Mr Nicolò d’Elia
Partner

Nicolò d’Elia is a Partner in the CMS Dispute Resolution & Insurance team and commenced his collaboration with CMS since 2013.

Nicolò has been seconded to some major insurance companies in London as well as headed up for several years the Italian Desk at the CMS London office.

Nicolò is an experienced litigator with a remarkable track record in the commercial, corporate, finance and insurance law areas.

Nicolò is highly specialized in insurance law from a contentious point of view advising insurance companies, brokers, MGAs, TPAs on a wide range of claims (e.g. D&O, PI, PO, MedMal, G.L., cyber, etc.) as well as from a non-contentious point of view advising clients on regulatory matters, corporate issues (e.g. establishment of branch), in negotiating, drafting or localizing contracts (e.g. distribution agreements) and insurance products. He also represents and assists clients before IVASS (the Italian Insurance Regulator) for alleged infringements of insurance law and regulations.

He also assists clients in placing W&I policies as well as in handling cyber-attacks and related legal issues.

Mr Marianna Scardia
Senior Associate

Marianna Scardia is a Senior Associate in the Insurance and Dispute Resolution department at CMS, where she has been collaborating since 2021.

She specializes in insurance law, focusing on drafting and negotiating various insurance contracts. Marianna supports clients in designing and structuring innovative insurance products across diverse risk classes, including D&O, professional liability, medical liability, cyber risks, and more. She provides regulatory guidance, and advises on corporate matters such as branch openings, company incorporation, and general corporate obligations.

Her expertise also includes assisting clients in judicial and arbitration disputes, including cases with international elements, as well as managing complex and cross-border insurance claims.

Additionally, she conducts training sessions, seminars, and webinars for insurance clients and contributes to the industry by preparing newsletters and publications on insurance law topics. Marianna combines technical expertise with a client-focused approach to deliver comprehensive legal support.

Regulatory insights in the Insurance Sector: challenges and compliance in Italy

1. The Regulatory framework in Italy

In Italy, insurance, reinsurance, and insurance and reinsurance intermediation activities are regulated sectors that can only be conducted by legal entities meeting specific requirements and obtaining prior authorization from the Italian Institute for the Supervision of Insurance (IVASS). IVASS plays a key role in overseeing these sectors, ensuring that companies and intermediaries comply with legal and regulatory frameworks. It also monitors their financial stability to protect policyholders and maintain market integrity. In addition, IVASS is dedicated to safeguarding consumer rights by promoting transparency and fairness in insurance contracts and addressing complaints. Furthermore, it develops and enforces regulations that implement the principles outlined in the Codice delle Assicurazioni Private (Private Insurance Code), which serves as the primary legislative framework for insurance in Italy. IVASS also collaborates with European and international supervisory bodies to align Italian practices with global standards, ensuring the stability and proper functioning of the market.

In the first section of this article, we offer a high-level overview of the key requirements that businesses and insurance intermediaries must fulfill to operate in the fields of insurance, reinsurance, or insurance intermediation in Italy.

In the second section, we focus on some of the most recurring issues and exceptions in the handling of insurance claims in Italy.

2. Insurance, reinsurance and insurance interme­diation in Italy

2.1. How to conduct insurance activities in Italy

The Italian legislator, in accordance with European regulations, has defined the conditions for carrying out insurance activities in Italy, distinguishing between cases where these activities are conducted by a company with its legal headquarters in Italy, another EU member State, or a foreign country. It should be premises that insurance companies are limited to carrying out life or non-life insurance activities, with some operations prohibited (for example, tontines, associations of underwriters, insurance for administrative sanctions and insurance for the payment of ransoms in case of kidnapping). Any breach of these prohibitions will make the contract void.

For an insurance company with its legal headquarters in Italy, the company must comply with specific legal and financial requirements. These include registering as a particular type of company, meeting minimum capital requirements, and establishing a head office in Italy. Additionally, the company must fulfill all conditions set by applicable Italian laws and regulations and obtain authorization from IVASS.

For an insurance company from the European Economic Area (EEA) to operate in Italy, it must notify its home country regulator of its intention to conduct business within Italy, under one of two regimes: the right of establishment or the freedom of services.

Under the right of establishment, an EEA insurance company must set up a branch in Italy by establishing an office or a permanent presence, such as an independent person with permanent authority to act on behalf of the company. This regime allows the company to have a physical presence in the country.

Under the freedom of services regime, a company can carry out insurance activities in Italy without establishing a branch or permanent presence. The distinction between this regime and the right of establishment lies in the temporary nature of the operations. If an insurance company conducts business in Italy for an indefinite period through a permanent presence, it will typically be considered under the right of establishment rather than the freedom of services.

To begin operations in Italy, a foreign EEA insurer must first notify its home country regulator of its intent to operate and specify the class of business it plans to engage in. The home country regulator must then inform IVASS, the Italian Institute for the Supervision of Insurance. If IVASS does not respond within 30 days of receiving this information, the silence is considered acceptance, allowing the insurer to begin operations in Italy.

For insurers operating under the right of establishment, the EEA company must wait for IVASS to confirm the general provisions to ensure the insurer complies with Italy’s regulatory standards. IVASS is required to provide this confirmation within 30 days of receiving the notification. If IVASS does not respond within that period, the insurer may proceed with its operations in Italy.

For operations under the freedom of services, the EEA insurer must notify IVASS through its home country regulator, providing all required information. This includes a detailed program outlining the establishments from which the company plans to operate, the Member States where it intends to expand, the nature of the risks and obligations, and any other information IVASS may request. Once IVASS acknowledges receipt of the notification, or if no response is received within 30 days, the insurer is permitted to begin its operations in Italy.

For a non-EEA insurance company to operate in Italy, it must first obtain prior authorization from IVASS. Unlike EEA insurance companies, which can operate under the freedom of services regime, non-EEA insurers are not permitted to conduct business in Italy without establishing a physical presence. This means that they must set up a branch office in the country. Additionally, the company must appoint a general representative who is a resident in Italy and has the authority to act on its behalf. This requirement ensures that the company complies with local regulations and is properly represented within the Italian market.

2.2. How to conduct re-insurance activities in Italy

A company operating as a reinsurer must focus solely on reinsurance business and related or ancillary activities and must be authorized by IVASS. This authorization will apply not only within the territory of the Italian Republic but also across other Member States, in accordance with the rules of that State under the right of establishment or the freedom to provide services, as well as in Third States.

IVASS will grant authorization if the following conditions are met: the undertaking must be a joint-stock company; general direction and administrative offices must be in Italy; it must met the minimum capital requirements and minimum solvency requirements; the undertaking must submit a scheme of operations describing the kind of reinsurance arrangements which it proposes to make; it must met good repute requirements; it must grant compliance with the system of corporate governance; the natural people charged with the administration, management and control functions and those who are responsible for the key functions must met the professional, good repute and independence requirements; companies must not have any relationship capable to obstacle IVASS’ supervisory role.

Pursuant to the Private Insurance Code, the establishment of companies within the Italian Republic with the exclusive purpose of conducting reinsurance business abroad is prohibited.

However, the pursuit of business in the territory of the Italian Republic by special purpose vehicles with head office in the territory of the Italian Republic is subject to IVASS’ prior authorization.

In addition, IVASS has an obligation to notify EIOPA and the supervisory authority of the host Member State when the scheme of operations of a home company indicates that a relevant part of its’ activities will be based on the right of establishment or the freedom to provide services in another Member State, and that those activities are likely to be of relevance with respect to the host Member State’s market.

2.3. How to conduct insurance distribution activities in Italy

Italy has implemented the EU Insurance Distribution Directive (2016/97) by Legislative Decree no. 68 of 2018, which amended and supplemented the Code of Private Insurance. The relevant regulation is also provided for by IVASS Regulation no. 40 of August 2, 2018.

Pursuant to the Private Insurance Code, it is defined as an insurance (or reinsurance) intermediary “any natural or legal person, other than an insurance or reinsurance undertaking or their employees and other than an ancillary insurance intermediary, who, for remuneration, takes up or pursues the activity of insurance (or reinsurance) distribution”. Only intermediaries enrolled in a special register held by the IVASS (Registro Unico degli Intermediari or “RUI”) or in the Annex Register for intermediaries which have a registered office in other EU states are authorized to perform insurance and reinsurance mediation in Italy.

The RUI is subdivided into several sections, which refer to different categories of intermediaries:

1. agents (letter A) which operate in the name of one or more insurance and reinsurance companies;
2. brokers (letter B) which operate on behalf of an insured and has no power of representation of insurance or reinsurance companies.;
3. direct producers (letter C) which are natural people who, even as a secondary activity to their main job, carry out insurance brokerage in the life, accident, and health insurance sectors on behalf of and under the full responsibility of an insurance company, and who work exclusively for that company without any obligations in terms of time or results;
4. banks, financial intermediaries, payment institutions, stock brokerage firms and Poste Italiane spa (letter D);
5. the so called “external collaborators” (letter E) which are those involved in distribution activities outside the premises of intermediaries registered in letter A, B, D and F of the RUI;
6. insurance intermediaries operating on an ancillary basis under the mandate of one or more insurance companies (letter F).

Letter A and B: agents and brokers are natural people or companies that could operate in the insurance sector once meeting the RUI’s requirements. These are indicated under article 110 of the Private Insurance Code which requests that natural people must have civil rights, must not have been declared insolvent, IVASS must assess their professional and technical capacity, and they must take on a professional insurance policy. In addition, article 10 of the Regulation requests to agents and brokers registered in the RUI not to have a relationship that could jeopardize IVASS’ supervisory role. The requirements for companies are listed under article 112 of the Private Insurance Code: companies must have their registered office in the Italian territory, be solvent, they must entrust the responsibility over the distribution activity to at least one natural person registered in the RUI (compliant with all the requirements stated above, indicated in the subscription form to the RUI), they must take on a professional insurance policy and they must have the capital limit imposed by IVASS. Also in this case, article 13 of the Regulation requests that companies must not have any relationship capable to obstacle IVASS’ supervisory role.

Letter C: As described above, the requirements for a natural person’s registration in the RUI are listed under article 110 of the Private Insurance Code. In addition, direct producers must not be public employees with a

full-time contract or a part-time one exceeding half of full-time working hours, and they must have appropriate professional training in brokerage.

Letter D: they operate in the insurance industry entrusting the responsibility of insurance distribution to one or more natural people falling under the categories indicated above. Furthermore, the entities registered under letter D must not be controlled over 10% of their share capital and they must indicate in the register form the shareholders’ names. In any case, they must avoid any relationship that could obstacle the IVASS’ supervisory role.

Letter E: natural people must comply with the provisions stated above for direct producers under letter C, excluding the mandatory registration in the RUI which is not requested in this case (article 22 point 3 of the Regulation). The responsibility to assess the compliance of the intermediaries with the provisions above is on the intermediary that requests the RUI’s subscription under letter E. On the other hand, in case of companies, they should meet the requisites listed under article 112 of the Private Insurance Code, they must not be controlled by public entities or acts directly or indirectly by another company. In addition, they must entrust the responsibility over the distribution activity only to natural people registered under letter E.

Letter F: such intermediaries includes natural people or companies (compliant with the requisites described under letter A, B and D) that operate as insurance intermediaries on an ancillary basis on behalf of one or more insurance companies.

The legislator has outlined the conditions for intermediaries to operate in the European territory as follows:

– by an intermediary with registered office in Italy: an intermediary must meet all the conditions set by the Regulation, must be authorized by IVASS and registered in the RUI;

– by intermediaries which operate in other Member States: an intermediary must notify its home country regulator of its intention to conduct business in Italy under one of two regimes: the right of establishment, or freedom of services. The home country authority must communicate it to IVASS. The intermediary must be registered in the Annex Register indicating the following information: fiscal data; regime of activity carried out; (under the right of establishment) secondary place of business in the territory of the Republic and the name of the person responsible; supervisory authority of the home country; date of commencement of the activity in the Italian territory; date of the measure, if any, adopted by IVASS; address of the website where the home country’s intermediary register can be consulted.

3. How to deal with a claim in Italy

Another aspect that may be of interest to insurance companies already operating in the Italian market or looking to enter it concerns the management of insurance claims and the rules governing this activity. The core rules on claims are outlined in the Italian Civil Code, with the following being particularly relevant

– claim notice: the insured persons must report the claim to the insurer within three days of its occurrence (but policies generally provide for longer deadlines). If they willfully fail to fulfil this obligation, they lose the right to insurance benefits; otherwise, if the late notification is not willful, the insurer is entitled to reduce the indemnity in proportion to the prejudice suffered;

– obligation to reduce damage: the insured persons shall do everything possible to reduce or avoid the loss resulting from a claim; the costs thereof shall be borne by the insurer;

– right of subrogation of the insurer: after having paid the indemnity to the insured, the insurer is entitled to pursue the party that caused the loss to the insured to recover the indemnity paid;

– duty of fair presentation: if the policyholder fails to disclose every circumstance material to the risk before signing the contract, the insurer is entitled to annul or terminate the contract. Moreover, in case of claim, if the non-disclosure was made with malice or gross negligence, the insured loses the right to the insurance benefits, while in the other cases the insurer is entitled to reduce the indemnity due.

– direct action against insurers: only the insured can bring legal action against the insurer, with some exceptions in motor vehicle third-party liability, hunting insurance and in case of medical liability;

– limitation period: claims arising from insurance contracts are generally subject to a two-year limitation period from the date of the loss or notification of a third-party claim.

– defense costs: covered up to 25% of the policy limit.