New rules on IBIPs, POG, motor car insurance and complaints’ handling: IVASS and CONSOB complete the implementation of the Insurance Distribution Directive in Italy

Following three public consultations launched on 23 September 2019, IVASS and CONSOB completed the implementation in Italy of (EU) Directive 2016/97 on insurance distribution (“IDD”), by publishing IVASS Measure No. 97/2020, IVASS Regulation No. 45/2020 and CONSOB Resolution No. 21466/2020. This new piece of regulation is aimed, among other things, at clarifying and aligning the rules applicable to the distribution of insurance based-investment products (IBIPs) and at setting out specific provisions on product oversight and governance (POG). The new legal framework will apply as from 31 March 2021, with the exception, among others, of certain provisions on inducements which will apply as from 31 March 2022.

On 4 August 2020, IVASS published its Measure No. 97/2020 – amending IVASS Regulations No. 40/2018 on insurance and reinsurance distribution and No. 41/2018 on transparency, disclosure and design of insurance products – (“Measure No. 97/2020”) in order to introduce specific rules related to the distribution of insurance based-investment products (“IBIPs”) by insurance undertakings and by intermediaries other than those enrolled in section D of the IVASS Register of Intermediaries (“RUI”). Measure No. 97/2020 provides also certain changes to IVASS Regulation No. 23/2008, laying down rules on the transparency of premiums and of the terms of contract in civil motor liability insurance, and to IVASS Regulation No. 24/2008 on complaints. Moreover, IVASS published IVASS Regulation No. 45/2020 on insurance product oversight and governance requirements (“POG Regulation”), together with the outcomes of the public consultations (please click here for our previous newsflash on IVASS and CONSOB consultations). On the same day, CONSOB published its Resolution No. 21466/2020, which amends CONSOB Regulation on Intermediaries with respect to the distribution of IBIPs by intermediaries enrolled in section D of the RUI and EU banks and investment firms pass-ported in Italy as insurance intermediaries.

New rules relevant to IBIPs

With specific regard to the distribution of IBIPs – which is also regulated by Commission Delegated Regulation (EU) 2017/2359 – specific provisions are introduced in IVASS Regulation No. 40/2018, concerning among others:

  • the obligations of the distributor to deliver to the policyholder a dedicated informative document and to inform the latter, on the nature, risks, costs and charges, including the risks associated with the issuer insolvency, the volatility of the price of the underlying financial instruments, the limitation to the rights of reduction and surrender, the existence of any guarantees or mechanisms to protect the premiums paid;
  • The detailed conditions under which insurance intermediaries and undertakings are allowed to pay or receive inducements (remuneration or commissions or non-monetary benefits provided to or received by any person other than the policyholder or a person acting on the policyholder’s behalf), which are similar to those set out by Delegated Directive (EU) 2017/593, implementing MiFID II. More specifically, the payment of inducements is allowed when it is aimed at increasing the quality of the insurance distribution and it does not affect the fulfilment of the obligations to act honestly, fairly and professionally in the best interests of the policyholder;
  • If the distributor provides advice on an independent basis, no inducements can be paid/received, except for minor non-monetary benefits;
  • Insurance undertakings and intermediaries must provide the policyholder with mandatory advice in case of distribution of IBIPs other than non-complex IBIPs according to the definition of the Commission Delegated Regulation (EU) No. 2017/2359.

Specific amendments also concern IVASS Regulation No. 41/2018 and relate to the annual statement of account (so called Single Reporting Document) and to the obligation of the distributors to provide the insurance undertakings with all the information for providing the Single Reporting Document, including all costs and charges related to the distribution activity, also in case of horizontal collaboration. The additional IPID for IBIPs is also amended.

POG Regulation

POG Regulation completes the Italian regulatory framework on POG, integrating Commission Delegated Regulation (EU) No. 2017/2358 and implementing Articles 30-decies and 121-bis of Legislative Decree of 7 September 2005, n. 209 (the Italian Insurance Code).

More specifically, POG Regulation provides rules on the approval process for insurance products, clarifying the manufacturer obligations which include, in particular, the identification of the positive and negative target market. POG Regulation also identifies the tasks and responsibilities of the corporate bodies involved in the process of approval and distribution of insurance products.

POG Regulation clarifies the distributors’ obligations, including the identification of the actual target market, and introduces specific rules for the exchange of information between manufacturers and distributors. Specific provisions for the product approval and distribution processes concerning IBIPs are also provided.

CONSOB Resolution No. 21466/2020

In line with the new rules set out by IVASS on POG and IBIPs, CONSOB Resolution amends the Regulation on Intermediaries. The provisions introduced by CONSOB only apply to intermediaries enrolled under section D of the RUI and EU banks and investment firms pass-ported in Italy as insurance intermediaries distributing IBIPs and concern, among other things: (i) the pre-contractual information, (ii) suitability, appropriateness, mandatory advice and cross-selling, (iii) inducements, (iv) POG, (v) conflicts of interest. In light of such amendments, the provisions of the Regulation on Intermediaries on direct distribution by insurance undertakings of insurance products with financial content are repealed.

Other rules introduced by Measure No. 97/2020

  • Distribution of insurance products: the impacts of Measure No. 97/2020 on IVASS Regulation No. 40/2018 also concern, among other things: (i) horizontal collaborations between intermediaries; (ii) pre-contractual information (i.e. the relevant Annexes related to the information on the distributor and the product offered); (iii) distributor obligation to deliver to the policyholder a statement declaring that the insurance product is suitable to the demands and needs of the policyholder/insured; (iv) cross-selling; (v) record keeping; (vi) professionalism and training requirements; (vii) phone records.
  • Motor car insurance: pursuant to the amendments to IVASS Regulation No. 23/2008, EU insurance undertakings operating in Italy under the right of establishment or freedom to provide services are required to specify in the free personalized quote if they adhere or not to the direct compensation scheme (so-called CARD). Moreover some changes have been adopted to the format of the so called “additional IPID”.
  • Complaints’ handling: certain amendments are introduced in IVASS Regulation No. 24/2008 in order to extend to EU insurance undertakings operating in Italy under the right of establishment or the freedom to provide services, receiving more than 20 (twenty) complaints a year, the obligation to publish the report on the management of complaints. Moreover, insurance intermediaries registered in Section D of the RUI are required to communicate to the principal insurance undertakings specific information on the complaints received.

Next steps

CONSOB Resolution No. 21466/2020, POG Regulation and Measure No. 97/2020 will apply as from 31 March 2021, with the exception, among others, of certain provisions on inducements, applicable to intermediaries other than those enrolled under section D of the RUI, which will apply as from 31 March 2022.

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