On 23 November 2023, the Italian insurance supervisory authority (“IVASS”) launched a public consultation on a draft regulation providing amendments and integrations to its Regulation no. 40 of 2 August 2018 laying down provisions on the distribution of insurance and reinsurance products ("Regulation 40") as well as Regulation no. 41 of 2 August 2018 laying down provisions on information, advertising and designing of insurance products ("Regulation 41").
The new provisions aim at enhancing the effectiveness of the information to be provided by Italian and foreign insurance undertakings and distributors to contracting parties, by implementing the simplification and streamlining measures that are deemed necessary to increase the protection of the contracting party at all stages of the relationship with the distributor. Such protection can be achieved, according to IVASS, by means of clear and exhaustive documents, not misleading and not redundant, concise but complete.
More in details, from various meetings held by IVASS with insurance companies and intermediaries' trade associations and with some of the main players in the insurance market, the critical issues summarised below emerged:
- With reference to Regulation 40: (i) plurality of forms to be delivered to the policyholder, with consequent dispersion of information; (ii) partial duplication of information content; (iii) ineffectiveness of the division of information between "static" and "dynamic" for traditional insurance distributors; (iv) lack of usefulness of Annex 4-ter concerning distributor conduct obligations.
- With reference to Regulation 41: (i) excessive length of additional insurance product information documents ("Additional IPIDs"); (ii) duplication of information in Additional IPIDs and insurance product information documents ("IPIDs") or key information documents ("KIDs").
The proposed interventions also take into account the need to ensure proper coordination and consistency with European and national regulatory developments regarding sustainable finance.
Simplification of distributor disclosure under Regulation 40
With regard to distributor disclosure, the draft regulation aims to:
- limit the number of information documents by providing for a single pre-contractual model (Modello unico precontrattuale - MUP) differentiated by product type (IBIP and non-IBIP) that integrates information now contained in several forms (Annexes 3, 4 and 4-bis);
- repeal Annex 4-ter, which sets out the conduct obligations of the distributor;
- repeal the obligations of publication on the website or posting at the distributor's premises of the information materials;
- insert a linking clause with the product disclosure, allowing the provision of information on complaints in a single location, provided that it is complete, in order to enhance the autonomy of operators and process synergies in the case where the product is placed by the same manufacturing company;
- allow the provision of information on the business relationships held by insurance intermediaries with insurance companies, either by publication on the website or by posting on the premises, without prejudice to the delivery on paper at the customer's request.
Simplification of product disclosures under Regulation 41
With regard to product disclosures, the draft regulation is intended to:
- simplify the structure of the Additional IPIDs, by eliminating the elements that are (a) redundant, because already contained in the KID, life IPID and non-life IPID or (b) related to the execution phase of the contract (e.g. how to report a claim) and in any case which can be easily found in the relevant general terms and conditions. As a result, the proposed new schemes focus the disclosure on: (i) costs; (ii) insurance guarantees/coverages offered, exclusions and limitations, target market; (iii) tax regime (iv) mandatory information under Article 185 of the Italian Insurance Code (solvency, complaints, applicable law).
- introduce a maximum number of pages for the drafting of Additional IPIDs;
- repeal the requirement to indicate in the Additional IPID the empty sections with the sentence "no additional information with respect to that provided in the IPID/KID";
- for IBIPs, standardise the name of the Additional IPID to that of the KID in order to facilitate comparability with other products perceived as similar and to make immediately self-evident the insurance features that characterise them.
The draft regulation under public consultation also aims to complete the adjustment of IVASS regulatory provisions to the European legislation on sustainable finance, in order to:
- take into account the changes made by the Regulatory technical standards (RTS) adopted with Delegated Regulation (EU) no. 2022/1288, in force as of 1 January 2023 and supplemented by Delegated Regulation (EU) 2023/363; and
- complete the alignment with the distributor's disclosure under Regulation 40 and realise the one with the manufacturer's disclosure under Regulation 41.
Based on the draft regulation, the amendments provided therein would apply to insurance contracts signed after the date of its entry into force and insurance undertakings and distributors would have to comply with the same within six months from such date.
The public consultation will be open until 22 January 2024.
Authored by Silvia Lolli, Davide Valloni and Federico Bastoni.