On 26 May 2010 ISVAP, the Italian insurance regulator, following a two-stage consultation process which began a couple of years ago, published Regulation No 35 (the “Regulation”) on the disclosure duties of insurance undertakings (with particular reference to pre-contractual information to proposed insured) and the advertisement of insurance products.
The Regulation shall apply to undertakings operating in the Italian market both under the freedom of establishment as set out in Article 49 of the Treaty and under the freedom to provide cross border services as set out in Article 56 of the Treaty.
The main purpose of the Regulation, which will come into force on 1 December 2010, is to strengthen the transparency and clarity of documents used in the offer of insurance products. The Regulation does not apply to reinsurance.
For the purpose of consolidating the duties of transparency and disclosure for insurance undertakings, ISVAP has introduced the obligation to deliver to the policyholders an information booklet (“fascicolo informativo“) containing all general and special terms and conditions applicable to the insurance contract, the proposal form and a information notice (“nota informativa“).
In detail, the information booklet shall include:
- a cover;
- an information notice, which shall be drafted in accordance with the forms attached to the Regulation and provide more information to the insured than is required at present;
- a glossary;
- general terms and conditions; and
- the proposal form, if any.
With regards to the information notice, ISVAP has developed new and more detailed schemes which shall include specific “warnings” concerning inter alia exclusions, limits and deductibles of the cover making references to each article of the terms and conditions of policy. For this reason it will be necessary to prepare an information notice for each single product which contains the information requested by ISVAP and the specific references to the related terms and conditions.
The Regulation includes prescribed forms of pre-contract information notice which are dependent upon class of business. These are:
- annex 6 (non-life insurance);
- annex 7 (accident insurance );
- annex 8 (health insurance).
The purpose of the Information Notice is to enable the proposed insured to “come to a reasoned conclusion concerning contractual rights and obligations”, as set forth in article 185 of the Code of Private Insurance Code(the “Code”).
Since these forms are standard forms they cannot cover all specific aspects of all insurance contracts. Accordingly, each undertaking shall need to supplement them with additional clauses to ensure that the information notice meets the Regulation’s requirements.
Particular attention shall be given to those provisions regarding “policyholders’ and insureds’ burdens and obligations, nullity, time-limits, exclusions, suspension and limitation of the guarantee, subrogation” which shall be highlighted in accordance to Section 166 of the Code, as implemented by the Regulation.
Moreover, the Regulation requires that the terms and conditions specify the policyholders’ premium payment obligations and highlight the risk that false or incomplete pre-contractual statements or representations by the policyholder may prejudice their right to performance of the contract.
In all cases, pursuant to Section 166 of the Code, the obligation to highlight the clauses mentioned above regarding the information notice shall also apply to any other part of the information booklet including the terms and conditions of policy and any other documents delivered to the policyholder prior to on or after inception of the policy.
Finally, a declaration of the contracting party confirming delivery of the information booklet shall be always included into the policy pursuant to Section 32.2 of the Regulation.
The obligations of disclosing the Information Booklet shall apply to all new insurance contracts concluded on or after 1 December 2010.