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18 May 2010
A decision issued by the Court of Genoa on April 8 2008 raised the issue of the invalidity of claims-made clauses due to their alleged conflict with Article 1917 of the Civil Code, which regulates insurance contracts on the basis of the loss occurrence scheme (for further details please see "The problematic coexistence of loss occurrence and claims-made clauses"). The court considered that the loss occurrence principle is mandatory and that a claims-made insurance contract involves no transfer of risk from insured to insurer. The Court of Milan has now examined the issue.
An insured notified its insurer of a claim, which was received on December 29 2005, arising from a wrongful action that occurred in March 2003 under a claims-made policy for the period between March 1 2001 and December 1 2003.
The insurer denied coverage. It relied on the claims-made clause and argued that the claim had been made after the policy's expiry date.
The insured claimed that the insurer's argument was groundless. It could not deny coverage on the basis of the clause, as the Court of Genoa had established that such a clause is null and void, because it contravenes Article 1917 of the code. Alternatively, the insured argued that the clause was unenforceable because claims-made clauses constitute unfair terms and therefore must be specifically approved in writing pursuant to Section 1341 of the code. In this case, such approval had not been obtained.
In a decision of March 18 2010 the Court of Milan - in line with previous decisions of other courts and with Supreme Court Decision 5624/2005 - diverged significantly from the Court of Genoa's 2008 decision, holding as follows:
In considering the insured's argument that the claims-made clause was unenforceable under Section 1341 of the code, the court distinguished between 'pure' and 'mixed' claims-made policies. It held as follows:
The court noted that the insured had not specifically approved the claims-made clause in writing. However, it upheld the insurer's denial of coverage, since the claim had been made against the insured after the policy's expiry date.
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