Insurance activity can be undertaken in Italy by i) an Italian insurance company that has met all the conditions set by the applicable Italian law and regulations and that has been admitted by the Italian Insurance Supervising Authority (IVASS); ii) an EEA insurance company that has notified the regulator in its home country that it intends to carry on business in Italy under either the right of establishment regime (by establishing a branch office or in case of any permanent presence on the Italian territory, including the organisation of an office managed by the undertaking's own staff or by a person who is independent but has permanent authority to act for the undertaking) or directly on a freedom-of-services basis; iii) a non-EEA insurance company that has been given permission by IVASS to set up a branch office.
Setting up a domestic insurance company in Italy requires that several legal and financial conditions be met (including setting up as a specific type of company, a minimum paid-up capital and a head-office within Italy). The specific licensing process with IVASS can be lengthy. A domestic insurance company is also subject to IVASS regulation.
Foreign insurers from EEA countries may also undertake insurance activities in Italy either by establishing a branch office or by providing insurance activities directly. In both cases, insurers are permitted to carry out the same activities in Italy as in their home country provided (i) they have notified their home country regulator of their intention, and (ii) the home country regulator has notified IVASS of their intention.
Insurers can start the activity in Italy (i) as soon as IVASS is notified on a freedom-of-services basis, or (ii) after 30 days from notification if establishing a branch office. It is cheaper and quicker to undertake insurance activities in Italy by using the EEA passporting schemes or for a non-EEA company to establish a branch office, than it is to obtain full IVASS authorisation. There is no minimum capital requirement under these schemes and the relationship with IVASS is considerably less demanding. In principle, insurers acting under these schemes are subject only to the control of their home country regulator. However, within 30 days from the receipt of the home country regulator’s notification, IVASS may set further specific conditions to be met by a branch office, to protect the general interest, on a case by case basis.
Companies from non-EEA countries are only entitled to undertake activity in Italy by establishing a local branch.
The Italian general good provisions, listed by IVASS, must be met also by both EEA and non EEA insurance companies.
2. Effect of misrepresentation and/or non-disclosure (retitled)
Before and during the policy period, the insured must disclose all the relevant information to the insurer. Pursuant to artt. 1892 and 1893 failure to do so, in case of fraud or gross negligence by the insured, may result in the insurer being able to claim a total or partial release from their obligation to provide cover whilst remaining entitled to the premium for the entire policy period. A misrepresentation not ascribable to either wilful misconduct or gross negligence, instead allows the insurer to request rescission from the Insurance contract.
3. Effect of breach of warranty and condition precedent
The condition precedent of the policy is the risk covered. This must be correctly represented and described by the Insured before the conclusion of the Insurance contract. The insurer has to be informed of any change in risk. A lower risk might entitle the insured to a lower premium unless the Insurer recedes from the contract. On the other hand, if the insured does not inform the insurer of an increase of risk which would have caused the insurer to refuse to provide a policy, or to require a higher premium, this will allow the insurer to recede from the contract. Fraud or gross negligence by the insured may result in the insurer being able to claim a total or partial release from its obligation to provide cover whilst remaining entitled to the premium for the entire policy period.
4. Consequences of late notification
If no other term is agreed, the insured is required to notify the insurer within three days of either the occurrence of the insured event or of the date the insured becomes aware of the insured event. Usually policies provide for a longer period, between 30 and 90 days. Moreover, article 1915 of the Italian Civil code states that any delay in notifying the claim entitles insurers to deny cover only in the case of a wilful/intentional delay and entitles them to reduce the indemnity sought in the case of negligent delay only if a prejudice has been suffered due to the late notification.
The burden of proof is on the Insurers. Proving an intentional or at least a grossly negligent delay on the part of the insured is not easy, so this needs to be assessed very carefully.
5. Entitlement to bring a claim against an insurer (retitled)
The Italian system does not entitle the claimant to bring an action against the insurers. Only the insured can summon the insurers before Court and/or exercise any right arising from the policy. However, there is an exception for motor vehicle third-party liability insurance, and other specific cases, where the third party that has suffered damage can bring a claim directly against the insurer.
6. Entitlement to damages from an insurer for late payment of claim
The insured is entitled to seek reimbursement for the damages suffered because of the late payment of claims. This can happen, for example, if the insured has to pay a higher sum to the Claimant, due to interest arisen in the meantime. If such a delay is attributable to the insurer, the sum to be paid might also exceed the policy limits. In the case of a motor claim, which is the only case which allows the claimant to act directly against the insurer, the claimant is also entitled to ask the insurer for interest and/or for increased damages suffered because of the delay in paying the claim.
7. General rules concerning the limitation period for claims
Any claim deriving from the insurance contract is subject to a two-year limitation period starting either from the date the loss occurred or, for third-party liability insurance, from the date the third party’s claim is notified to the insured. Notification by the insured to the insurer of the third party’s claim stays the two-year limitation period, until the claim becomes due and payable or the third party’s claim against the insured (or the insurer for motor vehicle liability insurance) becomes time barred. In life policies, however, the limitation period is extended to ten years.
The right to the payment of premium instalments is subject to a one-year limitation period starting from the maturity of each instalment.
8. Policy triggers with respect to third-party liability insurance
In general, the occurrence of an insured event during the policy period is the default policy trigger in third-party liability insurance. However, it is possible and increasingly common in some insurance contracts, for the parties to agree to other policy triggers. This is the case of claims-made policies, allowed by the Italian legal system as long as the relevant clause is specifically signed by the parties. In claims-made policies a claim is usually defined by the policy as a request for damages, received by the Insured for the first time during the policy period. Sometimes it is not so easy to assess whether a request can be considered as a proper claim which triggers the policy. The Supreme Court has pointed out, in this regard, that any request which contains a brief description of the facts, explains the reasons of the insured’s liability and allows an estimation of the potential damage is to be considered as a claim under the policy.
9. Recoverability of defence costs
Pursuant to art. 1917 civil code the Insurer must cover the insured’s defence costs. The claim can then end positively for the insured and award him with defence costs which have to be paid by the losing party. In this case the decision itself is the enforceable instrument which allows the insured to recover these sums. If the insured does not cooperate in order to recover the aforementioned sums, the policy usually provides for a subrogation clause which allows the insurers to be subrogated in the rights to reimbursement of the insured up to the limits of the amounts paid. In this case the insured must sign all the necessary documents and shall do everything necessary to formalise and maintain this right, including the signature of those deeds which permit the Insurers to legally act in place of the insured.
10. Insurability of penalties and fines
Pursuant to art. 12 of the Italian Code of Private Insurance covering the risks of payment of administrative penalties is not allowed. Considering the personal, distressing and dissuasive nature of administrative penalties, insurances aimed at transferring said risk are denied. The reasoning behind this provision is that the author of the unlawful behaviour shall bear the consequences (i.e. penalties and fines) provided by the applicable law. Otherwise, the protection of the public interest set out by the law will be avoided.