ITALY Trends and Developments Contributed by: Giovanna Aucone and Debora Gobbo, FIVERS Studio Legale e Tributario
Regulatory Shifts and Consumer Safeguards in Italy’s Insurance Sector Consumer protection Consumer protection represents a key focus of cur- rent regulatory and supervisory developments in the Italian insurance market, with particular focus on the distribution of insurance-based investment products (IBIPs). At national level, IVASS (the Institute for the Supervi- sion of Insurance – Istituto per la Vigilanza sulle Assi - curazioni ) has strengthened its supervisory approach to conduct-of-business rules, with specific emphasis on product governance and value-for-money assess- ments. At EU level, this trend is further reinforced by the recent agreement reached by the European Com- mission, the European Parliament and the Council on the “Retail Investment Package” (RIS), aimed at enhancing retail investor protection across the Union. The package includes two legislative proposals: • a proposal for an Omnibus Directive amending the Markets in Financial Instruments Directive (MiFID), the Insurance Distribution Directive (IDD), Solvency II, the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive and Alternative Investment Fund Managers Directive (AIFMD); and • a proposal for a regulation amending the PRIIPs (Packaged Retail and Insurance-based Investment Products) Regulation. The Retail Investment Package is expected to reshape the regulatory framework applicable to the Insur- ance-Based Investment Products (IBIPs) and other retail investment products by introducing enhanced value-for-money requirements, reinforced safeguards to address conflicts of interest, and stricter rules on inducements. The RIS also envisages adjustments to the regime for treating retail clients as professional investors, a simplification of suitability requirements for recommendations relating to diversified, non-com- plex and cost-efficient products, as well as new provi- sions on financial literacy and financial influencers. Once implemented, the package will require insurance undertakings and intermediaries operating in Italy to further adapt their product governance arrangements,
distribution models and internal control systems, under the enhanced and co-ordinated supervisory
oversight of IVASS. NAT/CAT insurance
With the introduction of the obligation for Italian com- panies and companies with registered offices abroad and a permanent establishment in Italy, required to be entered in the register of companies, to take out insurance covering climate change and natural catas- trophe risks, the Italian legislator has addressed the existing coverage gaps and the low insurance pen- etration in non-life insurance coverage. Following the introduction of the insurance obligation, the market for NAT/CAT products in the Italian non-life insurance sector is growing and will continue to grow requesting new products that are tailored to the demands and needs and address the country-specific risks of high frequency and high severity of certain types of cata- strophic events (in particular, earthquakes and floods). Cross-selling/embedded insurance The increasing digitalisation of the insurance business and advanced insurtech solutions have opened new markets for insurance cross-selling and embedded insurance sales, where traditional insurers, insurtech, and non-insurance platforms work closely together to offer goods or services along with insurance services in a seamless customer journey. Whether or not the insurance market will achieve the potential growth depends on the capacity of the market players to offer tailor-made solutions. The success of such solutions requires a clear and granular structuring of the individ- ual target markets and transparent and easily accessi- ble offers as well as adequately trained “distributors”. The Italian Supervisory Authority is closely monitoring the developments regarding insurance cross-selling and embedded insurance. The Authority’s concerns regard, in particular, the aspects of transparency and clearness of costs and coverage exemptions and exclusions, the value-for-money of the insurance com- ponent offered, clarity of the terms of use for services or goods offered in addition to the insurance cover- age, and potential issues of product pushing caused by a lack of transparency in the sale processes.
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