Insurance and Reinsurance in Italy 2024

INSURANCE AND REINSURANCE 2024

ITALY

Giovanna Aucone

(PG Legal)

REGULATION

Regulatory agencies

Identify the regulatory agencies responsible for regulating insurance and reinsurance companies.

In Italy, the following Italian agencies are involved in the regulation of the insurance and reinsurance sector:

The Institute for the Supervision of Insurance (IVASS) is entrusted with the adoption of the legislative framework for the operation of insurance and reinsurance companies in Italy. IVASS carries out its regulatory functions through the adoption of regulations and provisions for the implementation of the Italian Insurance Code and EU provisions, as well as recommendations, guidelines and other provisions issued by the European supervisory authority.
The Pension Fund Supervisory Commission (COVIP) is responsible for the supervision of Italian pension funds. COVIP, inter alia, adopts regulations governing the products for supplementary pension.
The National Commission for Companies and the Stock Exchange (CONSOB) oversees the Italian financial market and, in relation to the insurance sector, is entrusted with the regulations regarding the key information document that embodies all the relevant features of life insurance products with financial aims.

Formation and licensing

What are the requirements for formation and licensing of new insurance and reinsurance companies?

IVASS grants the authorization to new insurance companies that:

have adopted the form of a:
company limited by shares;
cooperative company;
a mutual undertaking whose units are represented by shares;
European company established according to Regulation (EC) No. 2157/2001; or
European cooperative society (ECS) established in accordance with Regulation (EC) No. 1435/2003;
have their offices in the territory of Italy;
hold the eligible basic own funds to cover the absolute floor of the minimum capital requirement;
show evidence that they will be in a position to hold eligible own funds to cover the solvency capital requirement;
show evidence that they will be in a position to hold eligible own funds to cover the minimum capital requirement;
provide a scheme of the program activities that illustrates:
the nature of the risks and commitments that the undertaking proposes to cover;
if the undertaking proposes to take up reinsurance risks, the kind of reinsurance arrangements it proposes to make with ceding undertakings;
the guiding principles as to reinsurance and retrocession;
the basic own-fund items constituting the absolute floor of the minimum capital requirement;
the estimates of the costs of setting up the administrative services and the organization for securing business; and
the financial resources intended to meet those costs;
show evidence that they will be in a position to comply with the system of governance set up by the Italian Insurance Code;
show evidence that the persons charged with the administration, management and control functions meet the requirements provided by the law;
do not have close links with other undertakings or group entities and other natural or legal persons, which may prevent the effective exercise of supervisory functions; and
in the case of proposing to obtain authorization to the simultaneous pursuit of life assurance and accident and sickness insurance the undertakings, shall also demonstrate that:
they possess the eligible basic own funds to cover the absolute floor of the minimum capital requirement for life insurance undertakings and the absolute floor of the minimum capital requirement for non-life insurance undertakings; and
they are able to cover the notional minimum capital requirements.

IVASS grants authorization to reinsurance companies that:

have adopted the form of:
a company limited by shares; or
a European company established according to Regulation (EC) No. 2157/2001;
have their general direction and administrative offices in the territory of Italy;
hold the eligible basic own funds to cover the absolute floor of the minimum capital requirement;
show evidence that they will be in a position to hold eligible own funds to cover the solvency capital requirement;
show evidence that they will be in a position to hold eligible own funds to cover the minimum capital requirement;
provide a scheme of the program activities that illustrates:
the nature of the risks and commitments which the undertaking proposes to cover;
if the undertaking proposes to take up reinsurance risks, the kind of reinsurance arrangements it proposes to make with ceding undertakings;
the guiding principles as to reinsurance and to retrocession;
the basic own-fund items constituting the absolute floor of the minimum capital requirement;
the estimates of the costs of setting up the administrative services and the organization for securing business; and
the financial resources intended to meet those costs;
show evidence that they will be in a position to comply with the system of governance set up by the Italian Insurance Code;
show evidence that the persons charged with the administration, management and control functions meet the requirements provided by the law; and
do not have close links with other undertakings or group entities and other natural or legal persons, which may prevent the effective exercise of supervisory functions.

Other licenses, authorizations and qualifications

What licenses, authorizations or qualifications are required for insurance and reinsurance companies to conduct business?

New Italian insurance companies need IVASS’s authorization to conduct business in Italy. IVASS verifies if the undertaking fulfills the requirements provided under Italian law and if they can guarantee a sound and prudent management.

Insurance and reinsurance companies with head offices in another member state can operate in Italy under the right of establishment or under the freedom to provide services, following notification to IVASS through the home country’s supervisory authority.

Insurance and reinsurance undertakings from a third state that intend to conduct business in Italy must set up a branch – within the territory of Italy – and appoint an authorized agent resident in Italy.

Officers and directors

What are the minimum qualification requirements for officers and directors of insurance and reinsurance companies?

Officers and directors must meet the professional, good repute and independence requirements, and meet the criteria of competence and fairness established by the Minister of Economic Development with a specific regulation adopted after hearing the opinion of IVASS.

Furthermore, officers and directors must dedicate the time necessary to efficiently carry out their assigned role to guarantee the sound and prudent management of the insurance or reinsurance undertaking.

In addition, the Decree No. 88 of 2 May 2022, has provided further requirements of honorability and independence for officers and directors, as well as additional limits on the accumulation of appointment by a single officer or director.

Capital and surplus requirements

What are the capital and surplus requirements for insurance and reinsurance companies?

The minimum capital requirements for insurance companies are:

€2.5 million for non-life insurance companies;
€3.7 million for life insurance companies; and
€6.2 million for the companies simultaneously carrying on life and non-life insurance.

The minimum capital requirement for reinsurance companies is €3.6 million, except for captive reinsurance companies, which have a minimum capital requirement of €1.2 million.

Italian law does not establish any surplus requirements, only requirements regarding technical provisions.

Reserves

What are the requirements with respect to reserves maintained by insurance and reinsurance companies?

As a general principle, Italian insurance and reinsurance companies have to establish technical provisions suitable for the risk assumed that is estimated on the basis of the obligations towards policyholders, insureds, beneficiaries and those entitled to insurance benefits.

The amount of the technical provisions must be equal to the sum of a best estimate (corresponding to the expected value of the cash flows, taking into account the probability-weighted average of future cash flows too) and a risk margin.

Furthermore, Italian law provides a more specific set of rules for technical provisions for cases in which:

insurance companies conduct life insurance business and are required to establish technical provisions, including mathematical reserves, sufficient to guarantee the obligations assumed and future expenses; and
insurance companies conduct non-life business and are obliged to establish, for the contracts in the Italian portfolio, technical reserves always sufficient to meet, as far as reasonably foreseeable, the commitments arising from the insurance contracts.

Further information on the reserve requirements may be found on IVASS’ website.

Product regulation

What are the regulatory requirements with respect to insurance products offered for sale? Are some products regulated by multiple agencies?

The pre-contractual and contractual documentation of insurance products must be written in clear and concise language to facilitate the understanding of the information contained therein.

The content and the structure of insurance contracts must mirror as much as possible pre-contractual information documents. The contract must indicate all the policy conditions and contain a glossary illustrating the meaning of the words used.

If an insurance product is co-produced by several undertakings, it must contain a single information set reporting the features and the provision of the product sold.

Furthermore, Italian regulations provide specific content requirements for the pre-contractual and contractual documentation for life insurance products, non-life insurance products and insurance-based investment products.

Life insurance products must include: the pre-contractual information document for life insurance products containing the main information about the insurance product indicated in IVASS Regulation No. 40/2018. The information must be given using the templates given as Attachment 1, the terms and conditions of the life insurance contract and the glossary defining the terms used in the contract.
Insurance-based investment products must include: the key information document (so-called KID), in accordance with Regulation (EU) No. 2017/653 and the additional pre-contractual information document for life insurance products containing the complementary information about the insurance product indicated in IVASS Regulation No. 40/2018. The information must be given using the templates given as Attachment 4.

Regulatory examinations

What are the frequency, types and scope of financial, market conduct or other periodic examinations of insurance and reinsurance companies?

IVASS carries out supervisory functions over insurance undertakings, reinsurance undertakings and insurance groups operating in Italy.

These activities include micro-prudential supervision as well as macro-prudential supervision. The micro-prudential supervision is aimed at verifying the sound and prudent management of individual undertakings and insurance groups. The macro-prudential supervision comprises the analysis of key insurance indicators, macroeconomic factors and the assessment of their possible impact on the insurance industry.

IVASS carries out the supplementary supervision of financial conglomerates and prudential control over national and cross-border insurance groups in collaboration with foreign surveillance authorities.

IVASS may:

conduct inspections at insurance and reinsurance groups and undertakings and other supervised entities, also in collaboration with the Bank of Italy; and
convene the members of the administrative and control bodies, the general managers of insurance and reinsurance undertakings, the shareholders’ meeting and the persons who perform these functions.

To ensure suitable protection of policyholders and of the persons entitled to insurance benefits, IVASS might also:

order preventative or corrective measures in relation to the individual insurance and reinsurance undertakings, including restrictions on the conduct of business;
forbid the conclusion of certain operations; and
require the strengthening or implementation of the system of governance.

Furthermore, IVASS might request information and order the exhibition of documents.

The frequency of the above-mentioned activities is not established by law and left to IVASS’s discretion. However, IVASS may require supervised subjects, on a regular basis, to send data, acts and documents as well as any information about the contracts held by intermediaries and carry out random inspections of Italian insurance undertakings and intermediaries.

Investments

What are the rules on the kinds and amounts of investments that insurance and reinsurance companies may make?

Insurance and reinsurance undertakings must invest their assets in accordance with the principle of prudence. Undertakings must invest in assets and instruments that can be properly identified, measured, monitored, managed, controlled and reported.

Specifically, undertakings must invest all their assets in such a manner as to ensure that investments:

in derivative financial instruments contribute to a reduction of risks or facilitate efficient portfolio management;
in assets that are not admitted to trading on a regulated market shall in any event be kept to prudent levels;
shall be properly diversified in such a way as to avoid excessive reliance on any particular asset, issuer or group of undertakings, or geographical area and excessive accumulation of risk in the portfolio as a whole; and
in assets issued by the same issuer, or by issuers belonging to the same group, shall not determine excessive risk concentration.

Italian undertakings are allowed to localize their assets also outside the territory of Italy or other EU member states.

Change of control

What are the regulatory requirements on a change of control of insurance and reinsurance companies? Are officers, directors and controlling persons of the acquirer subject to background investigations?

Any acquisition of insurance or reinsurance shares that determines the control or a qualifying holding of the companies and change in shareholding when it causes the takeover of 20, 30 or 50 percent of the company’s share must be authorized by IVASS in advance.

Any officer or director appointed due to or following the variation of the company’s shareholders must fulfil the general requirements provided under Italian law for officers and directors. However, IVASS will not carry out any independent investigation regarding the background of the single officer or director.

Financing of an acquisition

What are the requirements and restrictions regarding financing of the acquisition of an insurance or reinsurance company?

Persons or entities that hold relevant shares of an insurance or reinsurance company must meet the criteria of competence, good reputation and fairness. These standards aim to guarantee the sound and prudent management of the company.

Minority interest

What are the regulatory requirements and restrictions on investors acquiring a minority interest in an insurance or reinsurance company?

Italian law does not provide any specific requirement for investors acquiring shares up to 20 percent of the total shares of the insurance or reinsurance companies.

Foreign ownership

What are the regulatory requirements and restrictions concerning the investment in an insurance or reinsurance company by foreign citizens, companies or governments?

The same regulatory requirements and restrictions applicable to domestic investors apply to foreign investors.

Only in cases in which the acquisition is made by subjects from a third state is reciprocity not ensured and it leads to a controlling interest or a significant holding, IVASS must inform the Minister of Economic Development of the application for authorization, and upon a proposal by the Minister, the President of the Council of Ministers can prohibit the granting of authorization within one month of the date of the communication.

Group supervision and capital requirements

What is the supervisory framework for groups of companies containing an insurer or reinsurer in a holding company system? What are the enterprise risk assessment and reporting requirements for an insurer or reinsurer and its holding company? What holding company or group capital requirements exist in addition to individual legal entity capital requirements for insurers and reinsurers?

The legal and supervisory framework for a group of companies conducting insurance business is given mainly by the Private Insurance Code and IVASS Regulations No. 22/2016 and No. 10/2015.

The provisions are similar to those applicable to individual insurance companies regarding corporate governance, internal risk assessment and group solvency.

Further rules are provided for the monitoring and controlling of the intra-group transactions and concerning the identification of the type of shareholding.

The directors of the subsidiary companies provide the parent group with collaboration, and with data, documents and information for the adoption by the group of all measures eventually requested by IVASS.

In addition, IVASS demands to interact with a single interlocutor and to receive from this appointed contact information and indications referring to other companies of the group.

Reinsurance agreements

What are the regulatory requirements with respect to reinsurance agreements between insurance and reinsurance companies domiciled in your jurisdiction?

Agreements between insurance and reinsurance companies must respect the following requirements:

there must be a written contract;
there can be no relationship between the insured and the reinsurer; and
there must be automatic offsetting of outstanding debt and credit between the reinsurer and the reinsured.

Ceded reinsurance and retention of risk

What requirements and restrictions govern the amount of ceded reinsurance and retention of risk by insurers?

Italian law does not provide any specific requirement or restriction regarding the amount of ceded reinsurance or the retention of risk by the insurer.

Collateral

What are the collateral requirements for reinsurers in a reinsurance transaction?

In line with the European normative framework, there are no specific regulatory collateral requirements for reinsurers in reinsurance transactions under Italian law.

Credit for reinsurance

What are the regulatory requirements for cedents to obtain credit for reinsurance on their financial statements?

IVASS Regulation No. 22/2008, providing rules on drafting financial statements for insurance and reinsurance companies, clarifies how credits arising from reinsurance agreements shall be reported. Such credits must be registered in a section of the balance sheet specifying if credits arise to insurance and reinsurance companies or to reinsurance intermediaries (furthermore, Regulation No. 22/2008 provides an annex containing a template of the balance sheet that insurance companies must use).

Insolvent and financially troubled companies

What laws govern insolvent or financially troubled insurance and reinsurance companies?

The rules governing the insolvency of insurance and reinsurance companies are contained in the Private Insurance Code, which sets out the different stages of the procedure, the bodies in charge of crisis management and the main activities that have to be carried out to liquidate the assets and satisfy the company’s creditors.

In the case of regulatory gaps, in particular with regard to procedural aspects, the provisions of the Business Crisis Code apply analogously.

Claim priority in insolvency

What is the priority of claims (insurance and otherwise) against an insurance or reinsurance company in an insolvency proceeding?

As a general principle, the assets representing technical provisions for life and non-life business must be used to reimburse the obligation arising from the contracts the technical provisions are referred to.

In light of the above, the technical provisions for life business must be used to pay the creditors in the following order of preference:

those entitled to receive the payments for expired policies or policies under which a claim has arisen within 60 days of the date of publication of the winding up measure and those entitled to annuities payable within the same time limit;
the holders of claims deriving from capital redemption operations;
persons entitled to surrender;
the holders of current contracts on the date referred under (1), in proportion to the amount of the mathematical provisions; and
the holders of contracts that do not envisage the setting up of mathematical provisions, in proportion to that part of the premium corresponding to the risk not run.

Indeed, the technical provisions for non-life business must be used to pay creditors in the following order:

those entitled to capitals or payments for expired policies or policies under which a claim has arisen within 60 days of the date of publication of the winding up measure;
the holders of claims deriving from capital redemption operations;
persons entitled to surrender;
the holders of current contracts on the date referred to in (1), in proportion to the amount of mathematical provisions; and
the holders of contracts that do not envisage the setting up of mathematical provisions, in proportion to that part of the premium corresponding to the risk not run.

Intermediaries

What are the licensing requirements for intermediaries representing insurance and reinsurance companies?

Intermediaries intending to carry out distribution activity on behalf of insurance and reinsurance companies must be enrolled within the Register of Intermediaries (RUI).

The RUI provides the following sections:

section A, where insurance agents acting in the name and on behalf of one or more insurance or reinsurance companies are enrolled;
section B, where insurance or reinsurance brokers acting on behalf of their clients without the power to represent insurance or reinsurance companies are enrolled;
section C, where direct producers that conduct intermediary business in life assurance, accident insurance and sickness insurance on behalf of and under the full responsibility of an insurance company are enrolled;
section D, where banks authorized as per article 14 of the Consolidated Banking Law and financial intermediaries are enrolled;
section E, where any other people dealing with mediation, such as collaborators, and other subjects enlisted in the RUI under sections A, B, D and F are enrolled; and
section F, where ancillary insurance intermediaries are enrolled.

To be enrolled in the RUI:

natural persons must fulfil the following main requirements:
have full rights as citizens;
have not been convicted or been declared bankrupt;
may not be suspended or prohibited from exercise; and
may not be enrolled in the register of experts; and
companies, on the other hand, must:
have the head offices in Italy;
not be subject to judicial liquidation proceedings;
not be suspended or prohibited to exercise. Furthermore, companies must appointed at least one natural person enlisted in the same section of the RUI for which registration is sought as responsible for the distribution activity.

INSURANCE CLAIMS AND COVERAGE

Third-party actions

Can a third party bring a direct action against an insurer for coverage?

As a general principle, third parties are not allowed to bring direct action against an insurer seeking compensation. Direct action is admitted only when expressly provided by the Italian law, such as for example in motor liability policies or hunting liability policies.

Late notice of claim

Can an insurer deny coverage based on late notice of claim without demonstrating prejudice?

According to the Italian Civil Code and unless contractually otherwise agreed, the insured must report the claim to the insurer within three days of the occurrence. Insurance contracts in the Italian market usually provide for a longer notification term up to 30 days. Nonetheless, the insurer cannot reject claims notified after the aforementioned term unless the insurer proves to have suffered prejudice due to the delayed communication.

Wrongful denial of claim

Is an insurer subject to extra-contractual exposure for wrongful denial of a claim?

If the company refuses to indemnify the insured without any rightful reason or appears before a court pleading its case despite the lack of any lawful argument for the denial, the judge can condemn the company to compensate (without taking into account the coverage cap) and reimburse the insured for the legal cost sustained. In addition to this compensation, the company could also be condemned for vexatious complaints.

Defense of claim

What triggers a liability insurer’s duty to defend a claim?

The insurer must cover the legal expenses for the defense of the insured before the civil courts up to an amount equal to 25 percent of the maximum insured amount under the policy, which must be paid in addition to the maximum insured amount. Whereas the costs for the defense before the penal courts are deducted from the maximum insured amount. The amount of legal expenses to be paid for in penal proceedings has to be assessed in the light of a prudent administration of the policy and must not completely erode the maximum insured amount.

Indemnity policies

For indemnity policies, what triggers the insurer’s payment obligations?

For indemnity policies, the payment obligation for the company arises when the insured notifies the insurer a claim that is covered by the insurance contract.

Incontestability

Is there a period beyond which a life insurer cannot contest coverage based on misrepresentation in the application?

The insurer is entitled to contest the misrepresentation within three months of the moment the insurer becomes aware of the insured’s misrepresentation. This rule applies to life insurance and non-life insurance contracts. The insurer may deny coverage for claims if they become aware of the misrepresentation.

Punitive damages

Are punitive damages insurable?

The Italian law system does not provide for punitive damages. In light of this consideration, insurance products in the Italian market do not offer this kind of coverage.

Excess insurer obligations

What is the obligation of an excess insurer to ‘drop down and defend’, and pay a claim, if the primary insurer is insolvent or its coverage is otherwise unavailable without full exhaustion of primary limits?

Under Italian law, an insurer can subscribe to partial insurance that covers just a part of the value estimated of the insured goods.

The excess insurer is a particular form of partial insurance whose content is negotiable by the parties.

When the excess insurance contains a ‘drop down and defend’ clause, the coverage of the excess insurance has to be provided even though the underlying coverage has not been exhausted (owing to the insolvency of the first insurer as well as any other event that makes the underlying insurance unavailable).

In these cases, if the underlying limits are diminished the excess insurance will ‘drop down’ and act as a primary guarantee.

Self-insurance default

What is an insurer’s obligation if the policy provides that the insured has a self-insured retention or deductible and is insolvent and unable to pay it?

Although terms of specific policies differ and are subject to negotiation between insured and insurers:

for the deductible, the insolvency of the insured does not alter the insurer’s duty to defend and indemnify the insolvent insured. Based on the case law of the Italian Court of Cassation, in the case of insolvency of the insured, the insurer has to cover the entire amount of the claim including the deductible; and
for the self-insured retention, the insured’s insolvency does not obligate the insurer to drop down and to pay the part of the claim covered by the self-insured retention. The insurer is not obliged to defend or pay a claim that falls within the self-insured retention.

Claim priority

What is the order of priority for payment when there are multiple claims under the same policy?

Italian law does not provide any specific rule on this matter. The order of the claim’s payment may depend on the type of policy (e.g, loss occurrence, claim made and life policies). Furthermore, the policy conditions may establish the order in which the payment of claims has to be made on the basis of criteria that take into account, for instance, the nature of the claim, the time of notification of the claim, the amount of the loss and whether it is a first-risk or second-risk insurance policy.

Allocation of payment

How are payments allocated among multiple policies triggered by the same claim?

Italian law expressly governs multiple insurance policies when the same risk is covered by several policies provided by different insurers. In these cases, the insured:

must inform all the insurers that risk is covered by different policies; and
may ask for the total amount of the indemnity to one insurer.

The insurer who has paid the total compensation will be entitled to act for recovery against the other insurers.

If one of the multiple insurers is insolvent, its share of risk will be subdivided by the other insurers.

Disgorgement or restitution

Are disgorgement or restitution claims insurable losses?

Under Italian law, it is expressly forbidden to indemnify claims caused by the fraud or gross negligence of the policyholder. As disgorgement or restitution implies an intentional conduct by the insured, they are not insurable losses.

Definition of occurrence

How do courts determine whether a single event resulting in multiple injuries or claims constitutes more than one occurrence under an insurance policy?

The court determines whether a single event resulting in multiple injuries or claims constitutes more than one occurrence mainly based on the clauses and wording of the insurance contract as well as on the concrete underlying facts of the claim brought.

Rescission based on misstatements

Under what circumstances can misstatements in the application be the basis for rescission?

For the insurer, the assessment of the insured risk represents a key element of the insurance contract, and it is essential that the insured reports correctly all relevant circumstances to the insurer.

Thus, misrepresentation of facts by the insured is sanctioned under Italian law with:

the cancellation of the contract, if the insured has omitted on voluntary bases to report circumstances that they knew or could have known to the insurer; or
the withdrawal of the contract, if the insured has failed negligently to report all the relevant circumstances to the insurer.

REINSURANCE DISPUTES AND ARBITRATION

Reinsurance disputes

Are formal reinsurance disputes common, or do insurers and reinsurers tend to prefer business solutions for their disputes without formal proceedings?

In general, insurance and reinsurance companies are more inclined to settle the potential conflicts that may arise during the execution of the reinsurance agreement, and formal dispute resolutions represent an extrema ratio.

Common dispute issues

What are the most common issues that arise in reinsurance disputes?

Frequent issues arising between insurance and reinsurance companies are the extent of the policy’s coverage as well as the question: which subject has to cover the indemnity based on the conditions of the insurance or reinsurance contract? It is also common for the insurer and the reinsurer to argue about the applicability of possible clauses of exclusion contained in the policy, or about the misrepresentation of the insured (e.g, in cases in which the insured fails to report all diseases or conditions they are suffering in a medical questionnaire).

Arbitration awards

Do reinsurance arbitration awards typically include the reasoning for the decision?

Insurers and reinsurers are allowed to settle the disputes before different arbitration bodies that each have their own specific procedural rules, including the content of the arbitration award. However, it is very common that the arbitration award contains a brief summary of the factual and legal grounds on which the decision is based.

Power of arbitrators

What powers do reinsurance arbitrators have over non-parties to the arbitration agreement?

It is a controversial issue, to be examined on a case-by-case basis. Generally, the arbitral award binds only the parties to the arbitration agreement and, therefore, arbitrators have no power over third parties who are not parties to the agreement or the proceedings.

Appeal of arbitration awards

Can parties to reinsurance arbitrations seek to vacate, modify or confirm arbitration awards through the judicial system? What level of deference does the judiciary give to arbitral awards?

In the Italian legal system, the parties to reinsurance arbitration may contest or seek to vacate arbitration awards through the judicial system. However, the legal remedies and the grounds for appeal depend on the kind of arbitration procedure and on whether the arbitration is provided for by law or contractually agreed.

REINSURANCE PRINCIPLES AND PRACTICES

Obligation to follow cedent

Does a reinsurer have an obligation to follow its cedent’s underwriting fortunes and claims payments or settlements in the absence of an express contractual provision? Where such an obligation exists, what is the scope of the obligation, and what defenses are available to a reinsurer?

In Italian law there is no express provision obliging the reinsurer to follow the cedent’s underwriting fortunes and claims payments or settlements. The reinsurance agreement has to define the limits of the contract and the risks that are not among those reinsured.

Good faith

Is a duty of utmost good faith implied in reinsurance agreements? If so, please describe that duty in comparison to the duty of good faith applicable to other commercial agreements.

Italian law does not provide for any specific good faith obligations for reinsurers other than those provided for business and financial operators.

Facultative reinsurance and treaty reinsurance

Is there a different set of laws for facultative reinsurance and treaty reinsurance?

In general, the Italian system does not provide a specific set of laws for facultative reinsurance and treaty reinsurance. Therefore, provisions applicable to both kinds of reinsurance find their source in the contract entered by the parties.

Third-party action

Can a policyholder or non-signatory to a reinsurance agreement bring a direct action against a reinsurer for coverage?

Reinsurance agreements are contracts signed between an insurer and reinsurer and have no legal effect on the insured, who is not part of the reinsurance relationship.

Insolvent insurer

What is the obligation of a reinsurer to pay a policyholder’s claim where the insurer is insolvent and cannot pay?

The reinsurer is obliged to pay the amounts due under the reinsurance contract to the administrative compulsory winding-up procedure. In any event, there is no obligation to directly satisfy the claims of the policyholders.

Notice and information

What type of notice and information must a cedent typically provide its reinsurer with respect to an underlying claim? If the cedent fails to provide timely or sufficient notice, what remedies are available to a reinsurer and how does the language of a reinsurance contract affect the availability of such remedies?

The communication obligations of the insurer towards the reinsurer are governed by the reinsurance contract. There are no fixed rules governing how and when claims shall be notified and which remedies are available in case of lack or delay of notice.

It is common that reinsurance contracts provide for the obligation of communications and that parties provide for general obligations of cooperation in the execution of the agreement. For some types of insurance agreements, the insurer and reinsurer may agree on a periodic information flow.

Allocation of underlying claim payments or settlements

Where an underlying loss or claim provides for payment under multiple underlying reinsured policies, how does the reinsured allocate its claims or settlement payments among those policies? Do the reinsured’s allocations to the underlying policies have to be mirrored in its allocations to the applicable reinsurance agreements?

Communications between an insurer and reinsurer are governed by the reinsurance contract. Therefore, there are no fixed rules governing how and when claims must be notified and which remedies are available in the case of lack or delay of notice.

It is common that contracts set periodic communications and that parties provide for general obligations of cooperation in the execution of the agreement.

Review

What type of review does the governing law afford reinsurers with respect to a cedent’s claims handling, and settlement and allocation decisions?

There are no specific mandatory provisions under Italian law governing this aspect. Usually, the claim handling and settlement and allocation decision between insurers and reinsurers are regulated in the reinsurance contract. In the absence of any express provision between the parties, decisions shall be taken based on the general principles of Italian law and the prevailing market practice.

Reimbursement of commutation payments

What type of obligation does a reinsurer have to reimburse a cedent for commutation payments made to the cedent’s policyholders? Must a reinsurer indemnify its cedent for ‘incurred but not reported’ claims?

There are no provisions under Italian law regulating this matter expressly. The reinsurer and insurer shall establish the methods for assessing any outstanding claims or charges in their commutation agreement. In case of agreement gaps, the general rules of Italian Law on good faith obligation in the execution of the contract, on the right of termination and withdrawal, and on nullity apply.

Extracontractual obligations (ECOs)

What is the obligation of a reinsurer to reimburse a cedent for ECOs?

Italian law does not provide any specific previsions on this matter, which is usually regulated in the reinsurance contract by the contracting parties.

UPDATES & TRENDS IN INSURANCE AND REINSURANCE IN ITALY

Key developments

Are there any emerging trends or hot topics in insurance and reinsurance regulation in your jurisdiction?

Insurance and reinsurance regulation is in constant evolution, and there are many relevant topics.

Recently, new legislation on mandatory insurance for the civil liability of motor vehicles, amending the Private Insurance Code and aligning the national regulations with EU Directive 2021/2118 has been approved. The new regulation introduces the obligation to take out civil liability insurance for all vehicles, even for those that are parked or vehicles travelling in areas inaccessible to the public.

Furthermore, in March, IVASS issued Provision No. 142/2024 amending the Regulations No. 29/2016 and No. 38/2018. The Provision updates the criteria and eligibility requirements for officers and directors of insurance and reinsurance companies as well as the procedure that undertakings shall follow to assess the requirements of officers and directors. The Provision also supplied questionnaires that companies have to fill out and submit to IVASS, providing information on company representatives to assess their suitability for the position held.

On March 5, IVASS announced that in June 2024 the new Register of Intermediaries (RUI) portal will be operational. The new RUI will allow intermediaries and insurance companies to enter and update data directly into the register.

* The information in this chapter was accurate as of April 2024.

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