Insurance & Reinsurance 2024 Comparisons

In Italy, the main sources of insurance and reinsurance law are:

• EU Regulations, Directives, Decisions, Recommendations and Opinions;
• the Civil Code (specifically Articles 1882-1932);
• the Code of Private Insurance (Legislative Decree No 209 of 7 September 2005); 
• Legislative Decree No 231 of 21 November 2007 on anti-money laundering; and
• IVASS (Istituto per la Vigilanza sulle Assicurazioni or Institute of Insurance Supervision) Regulations.

The regulatory body is IVASS, a department of the Bank of Italy. IVASS issues regulations aimed at operators in the insurance sector characterized by high technicality,  offering detailed guidance not typically found in primary sources. In addition to formal regulations, IVASS employs soft law instruments, such as communications, letters to the market, and circulars, to provide recommendations and guidelines to the industry.

Secondary regulatory sources, not issued by IVASS, are represented by government or ministerial decrees that regulate specific matters, such as requirements relating to professionalism, integrity and independence, guarantee funds and motor vehicle civil liability. This regulatory framework serves to provide precise guidance to insurance sector operators with regard to:

• ensuring ethical conduct and professional training for those selling or promoting insurance products;
• simplifying and standardising information for consumers; and
• strengthening the sanctioning system and the related procedure, providing for quicker deadlines.

Pension funds, and some life policies with substantial financial components like index-linked products, are subject to the supervision and control of both IVASS and of the Commission for the Supervision of Pension Funds.

In Italy, only public companies, co-operatives and mutual insurance companies, or equivalent European or foreign companies, can write insurance and reinsurance business. Authorisation from IVASS is a prerequisite, contingent on the (re)insurer demonstrating that it has the minimal share capital or guarantee fund stipulated by the Private Insurance Code and that it has met additional requirements for authorisation set forth in the existing regulatory framework.

In Itay, premiums are not subject to VAT.

For non-life insurance, Law No 1216 of 29 October 1961 provides for an insurance tax, the amount of which varies for each class of insurance. In the context of life insurance contracts, financial profits, per Article 26-ter of Decree No 600 of 29 September 1973, are subject a 20% capital gains tax.

However, premiums and life policy revenue taxation in Italy is further complicated by a number of further norms. Seeking professional advice is advisable due to potential fines and sanctions that may be imposed by the tax authorities.

Only licensed or authorised (re)insurers can provide (re)insurance in Italy, therefore no unlicensed activities are permitted and IVASS is quite active in reviewing any applications for licenses and/or recognition of overseas licenses through EU passporting.

After Brexit and the end of the transition period (which lasted until 31 December 2020, during which European legislation continued to apply to the United Kingdom as if it was still a member state), IVASS imposed obligations on UK insurance companies to:

• adopt special action plans (contingency plans) to ensure service continuity and the fulfilment of contracts in Italy until their natural expiry;
• promptly inform Italian customers about the measures adopted and their impact on existing contracts; and
• stop underwriting new policies until they have been fully authorised to operate in Italy again.

Fronting is permitted, and the terms, conditions and premiums are dictated by the reinsurer. The fronting company acts as the direct insurer – the only one that remains obliged towards the insured for the entire risk – regardless of whether the reinsurer will accept and indemnify the claim or not. The fronting company receives a commission for this service, called a “fronting fee”.

Any mergers between insurance companies or acquisitions of insurance portfolios in Italy are subject to IVASS’s prior authorisation. However, the Italian Antitrust Authority shall also give its preliminary authorisation if the merger or portfolio acquisition results in an insurance corporation having a position of market dominance. The incorporating company or the new company resulting from the merger must have the necessary solvency margin, taking into account the merger and the consolidated liabilities.

Controls on investments in or the acquisition of (re)insurance companies generally focus on ensuring compliance with anti-money laundering provisions and public policy, and approval by IVASS. The latter involves an assessment of the merger, the new memorandum and articles of incorporation, and verification that the officers and directors of the acquirer or new company meet professionalism and integrity standards.

The intermediaries usually distribute insurance products, but in limited cases the insurance product can be acquired directly from the (re)insurer. To operate legally, insurance intermediaries must be registered with the Sole Register of Insurance and Reinsurance Intermediaries (RUI), established under the Private Insurance Code and governed by ISVAP Regulation No 5/2006. RUI is divided into sections, as shown below, and no intermediary may be listed in more than one section:

• Section A for insurance agents;
• Section B for brokers;
• Section C for direct canvassers of insurance undertakings;
• Section D for banks, financial intermediaries pursuant to Article 107 of the Consolidated Banking Law, stock-broking houses and Bancoposta, the Post Office’s banking division; and
• Section E for independent collaborators of intermediaries registered under Sections A, B and D but conducting business outside the premises of the intermediaries.

The Civil Code sets out the rules for insurance contracts and their negotiations, whereas IVASS Regulation No 41 of 2 August 2018 contains provisions regarding pre-contractual information, advertising and creation of insurance products in accordance with the Code of Private Insurance. Within this legal framework, the culmination of an insurance contract occurs at the final meeting of the parties’ will. This process begins with the potential insured proposing a risk, typically accomplished by completing a proposal form provided by the insurer. Subsequently, the insurer evaluates the risk based on the information received and provides a quoted premium.

The proposal form serves as the cornerstone of negotiations between the parties, and all information requested by the insurer in this form is considered essential by the court. Consequently, any omission or false statement in response to a question is automatically deemed as willful misrepresentation.

Generally, these rules apply uniformly to both consumer and commercial contracts. However, in cases of negligent non-disclosure, courts may be more inclined to consider misrepresentations made by a consumer in a more lenient manner.

The prospective insured is obliged to provide truthful and complete responses in the proposal form to avoid sanctions, including:

• the loss of the right to indemnity under the policy for willful non-disclosure in accordance with Article 1892 of the Civil Code; or
• a proportional reduction of the right to indemnity under the policy, corresponding to the premium that would have been charged if the actual situation had been known, in cases of negligent non-disclosure in accordance with Article 1893 of the Civil Code.

Insurance agents and direct canvassers are usually considered to be acting for the insurer, and if they have a power of attorney, they formally represent and engage their principal.

The broker, and their independent collaborators, represent the client by assisting them in identifying their needs, submitting their risks to the companies and obtaining the best market conditions for them, and usually take part in the loss adjustment process.

Banks, financial intermediaries pursuant to Article 107 of the Consolidated Banking Law, stock-broking houses and Bancoposta are usually considered independent third parties, but their status can be altered by the terms and conditions of the insurance agreement.

Insurance contracts can be verbally stipulated, but must be evidenced in writing in accordance with Article 1888 of the Civil Code. To be valid, an insurance contract must have an insurable interest so that the consequent risk must be an actual, and not supposed, risk. The minimal terms and conditions must set out the insured party, the risk, the period of insurance efficacy, the premium charged and the exclusions.

The essential parties in an insurance contract are the insurer, the policyholder and the insured, which may or may not be the same individual. Parties who, according to the contracting party, have a contractual lien upon the indemnity, such as mortgagers, may also be named as additional parties to the insurance contract.

Disclosure obligations primarily rest with the contracting party. However, if the contract covers multiple people or things, any misrepresentation or omission affecting only one person or thing will not necessarily invalidate the entire contract.

The position does not differ with regard to consumer contracts or reinsurance contracts.

In Italy, ART transactions generally involve two main areas:

• captive solutions, including captive fronting; and
• structured solutions, which are multi-year and multi-line hedges, including parametric insurance. 

As a result, ART transactions, depending on the specific risk at stake, can be qualified as insurance or reinsurance contracts.

If an ART transaction is written in another jurisdiction as reinsurance, as is typically the case with industry loss warranties (ILWs), it will also be regarded as a reinsurance contract in Italy and subject to the specific reinsurance regulation provided for by the Code of Private Insurance.

Insurance contracts in Italy follow the same interpretation principles outlined in the Civil Code (Articles 1362 through 1370), akin to any other contracts. The primary objective is to identify the common intention of the parties. This does not require a precise historical reconstruction of their will, but rather focuses on what their objectively expressed desires seem to be, as reflected in the contract wording.

Additionally, depending on whether the insurance contract has been drafted by the insurer as a standard contract or whether the policy wording has been actually negotiated between the parties, possibly with broker involvement, there are some significant differences in the interpretation of the contract.

In the first case, where the standard policy uniformly regulates a number of contractual relationships principally with consumers, the basic principle is the contra proferentem rule; in the second case, no diversion from the hermeneutic rules outlined in the Civil Code is allowed.

Apart from all risk insurance contracts, where the warranty is determined by the policy exclusions, in an Italian insurance contract the warranties are expressly described and limited by the contractual terms and conditions and, in particular, the clause describing the risk, scope and object of the contract.

In an insurance contract, all terms and conditions are relevant, and a breach of any may lead to the lack of operativity of the policy, contingent upon the gravity of the breach. However, special attention is given to conditions precedent, known as “condizioni essenziali” in Italian. These are clauses that signify the critical importance attached by one of the parties to their fulfilment. If breached, these conditions trigger, by operation of the law, the lack of operativity of the insurance contract, unless the party chooses to keep the contract in force.

The “simple and clear contracts” guidelines, jointly developed by the National Association of Insurance Companies (ANIA) in collaboration with associations of agents, brokers, and consumers, aim to create insurance contracts in simple language. According to these guidelines, contracts have to incorporate icons, boxes, and examples to illustrate the calculation of predictable compensation in case of an accident. Notably, the guidelines emphasise the use of bold font or colour to draw the insured’s attention to conditions of particular importance, such as conditions precedent.

Coverage disputes under Italian insurance contracts, whether consumer, commercial, or reinsurance, typically follow a consistent path:

• It is essential to adhere to the statute of limitation, bringing any claims under the policy within two years from the occurrence of the loss event.
• A contradictory loss adjustment takes place.
• When the insured party is dissatisfied, they first instruct a lawyer.
• The next step involves negotiations between the parties and their lawyers.

Efforts to preclude disputes over jurisdiction and choice of law in insurance contracts are commonly achieved through contractual provisions. These provisions, established by mutual agreement of the parties, explicitly specify both the applicable law governing the insurance contract and the territorial competence of the court tasked with resolving any controversies related to interpretation, breach, and execution of the insurance terms

However, in scenarios where the parties have not expressly chosen the jurisdiction and applicable law, specific EU regulations come into play in insurance disputes:

• EU Regulation No 1215/2012 (Brussels I bis) determines the jurisdiction, recognition and enforcement of decisions within the Member States and abroad; and
• EU Regulation No 593/2008 (Rome I) determines the applicable law.

In the event that mandatory mediation fails, parties involved in insurance disputes have the option to initiate legal proceedings or call for arbitration as stipulated in the policy’s “jurisdiction and choice of law clause”. Proceedings today are all in electronic format, and in compliance with the Legislative Decree No 149 of 10 October 2022, (commonly known as the Cartabia Reform), proceedings unfold as follows:

• The claimant serves the defendant with a writ of summons containing the particulars of the claim, sought remedies, the amount claimed and an invitation for the defendant to appear at the first hearing before the competent tribunal at a specific date scheduled at least 120 days after the date of service of the summons (Article 163bis of the Civil Procedure Code (the CPC)).
• The plaintiff must then enter an appearance within ten days of service of the summons (Article 165 of the CPC), whereas the defendant shall enter an appearance within 70 days before the first hearing (Article 166 of the CPC).
• Once the time limit for the defendant appearance has expired, within the following 15 days the court must carry out preliminary verifications (eg, regarding the powers of attorney, etc).
• Within 40 days prior to the hearing, the parties may specify or amend their claims, or propose the claims and exceptions that are a consequence of the counterclaim or exceptions made by the defendant (in light of which the plaintiff may also request to join a third party to the proceedings) (Article 171ter of the CPC).
• Within 20 days prior to the hearing, the parties may rebut the counterparties’ exceptions and provide their evidence (Article 171ter of the CPC).
• Within ten days prior to the hearing, the parties may further rebut and provide any contrary evidence (Article 171ter of the CPC).
• If the third party’s call is authorised by the court, a new hearing is set, triggering new time limits according to Article 171ter of the CPC.
• At the first hearing, the parties are mandated to appear in person (failure to appear without a justified reason is subject to the court evaluation pursuant to Article 116(2) of the CPC) so that the judge can:
1. freely interrogate the parties;
2. attempt conciliation;
3. provide for the preliminary requests and prepare the schedule of subsequent hearings, including the hearing for evidence admission that is set within 90 days;
4. order any means of evidence at its own discretion amongst the ones proposed by the parties; and
5. issue “definitory orders” accepting or rejecting the claimant pleading.

If a definitory order is not issued and discovery has been concluded in accordance with Article 275 of the CPC, the chairman of the court follows a specific timeline for further proceedings per Article 189 of the CPC:

• 60 days before the hearing: clarification of conclusions and remedies requested by the parties; and
• 30 days before the hearing: final defences.

After these stages, the oral pleadings might also take place at the scheduled hearing. Subsequently, the court is expected to publish the final sentence within the following 60 days.

Court judgments have immediate effect and can be enforced against the losing party while an appeal is still pending. The enforcement of the judgment must be preceded by the notification of a writ of injunction, which if not fulfilled by the debtor within the following ten days from notification allows the forced execution of the sentence upon the debtor’s assets and real estate.

Arbitration clauses in commercial insurance and reinsurance contracts are regularly enforced if properly drafted with clear indication that all disputes – including non-contractual ones – arising out of, related or connected to the insurance contract shall be settled by arbitration decided by a sole arbitrator or a bench of arbitrators, appointed in accordance with the rules of a specific chamber of arbitration that must be specifically identified.

In Italy, the arbitration award holds binding force on those parties who have defaulted, provided that they were duly invited and allowed to participate. If the defaulting parties do not comply spontaneously, the interested party can request the court to declare the award enforceable through a straightforward and swift procedure.

In Italy, the two ADR procedures that are relevant to the insurance market are:

• mediation for all casualty and property coverage controversies; and
• assisted negotiation for motor liability insurance.

Should out-of-court negotiations fail between the insured and the broker on one side, and the insurer(s) on the other, the dispute must be mediated in accordance with the provisions of Article 5 (I bis) of Legislative Decree No 28/2010 unless it is a motor liability insurance claim, in which case the assisted negotiation procedure must be completed pursuant to Article 3 of Legislative Decree No 132/2014 converted into law No 162/2014.

To start or join mandatory mediation or an assisted negotiation procedure, the parties must be assisted by a lawyer.

Both mediation and the assisted negotiation procedure can either succeed or fail:

• If successful, a negotiated agreement is reached. In this case the mediator or the parties assisted by the respective lawyers draw up a “verbal process” document, to which the text of the agreement is attached, which has the value of an enforceable title.
• Procedures can fail in two ways:
1. This can occur at the first meeting if the invited party fails to appear or all parties refuse to proceed with the process.
2. It can also happen later during the procedure if no agreement is reached.

In both scenarios, a formal document called “negative minutes” will be drafted. These minutes serve as valid evidence to fulfil the admissibility requirement for filing a lawsuit in court.

Italy does not allow punitive or exemplary damages; therefore, insurance products do not provide coverage for these sanctions in Italy but sometimes a derogation is provided for punitive or exemplary damages legitimately awarded abroad.

However, some form of sanctions might be awarded against insurers if they do not appear or fail to seriously engage in meditation or assisted negotiations, namely in the form of extra defence costs awarded to the successful insured.

Late payment of claims allows the insured to claim interest. Interest rates may be applied at the current yearly rate of 5% on capital. Interest for delayed payments may be applied at the current yearly rate of 12% on the capital from the date on which the writ of summons was served upon the defendant, with the possibility of simultaneously applying monetary revaluation according to the well-known binding precedent of the Supreme Court of Cassation No 1712/1995.

In Italy, when an insurer improperly delays settling a claim, there are potential last-resort remedies to hold them accountable. The insurance regulator (IVASS) can impose fines on insurers who fail to adhere to the regulatory timeframes for handling certain class of insurance as motor insurance claims.

Additionally, courts can impose sanctions under Article 96 of the Civil Procedure Code. If an insurer engages in vexatious or frivolous litigation to further delay the settlement process, the court may award a lump sum payment to the aggrieved policyholder, in addition to full compensation for the claim itself.

Under Article 1916 of the Civil Code, any insurer that has indemnified a claim automatically assumes the rights of the insured against any third party up to the amount of the indemnity paid. This legal concept is known as subrogation.

The scope of subrogation extends to both substantial and procedural rights. This means the subrogated insurer can either launch its own subrogated recovery action or in accordance with Article 111 of the CPC intervene in the litigation initiated by the insured against the liable party, subject to the statute of limitations applicable to the insured’s original claim. If the insured’s rights have expired due to time constraints, the insurer cannot pursue subrogation. Furthermore, any defences or objections that could have been raised against the insured can also be raised against the subrogated insurer.

To succeed in a subrogated recovery action, the insurer must prove three key elements:

• the existence of an insurance contract that has legitimately indemnified the insured;
• proof of payment through bank receipts or similar accounting documents; and
• notification of the intervened subrogation to the third liable party. 

In Italy, the insurtech sector is a dynamic and integral part of the insurance industry, contributing significantly to its growth. Digital insurance, a key driver of this evolution, is expected to propel the market from EUR145 billion in 2020 to at least EUR250 billion by 2030, with the digital segment itself rising from EUR1.9 to EUR30 billion. A substantial portion of this growth will be fuelled by embedded insurance. By 2030, estimates predict Italy’s embedded insurance market alone to reach EUR60 billion.

According to a survey and mapping conducted by the Italian Insurtech Association (IIA), using data from the Company Register, as of May 2023, a total of 111 startups are operating in the insurtech field in Italy.

The products offered by insurtech companies cover a broad spectrum, including security and recovery related to cyber risks and prevention of data fraud. Insurtech firms are involved in marketing and distributing insurance contracts via the web or embedding them in other contracts. Additionally, they assist insurers in stipulating electronic contracts and in the claims handling process, ranging from loss adjustment to the payment of settled claims.

IVASS is actively engaged with the insurtech sector. Its proactive approach involves not only supervising startups and their products but also intervening in the IT sector to ensure compliance and innovation.

As an example, IVASS Regulation No 20/2008 for IT imposes on insurers and reinsurers the implementation of internal controls, risk management, compliance, and outsourcing measures. Additionally, IVASS ensures adequate compliance with simplified procedures for signing insurance contracts, such as those provided by Articles 33 and 34 of Law Decree No 34/2020. According to these articles, policyholders can conclude insurance and financial contracts using a non-certified email address or other suitable electronic tools.

More recently, on 23 November 2023, IVASS issued a letter to insurance underwriters, informing them that the National Register of the Resident Population became active via the National Digital Data Platform and invited life insurers to access that database at least once a year to verify deaths among their policyholders, offering a streamlined approach to managing dormant policies.

Climate change, though not classified as an emerging risk, has taken centre stage following the devastating losses experienced by Italy in 2023 due to meteorological events, including unprecedented occurrences like micro hurricanes in the Mediterranean area. Another key focus is the impact of increased longevity, reshaping traditional insurance risks such as personal accident coverage, medical expenses insurance, and life policies.

Catastrophe risks linked to climate change have gained prominence in Italy to the extent that the government intervened through the 2024 Budget Law, making catastrophe risk insurance policies mandatory from 31 December 2024. The law obliges companies in Italy to procure insurance policies covering damage to their land, properties, contents, and goods. This coverage specifically addresses losses directly caused by specified natural disasters and catastrophic events within the national territory. Non-compliance may result in companies being excluded from state aid for losses exceeding their policy limits.

Legislative Decree No 149 of 10 October 2022, implementing the reform of the Civil Procedure Code (the “Cartabia Reform”), came into full force and effect in 2023. The reform is designed to reduce the average duration of proceedings by leveraging digital tools and fostering greater efficiency and procedural clarity.