SOCIAL INSURANCE. — The complex activity through which the State exercises its function of protecting workers’ interests proceeds along two distinct lines: on the one hand, it acts to prevent the danger of injury to the worker (regulation of employment and working hours, accident prevention, occupational hygiene, protection of women’s and children’s work, regulation of the employment relationship and of the right of association); on the other, it acts to remedy injuries that have occurred as a result of events affecting the capacity to work and earn. It is in this field of activity that the system of compulsory insurance, which, by reason of the ends toward which it is directed, is described as “social,” plays a predominant role.
Although they differ profoundly from the contractual and technical framework of insurance under private law, social insurance arrangements have in common with private insurance their essence, namely: a) the concept of provident saving, which leads, through savings paid in the form of insurance contributions, to the establishment of a right to compensation for losses resulting from future damage; b) the concept of risk, regarded as an aleatory event, future and uncertain with regard to whether it will occur or to the time at which it will occur, and considered in relation to the body of insured persons according to the calculations of statistical probability. Whereas in private insurance saving constitutes an individual and voluntary act, in social insurance provision is imposed by the State, with a bond of solidarity among the workers for whom the insurance is established; risk is not left to the free determination of the contracting parties, but is determined by law; the premium, instead of being related to the risk, is fixed by recourse to mutualist principles; finally, compensation for damage is not freely predetermined by the insured person, but is fixed by law, at times according to special social criteria with respect to categories and family responsibilities. In social insurance, moreover, alongside the compensatory function, the preventive function assumes particular importance.
The risks covered by insurance are those that threaten the continuity of work and earnings, or that otherwise create conditions in which earnings are insufficient in relation to needs. They are ordinarily divided into physical and economic risks. The first category includes illnesses, especially occupational diseases, industrial accidents, maternity, invalidity, old age, and death; the second includes involuntary unemployment and, according to some, family responsibilities. Social insurance arrangements established in response to these risks seek to remedy, wholly or in part, the damage suffered, not only by reimbursing, generally only partially, the lost earnings, but also, in the case of physical events, by providing therapeutic measures suitable for treating the illness and restoring health or at least the capacity to work.
The field of application of social insurance was originally limited to the category of dependent workers and, among these, to those recognized as economically weaker and less able to defend themselves against events impairing their capacity to work and earn. This field, however, tends increasingly to expand, until it encompasses not only all dependent workers but also self-employed workers. There are even examples and models of compulsory insurance extended to all citizens, which in that case take on the characteristics of national insurance, going beyond the premises of social insurance in the strict sense.
Even when limited to dependent workers, social insurance extends its function beyond the subject of the employment relationship, replacing the individual criterion with the family criterion. As a result of this criterion, not only do certain benefits—generally health benefits—accrue to the insured person’s family members as well as to the insured person, but the family event (marriage and the birth of children) and family responsibilities are taken as the basis for entitlement to particular allowances (marriage and birth allowances, family allowances).
Although there are earlier examples of compulsory insurance for particular categories of workers (seamen, miners, etc.), social insurance is generally traced back to the laws of Bismarck (sickness, 1883; industrial accidents, 1884; invalidity and old age, 1891). In Italy, the establishment of the various forms of insurance took place at the following times: accident insurance was instituted first (1898 and 1904); it was followed by insurance for invalidity and old age (1919–23), insurance against unemployment (1919–23), insurance against tuberculosis (1927), and maternity insurance (1923), subsequently transformed into insurance for marriage and birth (1939); sickness insurance was gradually implemented for occupational sectors through collective labor agreements (mostly from 1929 onward) and was unified legislatively only in 1943; family allowances were instituted in 1934, limited to industry, and generalized through various measures from 1937 to 1940. At later dates, after their initial establishment, improvements were introduced into the various forms.
The technique of the aforementioned insurance arrangements differs considerably from one form to another, according to the particular premises and characteristics of each risk. In accident insurance, implemented according to the so-called theory of occupational risk, which regards an industrial accident as an inherent and sometimes unavoidable consequence of work and of the organization of the enterprise, it is the enterprise itself which, as being responsible for such an eventuality, bears the related costs. Since the risk varies according to the nature of the work and the structural characteristics of the enterprise, the cost of the insurance (the premium) is graded according to that risk. In insurance for invalidity and old age, the concept of provident saving predominates: each worker, through contributions from himself and from his employer, builds up his own pension, the amount of which is graded according to the contributions paid. In sickness insurance, as well as in tuberculosis insurance—which represents one of the most dangerous social threats—the technique is that of mutuality, within a pay-as-you-go system. In unemployment insurance, every actuarial premise disappears in the face of the uncertainty of the event and the breadth and extent of the phenomenon; thus, rather than a genuine form of insurance, it is generally a system for setting aside funds deemed capable of meeting future eventualities, within the limits of reasonable forecasting. Finally, the family-allowance system is simply the implementation of a mechanism for compensating costs, which achieves an equalization of the related burden on enterprises with reference to the family composition of their employees as established for the category as a whole, independently of the specific situation of individual dependent workers.
Apart from industrial accidents, by reason of the aforementioned theory of occupational risk, and family allowances, regarded as an element of remuneration paid by means of a particular equalization mechanism, the other forms of insurance are originally charged not solely to the employer but in equal measure to both the enterprise and the individual worker, on the grounds of their common interest in insurance protection; provision is also made in certain cases for State participation, in order to supplement certain forms of benefit. In contrast to this approach, which assigns to employers and workers a particular and autonomous form of participation in the obligation of insurance, the principle has recently been gaining ground that the insurance burden should fall exclusively upon the worker, whose wage is divided into two distinct portions: the first (the wage properly so called), paid immediately and intended to meet direct and current needs; the second (the social-security wage), which serves to constitute his provision for the future; for this reason, insurance benefits are understood as a particular form of deferred wage (that is, paid on the occurrence of particular events, such as unemployment, illness and old age), differently supplied (through health services), or differently apportioned (in accordance with family burdens); and the contribution, regarded as an inseparable complement of the direct wage, is charged to production, whether it is placed entirely upon the employer, who merely pays the worker his direct wage, or, as some demand, placed entirely upon the worker by means of a deduction from the total wage, that is, from the direct wage together with the social-security wage.
In addition to distributing wages over time and among the categories of workers, social insurance also aims to achieve a more equitable redistribution of income on the basis of a concept of social solidarity; for this reason, while benefits are graduated with reference to the needs of individual workers, assessed on the social plane, it is required not only that the burden be related to the contributory capacity of individuals, independently of any relationship with the benefits, but also that the State intervene so that those who do not participate actively in social security may contribute to it through the tax system, which constitutes an essential instrument of income redistribution.
Because they arose at different times, sometimes as a result of contingent factors, with different structures and often with distinct immediate purposes, social insurance schemes have given rise, both in Italy and in
Under this conception, social insurances are therefore regarded as an instrument intended to counterbalance the disequilibria determined by the economic order with a solution inspired by the principles of justice and charity.