The legal framework
i Sources of insurance law and regulation
The most significant sets of provisions governing insurance contracts in Italy are:
- the Italian Civil Code (ICC), which establishes under Article 1882 ff. the general rules on contracts and obligations, as well as the specific rules governing insurance contracts;
- the Insurance Code, which provides the general legal framework concerning insurance companies, intermediaries and brokers; and
- the Consolidated Financial Act (TUF) and the regulations of the Italian securities market regulatory authority, CONSOB, which govern the pre-contractual requirements to be met by the intermediaries’ distribution network when selling insurance-investment products (such as unit- and index-linked life insurance policies).
Additional relevant provisions derive from the regulations issued by the Italian Insurance Market Regulatory Authority (IVASS), which establishes (1) specific rules regarding each type of insurance contract or some of their specific aspects; (2) transparency and disclosure requirements to be met in the pre-contractual phase of the conclusion of the insurance contract; and (3) post-sale requirements.
The Consumer Code is also part of the relevant legal framework if the policyholder qualifies as a consumer, and particularly in relation to contracts concluded at a distance or on unfair terms.
Finally, the national legal framework is integrated by various EU provisions related to insurance undertakings.
As to recent developments in the national legislative framework, the following items are worth mentioning:
- Legislative Decree No. 68/2018, IVASS Regulations Nos. 39, 40 and 41 of 2018 and CONSOB Regulation No. 20307/2018, which implemented the EU Insurance Distribution Directive (IDD), also amending the Insurance Code and the Consumer Code. These provisions establish additional rules for intermediaries with particular reference to pre-contractual disclosure requirements and conduct rules, aimed at safeguarding the interests of policyholders.
- Law No. 124/2017, which provides, inter alia, new rules concerning competition in the insurance market and uniform criteria for determining the value of non-economic damages. In addition, it establishes that insurance companies will be compelled to offer discounts to customers in the field of motor insurance under certain conditions (vehicles third-party insurance is compulsory in Italy).
- Law No. 24/2017 (the Gelli-Bianco Law), which introduces the obligation for healthcare facilities to conclude a third-party civil liability policy, and establishes specific procedures related to damages claims (see Section V).
- Legislative Decree No. 165 of 25 November 2019, which introduces amendments to Legislative Decree 129/2017, which implemented the Markets in Financial Instruments (MiFID II) Directive and the Markets in Financial Instruments Regulation (or MiFIR) in Italy, through the TUF. In particular, the Decree, among other things, abolishes the obligation for notification of the key information document for insurance-based investment products, and provides sanctions for entities authorised to carry out insurance distribution activity.
- Law-Decree No. 34 of 19 May 2020 introducing urgent measures in the areas of healthcare, support for work and the economy, and social policies (the Rilancio Decree), which the government adopted in response to the covid-19 epidemiological emergency. The Rilancio Decree introduces, inter alia, measures impacting the insurance sector and, in particular, simplified procedures for the conclusion of financial and insurance contracts, taking into account the limitations imposed by the recent decrees adopted to deal with the emergency situation following the covid-19 pandemic. The new provisions apply only to contracts concluded between the date of entry into force of the Rilancio Decree and the end of the state of emergency declared by the government, currently set at 15 October 2020.
- IVASS issued several notes providing rules for facilitating the activities of insurance companies and intermediaries following the covid-19 outbreak.
ii Insurable risk
As a general rule, under Italian law, insurance contracts cannot cover risks connected to illicit or catastrophic events. For example, insurance contracts do not cover:
- events caused by fraud or gross negligence of the insured;
- the risk connected to the payment of a ransom in cases of kidnapping;
- administrative fines;
- the risk of temporary driving disqualification or suspension of a driving licence;
- damage caused to the public administration by public officials; and
- various catastrophic events, unless a specific clause is agreed.
All other risks are, in general terms, insurable, provided that there is an interest upon the contracting party to insure the specific asset or event.
In particular, with reference to the concept of ‘insurable interest’, Article 1904 ICC establishes that a non-life insurance agreement is invalid if the policyholder does not have an interest in the compensation of the damage. Moreover, if the interest never existed or if it ceased to exist before the conclusion of the contract, the latter is null and void. When the interest ceases to exist after the conclusion of the contract, then the policy is considered terminated. This provision is grounded on the fact that the existence of an interest is considered a fundamental element of the agreement under Italian contract law.
As a consequence, it is generally not possible to insure the assets of another subject against damages. However, interest is not necessarily connected to an ownership right, it being sufficient that a relevant relationship is in place between the insured person and the insured object (e.g., the Italian Supreme Court considers a house ‘fire-insurable’ by tenants, who bear the responsibility if the damaging event occurs).
Policyholders are free to insure their risks also with foreign companies, which must nevertheless comply with certain requirements. EU insurance companies can carry out their activities without having their registered office in Italy, under the approval of their home-country regulatory authority. Additional fulfilments might be required, depending on the type of insurance contract.
The nationality of the insurance company might impact the law applicable to some aspects concerning the merit of the dispute, as well as the enforcement of a possible negative judgment. With regard to finance-related products, for instance, the principle of home country control could lead to the application of the law of the country of the insurer for issues regarding the composition of the fund underlying the policy; moreover, if the insurer has no assets in Italy, the enforcement shall be started abroad, in accordance with the relevant rules of the selected forum.
The involvement of a foreign insurance company in an Italian litigation also implies some minor changes in terms of procedural rules, particularly aimed at granting a full right of defence to the party involved. The translation of the policyholders’ writ of summons in a language known to the insurer might be requested under certain conditions, as well as the Italian translation of documents filed by the insurer in another language. In addition, foreign entities are granted with a longer minimum term of appearance.
iii Fora and dispute resolution mechanisms
In Italy there is no specific court dealing with insurance disputes, and these tend to be decided predominantly by civil courts. When a policy is entered into with a consumer, the competent court is the one of the place of residence or domicile of the insured (although alternative criteria for jurisdiction may apply at the plaintiff’s discretion).
As regards international disputes, the jurisdiction of the Italian courts is established pursuant to the Brussels Regulation and thus Italian ordinary courts may have jurisdiction depending on the cross-border elements contained in the insurance contract (e.g., if the policyholder resides in Italy).
As to the procedural rules generally applicable to all insurance-related disputes (i.e., also for foreign insurance companies), the plaintiff shall start compulsory mediation proceedings before initiating full legal proceedings in court; this constitutes a prerequisite for action. A court claim could therefore be lodged only if the mediation proceedings proved to be unsuccessful, as may be the case if the defendant does not attend mediation or the parties do not reach an agreement.
Italian law also provides for some alternative dispute resolution mechanisms, which are summarised below.
For disputes regarding compliance by the insurer or its financial intermediaries (e.g., banks, investment companies and other financial intermediaries) with the provisions of the Consolidated Financial Act (and relevant implementing regulations on distribution of insurance investment policies), claimants may refer the matter to the Arbitrator for Financial Disputes (ACF), established by CONSOB.
Arbitration clauses, on the other hand, are not common in insurance contracts with consumers and must be specifically negotiated and approved in writing if proposed by the insurer. Furthermore, for certain types of coverage (e.g., accidents and health insurance), IVASS provides specific requirements as to the seat of the arbitration.
Arbitration clauses are commonly used when insurance contracts are entered into with being decided by an arbitrator (or a panel of arbitrators) once it has already arisen.
This scenario is subject to further developments in the future, as a Ministry Decree is soon expected to set up a further alternative dispute resolution mechanism (as established under the recently introduced Article 187 ter of the Insurance Code), which is likely to follow the ACF model of specialised arbitral tribunals.
This would represent a voluntary venue for dispute resolution and would therefore be more accessible, even for individuals and small companies.