IVASS clarifies Italian rules governing insurance distribution

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On December 23, 2021, IVASS published a series of clarifications concerning a number of Italian provisions governing the insurance distribution activity.

Following a series of meetings held between the Italian Insurance Supervisory Authority (‘IVASS“) and market players (insurance companies and distributors, main professional associations of insurance product distributors and one of the main Italian consumer associations) and pending a broader revision of the IVASS regulation n ° 40/2018 on insurance and reinsurance distribution (“By-law No. 40“), on December 23, 2021, IVASS released a new set of clarifications in response to some of the comments raised by the market.

In particular, the clarifications concern the following points:

  • Intermediation through distance communication techniques and recording of telephone conversations: also in the light of the current health emergency, the IVASS has initiated a broader reflection on the rules governing telephone recordings and electronic communications, by evaluating possible future regulatory interventions which will be the subject of a public consultation. Pending a possible regulatory review, IVASS clarified that the obligation to record telephone conversations or electronic communications leading to the conclusion of insurance contracts provided for in article 83 of regulation 40/2018 only applies in cases where the distribution of insurance policies is organized to be carried out entirely by means of remote communication, and not in cases where, for the organization of the intermediary itself, the stages of the promotion and placement process normally takes place in person. The registration requirements for the distribution of insurance-based investment products (“IBIP”) Are also confirmed, including vis-à-vis potential customers (ie also in the event that the telephone conversation and electronic communications do not lead to the effective conclusion of the insurance contract). In addition, IVASS clarified that in the event of non-conclusion of the insurance contract, the starting date for calculating the retention period for records and communications (which will last for the duration of the contractual relationship or any longer period required by law and, in any event, at least five years after the end of the relationship) must be the date of the last registration or last electronic communication.
  • Distribution organization, management and control policies vis-à-vis brokers: with regard to the obligation provided for by Regulation No. 40 which requires insurance companies to put in place internal policies and procedures in order to ensure compliance with professional and organizational requirements, including those of good repute, planned for the exercise of distribution activities carried out directly and through the intermediary of distribution networks, IVASS specified that the monitoring actions carried out by insurance companies in order to verify the proper implementation of policies and procedures adopted and the related findings must take into account the different nature of the relationships that distribution networks establish with the same undertakings. Therefore, insurance companies are not allowed to introduce ubiquitous procedures (such as, for example, inspections) which are incompatible with the independence and autonomy of brokers. The control of the requirements of professionalism and good repute can therefore be based on direct support by brokers by issuing self-certified statements to insurance companies. in accordance with Presidential Decree no. 445 of 2000 and with the best standards of practice on the market.
  • Assessment of the control of distribution networks for the year 2021: the report on the control of distribution networks for the 2021 financial year will be produced by the compliance function insurance companies and, pending the issue by IVASS of the measure setting the precise content, modalities and schedule for sending the report, IVASS Measure no. 2743 of October 27, 2009 remain applicable (available here in Italian only). The report must be sent within 60 (sixty) days of the end of the calendar year.
  • Delivery of pre-contractual documentation digitally: the pre-contractual documentation of insurance products provided for by IVASS regulation n ° 41/2018 can be delivered digitally in accordance with the provisions of the same regulation which provides that the obligations to issue pre-contractual documentation must be fulfilled on paper or, with the consent of the contracting party, on another durable medium. The contracting party may choose the mode of communication also with regard to subsequent contracts concluded with the same company, without prejudice to the possibility of modifying this choice at any time. The distributor keeps a record of the choice made by the contractor and informs him of the possibility of modifying the choice made at any time.
  • Certain cases in which the insurance company may terminate the relationship with the insurance intermediary: as a result of the product surveillance and review activity referred to in Article 7 of Commission Delegated Regulation (EU) 2017/2358, manufacturers are required to adopt appropriate and corrective measures which include, in the most serious cases, the end of the distribution relationship with the intermediary. IVASS clarified that such “more serious cases” must be such as to justify the measure of termination of the relationship and include, by way of example, repeated breaches through the rules governing the distribution of the product to the target market and, more generally, repeated breaches of the rules of conduct as provided for by IVASS regulation 45/2020 relating to product monitoring and governance requirements.
  • Distribution of products from EU insurance companies: in accordance with article 11, paragraph 6, of IVASS regulation n ° 45/2020 on the requirements for the supervision and governance of products, insurance intermediaries who distribute products marketed by insurance companies of the The EU operating in Italy with the right of establishment or the freedom to provide services adopt all the necessary measures to ensure that the insurance products are distributed in accordance with the applicable IVASS and EU regulations and meet the needs, characteristics and objectives of the target market real identified. IVASS clarified that the Italian rules referred to in this provision are those that apply to foreign intermediaries as indicated in the list of provisions of general interest published by IVASS (available here in English). IVASS clarified that the ban on distribution to customers who fall within the negative target market applies if the manufacturer, authorized to operate in Italy, has identified groups of customers whose needs, characteristics and objectives are not compatible with the insurance product.
  • Communication of actual target market and negative target market via the intermediary to the insurance company: in the event that the actual target market and the actual negative target market for each insurance product are the same as those identified by the manufacturer, insurance intermediaries may refrain from notifying the insurance company before distribution, as generally required by Article 12, paragraph 5, of IVASS Regulation No 45/2020. In all cases, the intermediary informs the insurance company without delay if, following the results of its assessments, the real target market and the real negative target market no longer coincide with those identified by the company.
  • Communications to IVASS concerning holdings and close ties: IVASS clarified that in the absence of amendments to the primary legislation (article 109 (4-sexies) of the Italian Insurance Code), it is not possible by regulation to eliminate the obligation for insurance intermediaries to make the relevant communications to IVASS concerning holdings and close ties, also in cases where the intermediary does not consider that there is an obstacle to the exercise of supervisory powers by the ‘IVASS. The cases of “close links” relevant for the purposes of disclosure to IVASS fall under the Italian Insurance Code, and reference should be made in this regard to the clarifications on the transmission to IVASS of information relating to close links and Relevant participations already published on the IVASS website (available here in Italian only).
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