The Italian Government approved a draft law decree aimed at ensuring financial stability and market integrity in the event of hard Brexit (the “Decree”). The final version of the Decree is expected to be issued soon and will enter into force upon the publication on the Official Journal. Amendments in the final version of the Decree cannot be excluded at this stage, but significant deviations from the below are not expected as the Decree was presented and approved on the same day.
1. Cancellation from the Italian IVASS Registers and business interruption
In relation to UK insurance undertakings and intermediaries, these are the main provisions of the draft version of the Decree examined by the Government yesterday:
UK insurance undertakings and intermediaries that are allowed to carry out business in Italy under freedom of services and right of establishment will be required to interrupt any activity in Italy upon hard Brexit save for, respectively, a 18-month run-off period (unless IVASS grants an extension upon specific and motivated request to be submitted in advance) and a 6-month run-off period. In these periods insurance undertakings and intermediaries respectively are only authorized to manage the existing business and insurance covers, without the power to underwrite/distribute new business.
2. Disclosure requirements to existing policyholders, insured and beneficiaries
Within 15 days from the entry into force of the Decree, UK insurance undertakings and intermediaries must inform policyholders, insured persons and beneficiaries about their operational regime in place and of any actions taken to ensure the orderly closure of the existing contractual relationships, even if they already communicated to IVASS the contingency plan they intended to adopt in compliance with the previous regulatory requirements and guidelines.
3. Communication to IVASS
Within 90 days from the entry into force of the Decree, UK insurance companies must file with IVASS an action plan for the effective management of the insurance policies in place during the transitory period, including the payment of claims.
4. Right of withdrawal from existing contracts
Starting from the date of the exit of the UK from the EU, Italian policyholders of insurance contracts issued by UK insurance undertakings are allowed to withdraw from their policies having a duration longer than 1 year without any penalty, by sending a written communication to the insurer. Tacit renewal clauses will no longer be effective as of that date.We remain at your disposal for any clarification you may need.
Following the incorporation into Italian national laws of the Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution IVASS (the Italian insurance regulator) has issued the new Regulation no. 41 of 2 August 2018 on disclosure, advertising and creation of insurance products matters (the “Regulation”), applicable from 1 January 2019.
The Regulation is aimed at reviewing and amending the regulatory provisions contained in IVASS Regulation no. 35/2010, and provide a standardised base pre-contractual document for each insurance product category that will replace the standard Informative Note (Nota Informativa) as follows:
In addition, IVASS introduces a supplementary standardized pre-contractual document to be delivered to potential customers together with the base documents, the so called Supplementary DIP (“DIP Aggiuntivo”) aimed at collecting information which is supplementary and complementary with respect to the information contained in the base documents, in order to ensure a more detailed knowledge of the product and to guide the client toward an informed decision on contractual rights and obligations.
The European Commission has published a roadmap concerning its forthcoming Green Paper on retail financial services and insurance. The roadmap notes that the Green Paper, when published, will seek stakeholders’ views on how to bring about better outcomes for consumers and firms in terms of better access, more transparent markets, increased competition as well as greater consumer choice and improved consumer protection (on a domestic and cross-border level) in an increasingly digital environment. In particular, the paper will seek to identify the barriers in the market and investigate the means, including the state of the art technological and innovative solutions, to further improve the functioning of the EU Single Market for providing, purchasing and using retail financial services and insurance.
See Commission roadmap on Green Paper on retail financial services and insurance, 2 September 2015.