SOCIAL INSURANCE. - The complex activity through which the State exercises its function of protecting the interests of workers unfolds along two distinct lines: on the one hand it provides for preventing the danger of harm to the worker (regulation of employment and working hours, accident prevention, occupational hygiene, protection of female and child labor, regulation of the employment relationship and of the right of association), on the other for repairing the damages that have in any case occurred through events affecting the capacity for work and earnings. It is in this field of activity that, with a preeminent function, the system of compulsory social insurance is inserted, which, by reason of the purposes to which it is directed, takes on the qualification of "social."
Although they depart profoundly from the contractual and technical scheme of private-law insurance, social insurance schemes have in common with private ones their essence, namely: a) the concept of provident saving, which leads one to establish, through savings paid out in the form of an insurance contribution, the right to be indemnified for losses from future damages; b) the concept of risk, considered as an aleatory event, future and uncertain as regards its occurrence, or the moment in which it will occur, considered in relation to the mass of the insured according to the calculations of statistical probability. While, however, in private insurance saving constitutes an individual and optional act, in social insurance schemes providence is imposed by the State, with a bond of solidarity among the workers for whom the insurance schemes are arranged; the 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 mutualistic principles; the compensation for damage, finally, is not freely predetermined by the insured, but is fixed by law, sometimes with particular criteria of a social order with respect to categories and family burdens. In social insurance schemes, moreover, alongside the compensatory function, the preventive function holds a special importance.
The risks which insurance schemes provide against are those that threaten the continuity of work and earnings, or that in any case determine conditions of insufficiency of earnings relative to needs. They are ordinarily distinguished into physical and economic risks. To the first category belong illnesses, principally occupational ones, workplace accidents, maternity, invalidity, old age and death; to the second category involuntary unemployment and, according to some, family burden. The social insurance schemes, established in correspondence with the aforementioned risks, aim to repair, in whole or in part, the damage suffered, not only through the reimbursement, for the most part only partial, of lost earnings, but also, for physical events, through the provision of therapeutic aids suited to the treatment of the illness and to the recovery of health or at least of the capacity for work.
The field of application of social insurance is originally limited to the category of subordinate workers and, among these, to those recognized as economically weaker and more defenseless in the face of events affecting the capacity for work and earnings. This field, however, tends to extend ever more, until it groups together not only all subordinate workers but also the self-employed: nor are there lacking examples and schemes of compulsory insurance extended to all citizens, which in that case take on the characteristics of a national insurance surpassing the postulates of social insurance properly so called.
Even if limited to dependent workers, social insurance schemes expand their function beyond the subject of the employment relationship, substituting the family criterion for the individual one; by effect of this criterion, not only do certain benefits (generally health benefits) pertain to the insured's family members as well as to the insured himself, but the family event (marriage and the birth of offspring) and the family burden are assumed as the precondition for the right to particular indemnities (marriage and birth allowances, family allowances).
Although there is no lack of earlier examples of compulsory insurance for particular categories of workers (maritime workers, miners, etc.), social insurance schemes are traced back to the laws of Bismarck (illness 1883, workplace accidents 1884, invalidity and old age 1891). In Italy the institution of the various forms of insurance was carried out at the following times: first the accident insurance was established (1898 and 1904); there followed insurance for invalidity and old age (1919-23), that against unemployment (1919-23), that against tuberculosis (1927), for maternity (1923) later transformed into insurance for marriage and birth (1939); for illnesses the insurance was gradually implemented for occupational sectors by means of collective labor contracts (for the most part from 1929 onward) and was legislatively unified only in 1943; family allowances were instituted in 1934, limited to industry, and generalized with various measures from 1937 to 1940. At later dates, after the first institution, improvements were made to the various forms.
The technique of the aforementioned insurance schemes differs appreciably from one form to another by reason of the particular presuppositions and the characteristics of each risk. In accident insurance, implemented according to the so-called theory of occupational risk which configures the workplace accident as an immanent and at times inevitable consequence of the work and of the organization of the enterprise, it is the enterprise itself that, as responsible for such an eventuality, is burdened with the relative charges; and insofar as the risk varies by reason of the nature of the work, as well as of the structural characteristics of the enterprise, the charge of the insurance (premium) is graduated by reason of that risk. In insurance for invalidity and old age the concept of provident saving prevails, by reason of which each worker, with his own contribution and that of his employer, builds up his own pension, the amount of which is graduated by reason of the contributions paid. In insurance for illnesses, as well as for tuberculosis, which represents one of the most dangerous social perils, the technique is that of mutuality, within the framework of a distribution management. In insurance against unemployment every presupposition of actuarial technique falls away, in the face of the uncertainty of the event, as well as of the vastness and breadth of the phenomenon; so that, more than a true form of insurance, it is for the most part a system of setting aside funds deemed suited to meet future eventualities, within the limits of a reasonable forecast. In the system of family allowances, finally, it is nothing other than the implementation of a mechanism of compensation of charges, which achieves an equalization of the relative company burden with reference to the family composition of the employees resulting in the category as a whole, independently of the specific situation of the individual dependent workers.
Apart from accidents at work, by reason of the aforementioned theory of occupational risk, and family allowances, considered an element of remuneration paid by means of a particular equalizing mechanism, the other forms of insurance, rather than falling on the employer alone, were originally made to fall in equal measure both on the undertaking and on the individual worker, by reason of the common interest in insurance protection; and in certain cases a participation by the State is also provided for, in order to supplement particular forms of benefit. In the face of this arrangement, with which a particular and proper autonomous form of participation in the obligation of social insurance is identified as regards employers and workers, the criterion has recently been gaining ground that the insurance charge should fall exclusively on the worker, whose wage is divided into two distinct portions: the first (wage properly so called), paid immediately and answering to direct and current needs; the second (social-security wage), which comes to constitute his social security; for this reason the insurance benefits are identified as a particular form of deferred wage (that is, paid on the occasion of particular events, such as unemployment, sickness and old age), differently administered (by means of health benefits), or differently apportioned (by reason of family burdens); and the contribution, considered as an inseparable complement of the direct wage, is made to fall on production, whether it is placed entirely on the employer, who limits himself to paying the worker his direct wage, or, as some demand, is placed entirely on the worker by means of a deduction from the total wage, that is, including both the direct and the social-security wage.
Besides bringing about a distribution of the wage over time and among the categories of workers, social insurance moreover aims to achieve a more equitable redistribution of incomes on the basis of a concept of social solidarity; for this reason, while benefits are graduated with reference to the need of individual workers, assessed on the social plane, it is required not only that the charge be proportioned to the contributory capacity of individuals, disregarding any relation to 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 the redistribution of incomes.
By the fact of having arisen at different times, sometimes in dependence on contingent factors, with different structures and often with distinct immediate purposes, social insurance schemes have given rise, both in Italy and in in all the principal countries, to a body of legislative norms that is confused and in some parts disorderly, which awaits and requires an organic and coordinated reorganization that unifies in a general vision, together with the insurance system, the work of prevention against occupational risks. In this action, still under way, upon the essential elements of insurance, that is, upon the concepts of savings and risk, the concept of social solidarity tends to prevail, by virtue of which the social-security wage comes to represent, more than a share of individual savings—albeit compulsory and directed toward social ends—a form of participation in the needs of the community through a general system of apportionment of burdens by which a general plan of social security, or better still of social safety or protection, is realized.
In this conception, social insurances are therefore regarded as an instrument directed at counterposing to the imbalances determined by the economic order a solution inspired by the principles of justice and charity.