The European Commission recently adopted new rules to help insurers invest in equity and private debt and provide long-term capital financing. As a result of the new rules, insurers will have to hold less capital for investments in equity and private debt, including in small and medium-sized enterprises. The newly adopted rules take the form of a delegated regulation, amend the EU Solvency II Directive and follow on from the mid-term review of the Capital Markets Union Action Plan.
Similar to other jurisdictions, Italy has been affected by global phenomena such as technological advances, an ageing population, climate change and evolving legal and regulatory frameworks. So how has the Italian legal system adapted to emerging risks and the new needs of policyholders? This article examines a number of recent changes to the Italian insurance market in this context.
Under the consolidated act on public procurement, the procurement of goods or services by local public entities is conditional on the approval of the relevant expenditure budget. However, if a public official authorises an agreement for the procurement of goods or services without an approved budget, that agreement is considered to have been entered into directly by the public official and the service provider and the public official may be personally liable to said provider.
The Supreme Court and several lower courts recently examined the validity of claims-made insurance policies under Italian law and reached different, sometimes conflicting, conclusions. In its most recent decision in this regard, the Supreme Court abandoned the fairness or worthiness test, which is undoubtedly favourable to insurers.
IVASS, the Italian insurance regulator, recently introduced Regulations 40 and 41 regarding the distribution of (re)insurance products and pre-contract information duties. Alongside these regulations, IVASS also published a report following a consultation phase. The clarifications that IVASS provided in the report represent useful guidance for both insurers and intermediaries.
The new EU Insurance Distribution Directive was recently transposed into the Italian legal system. The Italian insurance regulator also recently published separate consultation papers on its website regarding implementing measures on (re)insurance distribution, pre-contract information for the marketing and manufacturing of insurance products and new procedural rules for the application of fines in case of breach of insurance regulations.
In recent years, the attention that IVASS (the Italian insurance regulator) and the EU authorities have paid to the protection and needs of insureds has increased and been translated into market letters (among other initiatives). These market letters aim to encourage insureds to intervene in contracts through the introduction of protective measures or eliminate potentially punitive restrictions, thereby limiting contractual autonomy in various areas.
IVASS, the Italian insurance regulator, recently provided details of an investigation into (re)insurance intermediaries' general understanding of cybersecurity-related issues and the remedies that they have implemented to protect their businesses and clients against the adverse effects of possible cyberattacks. IVASS will conduct another survey in 2019 to check that insurance intermediaries have complied with the proposed measures.
Article 117 of the Insurance Code provides that premiums paid to intermediaries and monies used to settle claims or due by insurers must be kept in separate accounts, the holder of which can be an intermediary that acts expressly in such a capacity. No seizure or distraint of the separate account can be carried out by creditors other than policyholders and insurers. IVASS recently clarified a number of issues in this regard following an investigation into the compliance of intermediaries with said requirements.
IVASS, the Italian insurance regulator, recently published a consultation document which includes a proposal to amend Regulation 35/2010 on the disclosure duties for proposers and the advertising of insurance products. The consultation document's publication follows the recent approval of EU Regulation 2017/1469 and sets out a standardised presentation format for insurance product information documents.
The Supreme Court recently ruled for the first time on the application of an insured's general duty to pay defence costs to prevent or mitigate loss, as set out in Article 1914 of the Civil Code. The court stated that such a duty applies to both first-party and third-party liability insurance, and – more importantly – that in either case it applies to defence costs.
A recent decision by the Supreme Court provided an important clarification on punitive damages and public order. The court ruled that damages in tortious and contractual actions seek not only to restore the position of the damaged party as it was before the wrongful action or breach of contract, but also to serve as a punishment and deterrent.
A recent Joint Divisions of the Supreme Court decision further clarified the Court of Auditors' jurisdiction compared with that of the civil courts regarding the liability of directors and officers (D&O) of companies held in whole or in part by public entities. The matter is relevant for insurers that underwrite D&O-related risks and need to determine whether the insured may be exposed to civil liability and sued before the civil courts or exposed to public liability and sued before the Court of Auditors.
Following Decision 9140 by the Joint Sections of the Supreme Court in May 2016, information asymmetry and the protection of insurance contract clauses became widely debated topics. While the court focused on the need to assess the validity of claims-made clauses on a case-by-case basis, this approach could also be applied in principle to any insurance contract clause that is not regulated by the Civil Code or other legislation.
The minimum requirements for mandatory professional indemnity (PI) insurance for lawyers were recently approved by Decree 22. The mandatory PI requirements for lawyers cover damages, gross negligence, wilful misconduct, claims from clients and third parties and joint and several liability. The minimum limits vary depending on the turnover and number of professionals.
IVASS, the Italian insurance regulator, recently approved regulations on the look-through approach to determine the solvency capital requirements of insurers under the Italian Insurance Code, the EU Solvency II Directive and the European Commission Delegated Regulation. The solvency capital requirement will be determined by applying the look-through approach to collective investment schemes and market, underwriting and counterparty risks.
The Italian insurance regulator recently published a proposal to amend Regulation 35/2010 on the disclosure and advertising of insurance products. The proposed amendments concern the simplification of the information note for third-party car insurance and other damages, new cases of exemption from the obligation to submit an information note and new methods for submitting pre-contractual documentation.
The Italian insurance regulator recently published Consultation Paper 7, which amended Regulation 5/2006 by introducing new methods for transmitting requests and communications required to maintain the Single Register of Insurance and Reinsurance Intermediaries. The consultation paper proposes that insurance and reinsurance intermediaries adopt an electronic signature for requests or communications relating to the register.
The Joint Divisions of the Supreme Court recently published a long-awaited judgment on the validity and enforceability of claims-made clauses. In line with its previous judgments, the court established that in civil liability insurance contracts, claims-made clauses are not unfair. The grounds of the judgment establish a number of additional principles of law which appear reassuring for market players.
A recent Court of Cassation ruling established that the stipulation of a limit does not constitute an essential element of a civil liability insurance contract. The ruling demonstrates the importance of setting out clear provisions regarding the limits and sub-limits in civil liability policies, and the burden of proof concerning their application in particular.