Insurance Law in Italy

In light of many Italian businesses being underinsured in many sectors, the Italian insurance market is considered to be continuously growing. Our legal advice based on the necessary competence and experience concerns all main players in the insurance sector:
• Insurance companies, among those Italian insurance companies according to the requirements of the Italian law and of the Italian regulatory office (Institute for Insurance Supervision, thereafter IVASS), insurance companies of the European Economic Area (EEA) and non-EEA insurance companies with permission by IVASS (thereafter called “Insurer”),
• Policyholders/ insured persons/ individuals (thereafter called “Insured”) and
• Intermediaries like insurance agents, brokers, banks.

Supervision and authorisation by the IVASS
The IVASS, a department of the Bank of Italy, is the competent independent Italian supervisory authority for insurance companies and intermediaries and therefore the main institution in this field. As a public entity endowed with legal personality under public law it has the power to enforce precautionary measures and sanctions, to adopt the necessary regulations as well as to manage registers aiming at the protection of policyholders, insured and beneficiaries and the distribution of insurance products.
Foreign Insurers with head offices in Italy or in an EEA country can undertake insurance activities in Italy by operating under the Freedom of Establishment or Service regime after authorisation through an order by the IVASS to be then registered in the companies register; or by an acknowledgement of the formal communication made by the company and confirmation of the supervisory authority/ regulator of their home country. Non-EEA insurance companies can undertake activity in Italy only by opening a local branch. For the application, the companies must provide the necessary documents and information in the Italian language (cf. Italian Legislative Decree no. 209 of 7 September 2005; ISVAP Regulation no. 10 of 2 January 2008).

Legal framework – sources of law
The applicable legal and regulatory framework regarding insurance law consists of both primary legislation and secondary legislation leading to a standardised system of stringent conduct rules.
The first includes various provisions of the Italian Civil Code, in particular Title XX: On Insurance – “Dell’assicurazione” in Articles 1882 et seq., setting out general principles for insurance contracts and obligations. Whereas – in addition to several sector-specific Legislative Decrees (such as No. 58/1998 Consolidated Finance Act, No. 74/2015) – the Italian Private Insurance Code, Legislative Decree No. 209/2005, provides a legal frame for insurance activities and it has been amended regularly. Article 165 of the Private Insurance Code sets out the relationship between the two regulations: unless otherwise provided by the provisions of this code, insurance, co-insurance and reinsurance contracts shall remain subject to the provisions of the Civil Code.
Secondary legislation consists of regulations regarding the IVASS as well as other regulators.
Precedents of case law are not binding, meaning that the same issue may be treated differently among courts.

Insurance contract
Usually, the Insurer and the Insured enter into an insurance contract. This is an agreement whereby insurance products are sold, meaning the Insurer receives an insurance premium from the Insured in return for providing the Insured with specific insurance cover in respect of a specific risk. The specific risk may concern e.g. road traffic or legal protection policies – the regulation of which we, as Italian lawyers, have been guiding and supporting successfully many times.
   Content
Articles 1882 and 1917 of the Italian Civil Code specify and define (in part) three types of insurance contracts: Against damages, for life insurance contracts for Italian citizen and liability insurance contracts; also there are several provisions for reinsurance contracts (cf. Articles 1928 to 1931 of the Italian Civil Code). In addition to the legal framework already described, the general principle of contractual autonomy under Article 1322 of the Italian Civil Code applies to insurance contracts. Accordingly, the parties are free to determine the content of their agreement within the limits imposed by law and by corporate rules. In case the policy wording causes disputes between the contracting parties, the contract is interpreted with the general rules of interpretation provided for in the Civil Code (cf. Articles 1362 to 1371 of the Italian Civil Code) for all contracts, relating to good faith and the will of the parties.
   Form
While the validity of an insurance contract does not depend on the written form, there must be written proof of its existence (Article 1888 of the Italian Civil Code). The insurance contract itself, as well as the pre-contractual and contractual documents, must be clear and comprehensive. Clauses providing for the forfeiture, nullity or limitation of the guarantees or obligations of the Insured must be duly highlighted so that they are easily recognisable (Article 166, Private Insurance Code; Article 4, Regulation 41/2018; EU Insurance Distribution Directive).

Obligations of the Insured: Disclosure and notification of an insured event
At the centre of every insurance contract is the covered risk, that must be indicated and explained precisely and clearly. Therefore, the Insured is obliged to disclose all necessary and relevant information to the Insurer before and during the period of the contract. If the Insured fails to do so, giving inaccurate declarations concerning circumstances that the Insurer should have known, in order to give its consent to enter the insurance contract and there is a claim from the insured, the Insurer may be partially or fully released from its duty to provide coverage according to Article 1892 of the Italian Civil Code. In the case of cancellation, however, the claim for payment of the insurance premium may continue to exist. If there is neither intent nor gross negligence, the said inaccurate declarations shall not cause the contract to be cancelled, but according to Article 1893 of the Italian Civil Code the Insurer may terminate the contract by means of a formal declaration. This also means that the Insurer must be informed of any change in the contractually covered risk. While a lower risk than the one agreed upon may entitle the Insured to a lower premium, unless the Insurer withdraws from the contract, the Insurer acquires a right of withdrawal in the event of failure to inform the Insured of an increase in risk.
The Insured is also obliged to inform the Insurer of the occurrence of an insured event within a period of time agreed in the policy. According to Article 1913 of the Italian Civil Code, the damage must be reported within three days. The period begins either (a) when the insured event occurs or (b) when the Insured becomes aware of the insured event. According to Article 1915 of the Italian Civil Code, late notification of a claim may lead to a refusal of insurance coverage in the case of deliberate behaviour and to a reduction of the indemnity in the case of negligence only if damage has also been caused as a result. The Insurer bears the burden of proof.

Rights of the Insured: Claims against an Insurer / for compensation against the Insurer for late payment of the claim
Under Italian law, the injured party itself cannot, in principle, bring a claim directly against the Insurer and enforce it in court. Usually, the damages party requests damages to the party that caused the damage and this latter can sue its insurance company to be held harmless. However, the Insured can do so by exercising its rights under the insurance contract: Subsequently to the traditional insurance mechanism provided for in the Italian Civil Code, the Insured can claim financial rights for a damage under the conditions agreed upon. The Insurer provides coverage for any damaging event that occurs during the contract policy period, in general regardless of when the claim is made. But also other triggers of the insurance can be agreed upon in insurance contracts. Such – permitted under Italian law – are e.g. claims-made policies, that have to be expressly signed by the parties. A claims-made policy refers to an insurance policy that provides coverage when a claim is made against it, regardless of when the claim event occurred.
Exceptionally, for motor third party liability insurance claims in case of motor accidents and other special cases, the injured party may take direct action against the Insurer (cf. Article 149 of the Private Insurance Code). If the Insurer is late in the payment for claims, the Insured is able to seek reimbursement for the suffered damages.
The party seeking to enforce its right in court has the burden of proof pursuant to Article 2697 of the Italian Civil Code; accordingly, the Insured must prove that the insured event occurred, the premium was paid and the insurance contract exists.

Limitation period
A distinction is made with regard to the limitation period according to the type of insurance. Under life insurance, claims arising from an insurance contract concluded between the parties expire only after ten years. In principle, however, claims arising from an insurance contract are subject to a two-year limitation period. This period begins (a) on the date of the occurrence of the loss or (b) – in the case of liability insurance – on the date of notification of the third party’s claim to the policyholder.

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This is just a brief overview of insurance law in Italy. Petrocchi & Partners has been assisting, over the last few decades, several insurance companies, especially foreign one, to deal with claims in Italy. We are at your disposal for any clarification you may need on this field.