IVASS monitoring KIDs of insurance-based investment products (IBIPs)
The scope of the recent initiative is not fully clear yet given that CONSOB currently supervises KIDs of financial insurance products and also receives the relevant communications. The general aim of the new portal – as per the IVASS public consultation – would be to strengthen the supervision of IBIPs in light of the general powers of supervision and intervention attributed thereto by law in relation to structure profiles of the insurance products. Thus, IVASS intends to equip itself with tools for the collection and analysis of data contained in KIDs in order to provide an initial source of information on the structure and main features of IBIPs.
The impact on the regulatory framework and supervision should become clearer when the expected IVASS regulation on IBIPs is issued.
Annual General Meeting of ANIA
At its Annual General Meeting on 10 July, ANIA (the Italian Association of Insurance Undertakings) discussed the insurance market in 2018 and the future main trends for the Italian insurance sector from either the market players' and representatives of the Italian government's perspective as well as from the point of view of the Italian insurance regulator.
During his speech, the new chair of IVASS Mr. Fabio Panetta addressed a number of issues that recently affected the insurance sector and that likely foreshadow future actions of the supervisory authority. In this context, it is worth mentioning his considerations regarding:
- Outcome of the joint initiative of IVASS and ANIA on “simple and clear contracts” (contratti semplici e chiari): in the context of the protection of consumers, the Chair of IVASS highlighted the Guidelines for Simple and Clear Contracts (the "Guidelines") for the review of the structure and language of insurance contracts published in February 2018 by a technical panel coordinated by ANIA. He noted this is still work to be done in this regard. More specifically, IVASS pointed out that the insurance products analysed so far by IVASS have shown that interventions resulted in many cases in an exclusively formal alignment with the indications provided under the Guidelines (e.g. structure, graphic characters, sample boxes), but were not adequate in terms of clarity of language, simplicity of terms used, elimination of redundancies and references. It is IVASS' intention to focus on a substantial improvement of the clarity of insurance contracts also with the support of ANIA and consumers' and intermediaries' associations. Given that the deadline for complying with the Guidelines is the end of 2019, there is still time for insurance undertakings to improve the language of their policies general terms and conditions, taking into account the scope of this initiative.
- Establishment of the Insurance Arbitrator: in line with the provisions of the Italian Insurance Code, as amended following the implementation in Italy of Directive (EU) 2016/97 on insurance distribution (IDD), IVASS announced that a number of actions are underway for the future establishment of the Insurance Arbitrator, which will represent the out-of-court complaint and redress procedure for the settlement of disputes concerning the rights and obligations arising from insurance contracts. The scope of application of the activity of the new arbitrator is not fully clear yet, but the goal is to reduce the number of ordinary litigations on insurance products and distribution activity. According to the Chair of IVASS, the Insurance Arbitrator is also expected to bring a significant support for the purposes of a substantial improvement of contractual clarity. This would be broadly in line with the Banking and Financial Arbitrator for the banking and financial sectors;
- ESG in the insurance sector: the increase in "green investments" - i.e. investments addressing environmental, social, governance (ESG) issues - by insurance undertakings is widely advocated and in some cases it is already underway; a revision of capital requirements aimed at encouraging such investments is equally advocated. In this regard, Mr. Panetta recalled IVASS Regulation No. 38/2018 on corporate governance published in July 2018, which anticipated these trends and introduced the obligation upon insurance undertakings to adopt specific measures aimed at identifying, assessing and managing -among the others - environmental and social risks. Indeed, the Chair of IVASS also addressed the lack of a specific regulation and technical guidelines related to ESG at a European level (e.g. the "taxonomy" on environmentally sustainable activities) that will be crucial to improve investments of this type by insurance undertakings.
IVASS Letters on Anti-Money Laundering (AML) risk assessment
On 19 June 2019, IVASS published two letters to the market (“Letters”) aimed at collecting information for the assessment of AML risks. The Letters are addressed respectively to insurance undertakings with registered office in Italy, Italian branches of EU and non-EU insurance undertakings and EU insurance undertakings operating under freedom of services (FOS) in Italy. Pursuant to the Letters: (i) Italian insurance undertakings and EU insurance undertakings acting through a branch are required to transmit to IVASS specific information concerning – among the others - the organisational model, the insurance benefits paid and the outcome of the AML risk assessment related to 2018 and (ii) EU insurance undertakings operating under FOS regime are required to provide IVASS with specific information related to the activities performed in Italy through intermediaries.
The relevant information must be sent to IVASS by 30 September 2019. In case of variations of the risk profile with respect to the previous assessment, the entities under point (i) may send information on AML risks by 31 October 2019. Given the rather sever enforcement of this area by the Bank of Italy for other players in the financial market, one would expect IVASS to at least consider this information carefully.
Please click here and here to download the IVASS Letters.
Authored by Jeffrey Greenbaum, Silvia Lolli and Giulia Monacelli