Legal and regulatory updates

IVASS RIGA PORTAL – 16 APRIL 2024

On 12 April 2024, the Italian Insurance Regulatory Authority (IVASS) published Regulation no. 55/2024 (Regulation) laying down provisions on the digital transmission of information regarding both the single companies and insurance groups in a web portal (RIGA).

The Regulation applies to:

• insurance and reinsurance companies with legal seat in Italy
• Italian branches of extra EU insurance and reinsurance companies
• reinsurance companies with legal seat in Italy
• ultimate Italian controlling companies

These entities will have to notify RIGA with certain data and information, for example:

• information regarding the subjects who hold a corporate position within the company, including their appointment, the expiry date, the renewal and any change of the administrative bodies
• the subjects responsible of the fundamental functions and, in case of outsourcing, those responsible of the outsourcing
• the shareholders, the shareholders’ agreements and the participations
• the providers of fundamental or essential or important functions in case of outsourcing

For all the above information, the Regulation details the information that needs to be provided.

For companies operating in Italy under the right of establishment or the freedom to provide services, the above information will be transmitted by the competent home country authority to IVASS.

The information will need to be transmitted to IVASS by the companies indicated above according to the timelines provided for by the law, but, in any case promptly and not later than 30 days.

Each company will have to register to the web portal, according to certain technical instructions, and will have to appoint:

• a subject (utente gestore), responsible for sending information to IVASS; the information will have to be complete, up to date and prompt; and
• another subject (utente operatore), delegated by the above subject, in charge of sending the information to IVASS.

The companies that were not previously registered with the Anagrafe Soggetti, held by Bank of Italy, will have to send a request of registration by using the certified email address and the forms indicated in the technical instructions. The Bank of Italy will process the request and revert back to IVASS, which, in turn, will notify the requesting company.

With the entry into force of the Regulation (the day following its publication in the Italian Official Gazette), the operational parallel phase initiated with the letters to the market of 19 February 2020 and 4 November 2020, now repealed, will come to an end. On first application, the companies will comply with the provisions of the Regulation by the deadline of 30 June 2024, verifying that their personal and corporate information is correct and complete.

 

ITALIAN BUDGET LAW ON MANDATORY INSURANCE AGAINST CATASTROPHIC EVENTS RAISES SEVERAL QUESTIONS – 6 MAY 2024

Law No. 213 of 30 December 2023 (the Budget Law) has introduced a new obligation for companies with registered offices in Italy and for companies with registered offices abroad with a permanent establishment in Italy. As of 31 December 2024, these companies will have to take out insurance to cover damage to assets caused by natural disasters and catastrophic events occurring on national territory.

These provisions, which are totally new in the legal framework of compulsory insurance cover, are supplemented by a series of implementing decrees aimed at defining further implementation and operating procedures. The Italian Insurance Regulatory Authority (IVASS) might further clarify the scope of application of the provisions, especially with reference to the characteristics of the insurance cover, including deductibles and uncovered amounts.

Who has to take out insurance and on which property?

Companies with a registered office in Italy and the branch offices of foreign companies required to be registered in the Italian commercial register have to take out insurance cover, pursuant to Article 2188 of the Civil Code.

The assets subject to compulsory coverage include land and buildings, facilities and machinery and industrial and commercial equipment. The insurance obligation doesn’t apply to those buildings encumbered by building abuse or constructed without the required authorisations or burdened by abuse arising after the date of construction.

On 27 February 2024, Law No. 17/2024 converting Law-Decree No. 212 of 29 December 2023 was published in the Italian Official Gazette. The law stipulates that those who have taken advantage of the “superbonus” tax benefits in relation to expenses for works started after 30 December 2023, also have to take out insurance to cover damages caused to their properties by natural disasters and catastrophic events. This includes residential properties. They have to take out insurance within one year from the conclusion of the works benefiting from the “superbonus.”

Beneficiaries of the “superbonus” may find themselves in a delicate position. While they’re entitled to special tax benefits, they will now have to take out additional insurance policies, an additional financial burden for them.

We’re still waiting for the Minister of the Economy and Finance and the Minister of Enterprise and Made in Italy to issue decrees to establish the detailed terms and conditions for implementing the provision.

Defining calamitous and catastrophic events

Paragraph 101 of Article 1 of the Budget Law defines calamitous and catastrophic events as those caused by earthquakes, floods, landslides, and inundations. However, paragraph 105 of Article 1 of the Law doesn’t exclude that the procedures for identifying calamitous and catastrophic events eligible for compensation may also be referred to in the implementing decrees to be issued by the Ministries of Economy and Finance and of Business and Made in Italy. Currently there are no indications in this regard.

The parties required to provide insurance cover and the cover offered by SACE

Insurance undertakings will be able to offer insurance cover by directly assuming the entire risk or in co-insurance, including through consortia, which must be registered and approved by IVASS. Paragraph 104 of the Budget Law states that the insurance cover can provide for a possible overdraft or deductible of no more than 15% of the loss. But IVASS could revise this figure later.

Insurance companies will not be able to refuse to underwrite the risk or circumvent the obligation to underwrite. Doing so will be punishable with a fine from EUR100,000 to EUR500,000.

SACE will guarantee the insurance coverage offered by insurance undertakings. SACE is authorised to grant, at market conditions, private insurers and reinsurers, a reinsurance coverage of up to 50% of the indemnities paid, for an amount not exceeding EUR5,000 million for 2024. On the cover offered by SACE, a first demand state guarantee is granted as of right.

Real Estate

These provisions raise a number of questions. How will insurance companies manage and assess requests for coverage in relation to real estate located in earthquake-prone areas or frequently affected by natural disasters? And will the obligation to take out the insurance policies in question affect – and to what extent – the investment choices of national and international operators in the real estate sector in Italy?

It’s not clear whether the insurance cover, like with civil motor liability insurance, will have to take into account the natural greater predisposition of certain areas compared to others to catastrophic events (ie earthquake zones), which could affect the risk pricing and the premium.

Another element the legislator or the competent Ministries need to clarify when issuing the expected implementing decrees pertains to real estate property “encumbered by building abuse or constructed in the absence of the required authorisations or burdened by abuse arising after the date of construction.” The provisions specify that the insurance obligations don’t apply to this type of real estate. This leaves room for uncertainty as to the terms and procedures for demonstrating whether or not the properties are up to standards or as to any action to be taken, by the owner, once the building abuse has been ascertained.

So will owners of real estate have to carry out preventive inspections on the properties they own – at their own care and expense – to get sworn building conformity certification? Pending the implementing decrees, it’s not clear whether owners of the properties in question will have to submit building compliance certifications to insurance companies to get relevant insurance coverage. At the moment this is only a theoretical hypothesis, but if the provision relating to the non-applicability of the rule in question to buildings with building abuses is to be given full meaning, it will be necessary to provide for a complete and rational discipline, hopefully without burdening property owners with further obligations and expenses. Otherwise, the rules in question could have a negative impact on property investment valuations, also in terms of cost allocation between sellers/buyers and landlords/tenants.

The legislator, through specific interventions on the provisions, or the competent Ministries when issuing the implementing decrees, should provide clear guidelines on insurance coverage for real estate affected by building abuses. The lack of clarification could open the way to litigation and legal uncertainty, potentially affecting the real estate market and the insurance industry.

 

CONSTITUTIONAL COURT RULES ON STATUTE BARRED PERIOD FOR LIFE INSURANCE CONTRACTS – 6 MAY 2024

In a recent judgment (number 32 of 2024), the Constitutional Court ruled on the illegitimacy of article 2952, paragraph 2, of the Civil Code, specifically of the text version introduced by article 3, paragraph 2-ter, of Law-Decree no. 134 of 28 August 2008 (Urgent provisions on the restructuring of large companies in crisis).

The law was introduced by article 3, paragraph 2-ter, of Law-Decree no. 134 of 28 August 2008 (Urgent provisions on the restructuring of large companies in crisis). It was converted, with amendments, into Law No. 166 of 27 October 20081 and, before that, replaced by article 22, paragraph 14, of Law-Decree no. 179 of 18 October 2012 (Further Urgent Measures for the Country's Growth). It was then converted again, with amendments, into Law no. 221 of 17 December 2012.2

The facts

The case related to the stipulation of an index-linked policy in 2002. The policyholder, who died in 2009, had designated his son as beneficiary, who requested the liquidation of the death benefit in 2015. The insurance company rejected the claim, using the expiry of the statute barred term in force at the time (two years from the day the right was founded). The insurance company devolved the sums payable to the Dormant Policy Fund.

The beneficiary brought an action before the ordinary Court of Lucca, requesting the nullity of the policy. He said it was a financial product, which would have required a framework contract or general investment contract, pursuant to article 23 of the Financial Consolidated Act (TUF). The beneficiary also requested the payment of the policy amounts, considering the ten-year statute barred period, starting from the beneficiary's actual knowledge of the policy underwritten by his father.

The Court of Lucca declared the contract null and void, deeming it to be a financial instrument, making no further ruling and ordering the insurance company to refund the premium.

The insurance company appealed against the ruling. The Court of Appeal of Florence ruled out the nullity of the policy (which was qualified as a life insurance policy, falling within class III of life insurance business). It also raised ex officio the issue of the constitutional legitimacy of article 2952, paragraph 2, in the version before the amendment introduced by article 22, paragraph 14, of legislative decree no. 179 of 18 October 2012, for violation of articles 3 and 47 of the Constitution, which stipulates “Other rights arising from the insurance contract […] shall be time-barred in two years from the day on which the event on which the right is based occurred.”

The judge argued that the questions on the constitutionality of the censured provision were not manifestly unfounded. The judge mentioned the historical evolution of the 2008 amendment, followed by the 2012 amendment, and recalled how, before the first amendment, the statute barred period (at that time only annual) had been considered unreasonable by the Insurance Supervisory Authority (at the time, ISVAP). In circular no. 403/D of 16 March 2000, ISVAP had invited insurance companies to pay death benefits, even for late claims (the Authority had already noted at the time that beneficiaries were not necessarily aware of the existence of policies concluded for their own benefit).

The Court of Appeal also noted the unreasonableness of the time limits for the devolution of unclaimed death benefits to the Dormant Policy Fund due to the short statute barred period. The court considered that, for other contractual relationships, article 3 of Presidential Decree no. 116/2007 (Implementing Regulation on Dormant Deposits) provides for the prior sending, by registered letter, of an invitation to the beneficiaries containing instructions within the term of 180 days from receiving the letter.

The considerations of the Constitutional Court

The Supreme Judge held that the questions raised by the court were well founded. In fact, although it acknowledged that the legislator has wide discretion in applying the statute barred period, it considered that this discretion is limited by the actual exercise of the right to which the statute barred period refers. This is especially where the calculation of the dies a quo is identified with events (death or survival at the expiry of the contract), not necessarily known in time by the beneficiary and on which the acquisition of the right depends. This, in the context of life policies, has features of manifest unreasonableness, according to the court.

With respect to life insurance, which, according to the Supreme Judge, does not perform “[...] an indemnity function with respect to the occurrence of an accident, but [...] a prevalent function of social security, related to the risk of human life. [...],” as testified by the fact that “[...] the sums owed by the insurer cannot be subjected to executive or precautionary action (article 1923, first paragraph, of the Civil Code) [...],” a short statute barred term is manifestly unreasonable. It makes it excessively difficult or impossible to enforce it, aggravated by the obligation for the insurance undertakings to devolve the sums owed to the Dormant Policy Fund, once the statute barred period has expired.

The Constitutional Court declared the constitutional illegitimacy of the second paragraph of Article 2952 of the Civil Code, in the wording before the 2012 amendment, opening the way to the revival of rights that the insurance companies considered statute barred at the time.

 

IVASS REMINDS OF THE UPCOMING ENTRY INTO FORCE OF THE NEW RUI WEBPORTAL – 16 MAY 2024

On 15 May 2024 the Italian Insurance Regulatory Authority (IVASS) published a notice on its website concerning the new RUI portal, which became operational on 4 June 2024.

Specifically, IVASS clarifies that, to access the new RUI, it is necessary for the following parties to gain prior access to the Delegation Portal via SPID, CIE or CNS:

• the legal representatives of intermediaries registered in Sections A, B and D of the RUI
• the legal representatives of insurance companies
• the general representatives of the branch offices of intermediaries registered in the EU List attached to the RUI

As for natural persons intermediaries, even if they operate through a sole proprietorship/individual enterprise, they don’t have to proceed with prior accreditation on the Delegation Portal, as they can access the new RUI portal directly.

Finally, IVASS states that, before starting the accreditation procedure on the new portal, it is necessary to obtain the company search extracted from the relevant chamber of commerce or other appropriate documentation attesting the representation on behalf of the company. Once they’ve been accredited, these representatives may, in turn, delegate one or more parties to access the New RUI.

 

NEW RUI ONLINE WEBPORTAL AND LAUNCH OF JOINT MYSTERY SHOPPING BY EIOPA AND IVASS IN ITALY – 5 JUNE 2024

On 4 June 2024 the Italian Insurance Supervisory Authority (IVASS) announced that the new Single Register of (Re)insurance Intermediaries (RUI) is online.

As of 4 June 2024, the following are online:

• The new RUI web portal for consultation of intermediaries registered on it and carrying out their activity in the Italian territory. From the portal users can view and download all the information on the intermediaries registered in the RUI and in the list attached to the RUI, as well as all the information on the persons responsible for the distribution activities of insurance undertakings.

IVASS has published a User’s Manual on how to consult and use the new RUI portal.

• The new RUI portal dedicated to operators, which allows intermediaries and insurance undertakings to send requests and communications directly to IVASS.

In the new RUI portal:

• intermediaries registered in sections A, B, D and F of the RUI can fill in and submit to IVASS all applications (registration, reinstatement, cancellation, collaborations, change of section in the RUI, extension of distribution activities to another EEA state) and communications (start of activity or inactivity period, changes of appointments in companies registered in Sections A, B or F of the RUI, appointment or termination of the person responsible for the distribution activities of intermediaries registered in section D of the RUI, websites used for the distribution of insurance policies);
• canvassers registered in Section C of the RUI and intermediaries registered in section E of the RUI can only submit an application for change of section in the RUI;
• EU intermediaries registered in the list attached to the RUI and carrying out business in Italy under the right of establishment regime can submit applications for change of a collaboration relation and report the website used for the distribution of insurance policies;
• Italian insurance undertakings can communicate the appointment or termination of agency mandates or distribution agreements, registration/cancellation of canvassers registered in section C of the RUI, communicate the identity of the person responsible for the distribution activity if they carry out distribution activities;
• EU insurance undertakings carrying out business in Italy under the right of establishment regime can communicate the appointment or termination of agency mandates or distribution agreements.

As you might already know, insurance intermediaries and undertakings can access the RUI, via SPID, CNS, CIE, eIDAS. To be able to access the RUI, operators must have correctly completed the required accreditation.

On the same day, IVASS published a press release informing operators that it is about to undertake, with the European Insurance and Occupational Pensions Authority (EIOPA), the first joint mystery shopping exercise across the state.

The trained mystery shoppers will act as potential customers and will visit distributors’ premises (in particular IVASS appears to have chosen specific banks, post offices and agencies) to verify how insurance policies are offered to the public.

 

IVASS ORDER NO. 144/2024 ON AML AND CTF – 10 JUNE 2024

On 4 June 2024, the Italian Insurance Regulatory Authority (IVASS) published Order no. 144/2024 (the Order), amending and implementing IVASS Regulation no. 44/2019 (Regulation 44) in matter of anti-money laundering (AML) and counter terrorist financing (CTF).

As you might be aware, on June 2022, EBA (the European Banking Authority) published a set of Guidelines giving indications on the role, tasks and responsibilities of the AML/CTF compliance officer and the management body, as well as information on the modalities of outsourcing methods, policies, controls and procedures at a group level.

IVASS underlines that the provision contained in Regulation 44 are already compliant with EBA’s Guidelines, but to completely implement the Guidelines in Italy, it was necessary to slightly integrate Regulation 44 with the Order.

The Order introduces a definition of “body with management function,” which is the body which replaces the top management (alta direzione), and indicates the role of this new body.

Furthermore, the definitions of “administrative body,” “guidelines” and “corporate governance system” have been modified.

The Order also introduces these important novelties:

1. Director responsible for anti-money laundering.

All credit institutions and financial institutions subject to anti-money laundering regulations have to identify a member of the management body who will be responsible for the overall compliance with the regulations on the prevention of money laundering and terrorism financing.

The director will be responsible for ensuring that the management body is fully aware of the money laundering and terrorist financing risks to which the company is exposed. They will also be responsible for providing the necessary guidance to the relevant corporate functions.

The appointment of the director responsible for anti-money laundering must be made no later than the first renewal of the corporate bodies following the publication of the Order and, in any case, by 30 April 2026.

2. AML function

Regulation 44 is already compliant with EBA’s Guidelines, but it’s necessary to modify several provisions to regulate the relations between the AML function and the newly introduced AML Director.

The Order also introduces the obligation to consult the AML function where starting or continuing a relationship with a high-risk client requires by law the approval of a top manager.

3. Outsourcing

Outsourcing is allowed only for the functions/obligation of the AML function, while it is not allowed to outsource the responsibilities of the AML function.

Furthermore, in any case, the holder of the AML function must always be appointed, and they have to monitor and control all the outsourced activities.

4. Groups

At a group level, the Order requires:

• the appointment of a director responsible for the group’s AML;
• the appointment of the holder of the AML function for the group. They will be responsible for coordinating between all the AML functions of each company of the group, for drafting a self-assessment of the risks at a group level, and for developing procedures, standards and methodologies at a group level.

The Order will enter into force the day after its publication in the Italian Official Gazette.