On 23 September 2019 the Institute for the Supervision of Insurance (IVASS) launched a public consultation on two separate documents containing additional rules implementing the local and EU laws on insurance distribution (and other ancillary provisions).
The consultation phase closed on 31 October 2019 and the final measures introducing the new rules are expected to enter into force on 31 March 2020.
Product oversight and governance
The first consultation document relates to product oversight and governance. The new rules aim to strengthen the existing provisions in this area(1) and align them with the new legal framework applicable to insurance investment products.
The proposed regulation will apply to:
- domestic insurers;
- branches of third-country insurers;
- de facto manufacturers (limited to certain provisions thereof); and
- domestic and EU intermediaries (limited to certain provisions thereof).
The proposed regulation will mainly regulate:
- the roles and responsibilities in respect of product approval processes, with particular reference to insurance investments products; and
- the roles and responsibilities in respect of distribution activity.
As to the first bullet point, there is a particular focus on boards, compliance units and the importance of a constant flow of information between insurers and intermediaries.
Insurers' boards must approve a product oversight and governance policy (the contents of which must align with the regulation), while their compliance units must ensure that the policy is updated and reviewed on a regular basis. Product oversight and governance policies and documents relating to a product approval process must be made available to the regulator on request.
The board (or other equivalent body) of a de facto manufacturer will be responsible for the product approval process and must ensure that the product oversight and governance policy approved by the insurer is duly followed.
As to the second bullet point above, there is a particular focus on the precise identification of the target market.
Article 6 of the draft regulation lists the elements that must be considered to properly identify the target market, such as clients' category, needs and policy terms and conditions, with particular reference to exclusions, limitations and the complexity of the product.
Changes to IVASS Regulations 38/2018, 40/2008 and 41/2008
The second consultation document introduces changes to the existing IVASS regulations on product and oversight governance, the distribution of insurance products and the pre-contract information available to proposers.
Pursuant to Regulation 38/2018, compliance units must extend their control over an insurer's compliance with product and oversight governance rules.
Pursuant to Regulation 40/2008, certain new rules should be introduced to rationalise and simplify the pre-contract information available to proposers and strengthen consumer protection. Such new rules include specific conduct rules applicable to insurance investment products.
Moreover, detailed provisions on incentives regarding insurance investment products should be introduced.
Regulation 41/2008 introduces changes to the present structure of the insurance product information document (IPID) and the additional IPID for life and insurance-based investment products (among other things).
Through the second consultation document, IVASS has proposed to introduce changes to other existing regulations (not related to the EU Insurance Distribution Directive (2016/97/EU)) – namely, Regulations 23/2008 and 24/2008 regarding clarity of terms and conditions of mandatory motor liability insurance and complaints, respectively.
The proposed changes would affect EU insurers which perform business in Italy under the freedom to provide services or freedom of establishment regime.
In particular, pursuant to Regulation 23/2008, such undertakings must notify clients of whether they have adhered to the direct indemnification mechanism. If they have not, clients must be notified that they cannot seek indemnification from their insurer and that they should contact the damaging party's insurer.
As to Regulation 24/2008, it is proposed (among other things) that EU insurers which perform business in Italy under the freedom to provide services or freedom of establishment regime must annually publish on their website a report regarding their complaint management activity, including details of any complaints received and the outcome.
Endnotes
(1) EU Delegated Regulation 2017/2358 and Articles 30decies and 121bis of the Italian Insurance Code.
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