Recent law provisions and regulatory measures impacting the Italian insurance sector

Hogan Lovells

Hogan Lovells[co-author: Federico Bastoni]

The Italian Budget Law for 2024 introduced important measures that will have an impact on the insurance business. As to the non-life insurance sector, it is provided an obligation for Italian enterprises and branches of foreign companies to stipulate catastrophic risks insurance covers (i.e. insurance against catastrophe events on lands and physical assets) and thus Italian non-life insurers are obliged to accept proposals to cover such risk under certain conditions. Moreover, the current legal framework regarding motor liability insurance has been slightly amended, while IVASS asked insurance companies to make a communication thereto with respect to surety policies. As far as the life insurance sector is concerned, the Budget Law provides for the setting up of a life guarantee insurance fund which would perform payments in cases of compulsory liquidation of member insurance undertakings and that could also affect EU undertakings operating in Italy through a branch or under the freedom to provide services.

Compulsory catastrophic risks insurance cover

Law no. 213 of 30 December 2023 regarding the Italian State budget for the financial year 2024 and multiannual budget for the three-year period 2024-2026 ("the "Italian Budget Law") introduced a new category of compulsory insurance aimed at covering damages occurring to the lands, buildings, plants, machineries, as well as industrial and commercial equipment of companies registered within the Italian Register of Enterprises (excluding agricultural businesses), where such damages are due to natural disasters and catastrophic events (i.e. earthquakes, floods, landslides and overflows). The scope of application of the new provisions also includes enterprises incorporated abroad with a branch in Italy subject to registration requirements. According to the new provisions of law the mandatory insurance cover is governed as follows:

  • the relevant contract may provide for a deductible not exceeding 15 per cent of the damage and shall provide for the application of premiums proportional to the risk;

  • insurance undertakings may offer such coverage either by assuming the entire risk directly, or as a co-insurance, or as a consortium through a plurality of undertakings. In the latter case, the consortium must be registered and approved by IVASS;

  • in the case of refusal or evasion of the obligation to contract by insurance undertakings, including in the event of renewals, IVASS may levy an administrative fine;

  • in order to contribute to the effective management of the portfolio managed by insurance companies for the coverage of the damages at hand, insurers and reinsurers can obtain by SACE S.p.A. (Italian Export Credit Agency), by means of a specific agreement and under market conditions, coverage of up to 50 per cent of the indemnities payable by them in respect of the occurrence of the events of damage covered under the relevant contracts and in any event not exceeding specific thresholds.

Further implementation and operational modalities may be established by ministerial decree, including the modalities for identifying the calamitous and catastrophic events eligible for compensation as well as the determination and periodic adjustment of premiums.

The enterprises concerned are required to stipulate such mandatory insurance contract within 31 December 2024.

Setting-up of a life guarantee fund

In consideration of the potential risks and implications arising out of the default of an Italian life insurance undertaking in 2023 (Eurovita case) the Italian Budget Law provided for the setting up of a life insurance guarantee fund for the management of crisis in the life insurance sector (the “Fund”). The Fund is associative body established between member insurance companies and intermediaries with the aim of protecting those entitled to insurance benefits against member companies within the limit of Euro 100,000.00 per each eligible person.

The Fund will perform payments in cases of compulsory administrative liquidation of member insurance undertakings and may also intervene – if provided in its articles of association - in transactions involving the sale of assets, liabilities, businesses, business units as well as assets and legal relations identifiable as a block. The Fund may also intervene to prevent or overcome a crisis situation that could lead the insurance undertaking to compulsory administrative liquidation.

Membership to the Fund is mandatory for Italian life insurance undertakings and insurance and reinsurance intermediaries enrolled in the related register kept by IVASS ("RUI") if the amount of annual premiums collected or intermediated in life insurance classes is equal to or higher than Euro 50 million. Branches of non-EU insurance undertakings authorized to conduct life business in Italy shall also adhere to the Fund unless they participate in an equivalent foreign insurance guarantee scheme, at least with reference to the level and scope of coverage. Failure to join the Fund or exclusion from it will result in the withdrawal of authorisation to pursue life insurance business or, in the case of intermediaries, removal from the RUI.

The articles of association of the Fund may allow Italian branches of EU insurance undertakings conducting life insurance business in Italy or those operating in Italy under freedom to provide services to join the Fund.
The Fund is financed by its members which are required to pay contributions at least annually, in the amount determined by the Fund and communicated to the members from year to year. Contributions owed by member insurance companies are proportionate to the amount of the commitments vis-à-vis the insureds and the risk profile of the companies, while contributions due by member intermediaries are determined in relation to the total volume of life insurance products intermediated and the revenues associated therewith. In the phase of application of the Fund, the contributions due are calculated as a percentage of specific parameters.

The ministerial decree to appoint a board of promoters with the obligation of convening the constitutive assembly of the Fund has yet to be adopted.

Implementation of Directive (EU) 2021/2118 amending Directive 2009/103/EC on insurance against civil liability in respect of the use of motor vehicles and the enforcement of the obligation to insure against such liability

On 2 December 2021 Directive (EU) 2021/2118 was published on the European Official Journal with the aim to ensure an equal minimum protection of parties injured as a result of traffic accidents across the EU, to ensure their protection in the event of insolvency of insurance undertakings and to ensure equal treatment of claims-history statements by insurers for potential policyholders crossing internal borders of the Union.

Such Directive has been implemented in Italy by means of legislative decree no. 184 of 22 November 2023, which introduced in the Italian Insurance Code several provisions on motor insurance. The most relevant rules relate to the following:

  • minimum amounts of cover for compulsory motor vehicle and watercraft liability insurance have been increased;

  • insurance undertakings shall treat claims-history statements issued in other EU Member States in the same way as those issued by an Italian insurance undertaking, also with regard to the application of any discounts;

  • insurance undertakings operating in Italy under the right of establishment or the freedom to provide services which are subject to an insolvency or liquidation procedure shall inform the Italian Guarantee Fund For Road Victims when they indemnify or deny liability in respect of a claim received by the fund itself;

  • the insurance undertaking of the vehicle responsible for the accident shall inform the Italian Compensation Body when it indemnifies or denies liability in respect of a claim that has also been received by the Body;

  • the establishment of a quote generator comparing motor insurance prices. In particular, consumers can compare, free of charge, the prices, tariffs and contractual terms and conditions of insurance companies providing motor insurance cover, through the independent tool called 'Preventivass', which can be consulted on the websites of IVASS and the Italian Ministry of Companies and the Made in Italy.

IVASS Request for communication of the telematic means of verifying surety policies pursuant to the Public Contracts Code

On 4 January 2024 IVASS published a letter to the market asking insurance undertakings authorised to carry out business in non-life class 15 (Suretyship) – including EU insurance undertakings operating in Italy under right of establishment or under freedom to provide services – to communicate thereto the telematic methods of verifying the surety policies pursuant to legislative decree no. 36 of 31 March 2023 (the Public Contracts Code, hereafter the “Code”). In fact, the Code introduced new specific requirements for guarantees issued in support of a bid in the case of participation of the contractor in public tenders, aimed at ensuring the authenticity of the policy. In particular, the Code sets out that such guarantees – which may also be granted by insurance companies - shall be issued and signed digitally and must be verifiable by telematic means with the issuer or managed through the use of platforms operating with technologies based on distributed registers.

Pending the adoption of platforms that comply with the criteria set out by law, the Italian Anti-corruption Authority (ANAC) introduced, with Resolution no. 606/2023, a transitional solution until 30 June 2024 aimed at avoiding disruptions in the operations of market players, allowing contractors to verify the authenticity of the policy via alternative telematic means.

During the transitional period, insurance companies may alternatively:

  • provide for a specific section within their website, dedicated to the verification of the authenticity of the policy in real time, ensuring compliance with specific safeguards;

  • provide themselves with a certified electronic mail (PEC) address, through which the beneficiary of the surety policy may ask the issuing insurance company to confirm its authenticity.

To this end, the addressed insurance undertakings are invited to notify IVASS of the verification method chosen and any subsequent changes thereto.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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