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21 June 2011
On June 3 and June 9 2011 Italy's insurance regulator, ISVAP, approved Regulations 38 and 39. The former relates to the establishment and management of segregated assets and internal funds for undertakings carrying out life insurance business; the latter relates to remuneration policies for insurance companies.
As stressed in its introductory report, Regulation 38 significantly amends ISVAP Circular 71/1987 in order to provide greater protection to policyholders.
The main changes affect:
Based on the principle of home country control, the regulation will apply only to insurance companies with registered offices in the Italian territory and to branch offices of companies based abroad.
Article 18 of the regulation sets forth deadlines for compliance.
The introductory report to Regulation 39 notes that although compensation policies are in the hands of individual companies, they must meet criteria for sound and conservative management in order to prevent the recurrence of the disasters that have damaged the financial markets in recent years.
In preparing the regulation ISVAP has taken into account the most recent international guidelines on remuneration policies, including European Commission Recommendations 2009/384/EC and 2009/385/EC of April 30 2009.
Specific, harmonised EU rules on insurance undertakings are yet to be approved; in the meantime, insurance companies must follow the guidelines set by the EU Third Capital Requirements Directive (2010/76/EC), which, among other things, deals with the supervision of banks' remuneration policies.
Based on the home country control principle, the regulation will apply only to insurance and reinsurance companies with registered offices in the Italian territory; for branch offices of companies based in third countries, it will apply as far as is compatible with the legislation of such countries.
Article 27 of the regulation sets the deadlines for compliance.
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