SOCIAL INSURANCE. – The complex activity by which the State exercises its function of safeguarding the interests of workers unfolds along two distinct lines: on the one hand, it seeks to prevent the danger of harm to the worker (regulation of employment and working hours, accident prevention, industrial hygiene, protection of women’s and child labour, regulation of the employment relationship and the right of association), and on the other, to repair damages that may nonetheless occur due to events affecting the capacity for work and earnings. It is in this sphere of activity that the system of compulsory social insurance is primarily situated, assuming the character of “social” insurance in view of the purposes for which it is designed.
Although social insurance departs fundamentally from the contractual and technical framework of private insurance, it shares with the latter its essential nature, namely: a) the concept of saving-based provision, which involves the accumulation of reserves through contributions in order to secure the right to compensation for future losses; b) the concept of risk, understood as a random event, future and uncertain in its occurrence or timing, assessed in relation to the insured population according to the calculations of statistical probability. Whereas in private insurance saving is 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 intended; the risk is not left to the free determination of the parties but is defined by law; the premium, instead of being tied to the risk, is fixed according to mutualist principles; and compensation for damages is not freely predetermined by the insured but is set by law, sometimes with special criteria of a social nature applied to categories and family burdens. In social insurance, alongside its compensatory function, the preventive function also assumes special importance.
The risks covered by social insurance are those that threaten the continuity of work and earnings or otherwise create conditions of insufficient income relative to needs. They are ordinarily divided into physical and economic risks. The first category includes sickness—especially occupational disease—workplace accidents, maternity, disability, old age, and death; the second includes involuntary unemployment and, according to some, family burdens. Social insurance schemes, established in response to these risks, aim to repair, in whole or in part, the harm suffered, not only by reimbursing—usually only partially—the lost earnings, but also, in the case of physical events, by providing therapeutic measures to cure illness and restore health or at least the capacity for work.
Originally, the scope of social insurance was limited to the category of wage and salary earners, and within that group, to those economically weaker and most vulnerable to events that impair their capacity for work and earnings. This scope, however, has progressively expanded to include not only all wage and salary earners but also self-employed workers; and there are examples and schemes of compulsory insurance extended to all citizens, which in such cases take on the characteristics of a national insurance surpassing the principles of social insurance in the strict sense.
Even when limited to dependent workers, social insurance extends its function beyond the individual employment relationship, replacing the individual criterion with a family-based one. Under this criterion, certain benefits—generally health-related—are granted not only to the insured but also to their dependents; moreover, family events (such as marriage and the birth of children) and family burdens are recognized as grounds for entitlement to special allowances (marriage and birth grants, family allowances).
Although there were earlier examples of compulsory insurance for particular categories of workers (seafarers, miners, etc.), social insurance is generally traced back to Bismarck’s laws (sickness insurance in 1883, workplace accident insurance in 1884, disability and old-age insurance in 1891). In Italy, the establishment of various forms of insurance occurred as follows: accident insurance was introduced first (1898 and 1904); followed by disability and old-age insurance (1919–23), unemployment insurance (1919–23), tuberculosis insurance (1927), and maternity insurance (1923), which was later transformed into marriage and birth insurance (1939). Sickness insurance was gradually implemented by occupational sectors through collective labour agreements (mostly from 1929 onward) and was only unified by legislation in 1943. Family allowances were introduced in 1934, initially limited to industry, and then generalized through various measures between 1937 and 1940. Subsequent reforms have been applied to the various forms of insurance after their initial establishment.
The technical structure of these schemes varies significantly from one form to another, depending on the specific conditions and characteristics of each risk. In accident insurance, based on the so-called theory of occupational risk—which views workplace accidents as an inherent and sometimes unavoidable consequence of work and business organization—it is the enterprise itself, as the party responsible for such contingencies, that bears the related costs; and since the risk varies according to the nature of the work and the structural features of the enterprise, the insurance burden (premium) is graded accordingly. In disability and old-age insurance, the prevailing concept is that of saving-based provision, whereby each worker, through contributions from both themselves and their employer, builds up their own pension, the amount of which is determined by the contributions paid. In sickness insurance—including tuberculosis insurance, which represents one of the most dangerous social threats—the technique is based on mutuality within a system of distribution. In unemployment insurance, any actuarial assumptions are undermined by the uncertainty of the event and the vast scale of the phenomenon; thus, more than a true form of insurance, it is largely a system of fund accumulation intended to meet future contingencies within the bounds of reasonable foresight. Finally, in the system of family allowances, the mechanism is simply the implementation of a device to offset burdens, achieving an equalization of the related corporate costs based on the family composition of employees across the sector as a whole, irrespective of the individual circumstances of each worker.
Beyond work-related accidents—covered by the aforementioned theory of occupational risk—and family allowances, which are treated as an element of remuneration disbursed through a specific equalizing mechanism, other forms of social insurance, rather than being borne solely by the employer, are originally imposed in equal measure on both the enterprise and the individual worker, reflecting their shared interest in protective coverage. In certain cases, state participation is also envisaged to supplement specific benefit schemes.
In light of this framework, which establishes a distinct and autonomous form of shared obligation between employers and workers, a more recent trend asserts that the burden of insurance should fall exclusively on the worker. Under this view, wages are divided into two distinct components: the first (proper wages) is paid immediately and meets current needs, while the second (social security wages) constitutes the worker’s future provision. Consequently, insurance benefits are seen as a form of deferred wages—paid out upon specific events such as unemployment, illness, or old age—distributed differently (through healthcare services) or allocated variably (according to family obligations). The contribution, regarded as an inseparable complement to direct wages, is charged to production, whether entirely borne by the employer—who simply pays the worker’s direct wages—or, as some advocate, entirely deducted from the worker’s total wages, which include both direct and social security components.
In addition to distributing wages over time and across worker categories, social insurance schemes aim to achieve a more equitable redistribution of income based on a principle of social solidarity. To this end, while benefits are scaled according to the assessed social needs of individual workers, the burden is required to correspond to each worker’s capacity to contribute, independent of the benefits received. Moreover, the state is expected to ensure that those not actively engaged in social security contribute through the tax system—a key instrument for income redistribution.