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06 November 2007
The Istituto per la vigilanza sulle assicurazioni private e di interesse collettivo (ISVAP), the regulatory body which has authority over the insurance sector, is continuing its implementation of the Insurance Code. Two draft regulations, published on the ISVAP website on October 11 2007 and October 18 2007 respectively, deal with (i) internal audits, compliance, risk management and outsourcing, and (ii) motor liability insurance, with particular reference to insurance certificates and claims notification forms. The consultation periods end on November 15 2007 and November 19 2007.
The regulation on internal audits, compliance, risk management and outsourcing mainly consolidates the existing rules in ISVAP Circular 577/D, issued on December 30 2005. The most significant changes relate to compliance and outsourcing.
Insurers will be required to establish specific procedures aimed at preventing legal risks and reputational damage arising from breach of laws, regulations or orders issued by regulatory bodies. The regulation requires that a compliance manager be appointed by the board of the insurance company, which will determine the manager's tasks, responsibilities and reporting procedures. The manager's main role will be to monitor the effectiveness of internal compliance rules.
Following the guidelines in the report - entitled "Outsourcing in Financial Services" - which the Joint Forum on Outsourcing issued in February 2005, the regulation sets out the conditions under which insurers may outsource certain activities. The aim of these provisions is to prevent the depletion of insurance companies' core business. The regulation also lists minimum requirements which every outsourcing agreement must include.
The regulation will apply to domestic insurers and reinsurers, branch offices of non-EU insurers and branch offices of EU and non-EU reinsurers; thus, branch offices of EU insurers fall outside the scope of the regulation.
The regulation on motor liability insurance certificates and claims notification forms mainly consolidates existing laws and regulations.(1) The most significant changes relate to the information that insurers may include in the insurance certificate (in addition to mandatory information) and the provisional documents which may replace the insurance certificate. No significant changes have been introduced with regard to claims notification forms.
The regulation will apply to both domestic and EU insurers which carry out insurance activities under EU freedom of establishment or freedom of services rules.
For further information on this topic please contact David Maria Marino at Giuffrè Scorcelli Rosa & Partners by telephone (+39 02 7639 0744) or by fax (+39 0276 390 681) or by email (email@example.com).
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