies that protect vulnerable groups while incentivizing market participation requires balancing the interests of multiple stakeholders. For instance, overly high mandatory insurance premiums might provoke public resistance, whereas excessively low premiums could dampen insurers’ enthusiasm.
2. Data-Driven Decision-Making
Dr. Marco Fossati emphasized the significance of data analysis in policy-making. Real-time monitoring of metrics like accident rates and insurance penetration provided scientific foundations for policy adjustments. Students realized that transparency and accuracy in data are critical to enhancing policy effectiveness.
Regulatory Interventions and Innovations in the Insurance Sector
The course examined the history of regulatory interventions in the Italian insurance industry. From the introduction of mandatory motor liability insurance (RC Auto) in 1969 to the implementation of electric scooter liability insurance in 2024, the evolution of policies reflects the government’s balancing act between protecting public interests and promoting market efficiency.
The Role of Mandatory Insurance
Mandatory insurance policies aim to protect potential victims while reducing socio-economic costs. However, their implementation raises debates about fairness and efficiency. For example, the “direct compensation system” (risarcimento diretto) significantly improved claims efficiency but posed challenges for smaller insurers, potentially leading to market centralization.
Incentives and Subsidies
In life and property insurance, the government has used tax incentives to promote private savings and risk management. For instance, the 2018 tax relief policy for residential disaster insurance increased coverage rates while alleviating the fiscal pressure of post-disaster government aid. However, the long-term sustainability of such measures requires further assessment.
Public Policy and Private Market Synergy
Policy-making cannot rely solely on government efforts; private sector involvement is equally essential. The “reinsurance system” managed by SACE exemplifies this public-private collaboration. Through this mechanism, the government provides risk-sharing tools to insurers, encouraging them to expand their services proactively.
The pension system, a cornerstone of social security, showcases the synergy between public and private domains in Italy. The development of private supplementary pension systems reflects the government’s efforts to encourage diversified retirement savings. Reforms in both public and private systems have mitigated the impact of population aging on the pension framework.
Future Prospects for Public Policy
The seminar highlighted several key directions for future public policy:
1. Flexibility and Adaptability
Under conditions of uncertainty, policies must be dynamically adjustable. For example, the introduction of liability insurance for electric scooters addresses the growing prevalence of new transportation methods. As artificial intelligence and autonomous driving technologies evolve, regulatory policies will need to be more flexible to accommodate technological changes.
2. Public Engagement and Education
The successful implementation of policies depends on public understanding and support. Enhancing public education on risk management can effectively reduce resistance during policy execution.
3. Technology-Driven Regulatory Innovation
Technologies such as blockchain and big data offer new possibilities for the insurance industry. For instance, smart contracts enabling automatic payouts can improve efficiency and boost consumer confidence.
Conclusion
This laboratory course provided a valuable learning opportunity, enabling students to thoroughly understand the policy-making process from theory to practice. Whether through the lens of expected utility theory or behavioral economics, the course unveiled the complexities inherent in crafting effective policies. Through the in-depth discussions during the seminar, students gained a deeper appreciation of how innovation and collaboration can uncover robust solutions in an uncertain future.