Italy

Donati and Volpe Putzolu (2014), p. 249.

It should be pointed out that the model of ‘intermediate selling’ developed over the years involved a clear distinction and lack of communication between insurance companies, on the one side, and their clients, on the other; the possibility for insurance companies to acquire a true understanding of their clients’ needs was thus inevitably restricted, weakening consumer confidence.

See Volpe Putzolu, quoted, 315.

Volpe Putzolu, quoted, 20.

The classification by “class of insurance” was introduced by the First Directive 79/267/EEC, concerning admission to the direct life assurance activity. Alpa (2006), p. 77 ff. It analyses the financial structure of linked policies. E. Piras, Polizze “index linked” collegate ad obbligazioni Lehman Brothers, in Banca borsa tit. cred., 2012, II, 76 ff.; D. Cerini (2012), Insurance law in Italy, International Encyclopoedia of Laws, Kluwer.

Art. 1, para. 1, lett. w-bis, of the TUF defines “financial products issued by insurance companies”, these meaning “policies and operations referred to in the life sectors III and V set out in Article 2, subsection 1, of the Legislative Decree no. 209 dated 7th September 2005, with the exclusion of individual pension scheme according to article 13, subsection 1, letter b), of Legislative Decree no. 252 of 5th September 2005”.

Consob Regulation no. 16190 of 29 October 2007.

On this matter, it is interesting that, in December 2007, a consultation was commenced by IVASS and Consob for a joint communication aimed at governing the distribution of these policies; the document draft submitted for market evaluation also included obligations regarding pre-contractual information and information during the contract, reporting and advertising, and specific rules regarding client knowledge and the evaluation of product suitability. However, such consultation did not lead to the issue of the final text of the communication by the Authorities.

On this matter, it is interesting that, in December 2007, a consultation was commenced by IVASS and Consob for a joint communication aimed at governing the distribution of said policies; the document draft submitted for market evaluation also included obligations regarding pre-contractual information and information during the contract, reporting and advertising, and specific rules regarding client knowledge and the evaluation of product suitability. However, such consultation did not lead to the issue of the final text of the communication by the Authorities.

As for the reconstruction of the legislative measure, it should be recalled that in the course of the overall review of the financial market regulations—which then ended up in MiFID II—the EU legislator felt the need to regulate the cases regarding “Investments that involve contracts of insurance that are often made available to customers as potential alternatives or substitutes to financial instruments” (see recital 87 of MiFID II) on the basis of the consideration that said investments were more and more popular among retail clients, who thus needed greater protection from potential distortions linked to the absence of any harmonisation of the treatment of insurance and financial products. On this matter, art. 91 of MiFID II—while awaiting the future union legislation on insurance intermediary and insurance company activities (which arrived in January 2016 with the IDD)—introduced chapter III-bis in Directive 2002/92/EC on insurance mediation (so-called “IMD”), which was specifically dedicated to insurance investment products. The reform of the MiFID II centred around two essential elements: firstly, the introduction of the innovative (for the EU legislation) category of “insurance-based investment product” defined as “an insurance product which offers a maturity or surrender value and where that maturity or surrender value is wholly or partially exposed, directly or indirectly, to market fluctuations” [The definition was then later included into Regulation (EU) no. 1286/2014 (so-called “PRIIPs”) on key information documents for packaged retail and insurance-based investment products]. It is clear that the EU definition of insurance-based investment products is inevitably wider and general, with particular reference to the exposure of the maturity or surrender value “wholly or partially, directly or indirectly, to market fluctuations” and therefore subject to interpretation; on this matter, it will be interesting to understand which products on the market must actually come under this category, since the MiFID II does not provide for inclusions, but only exclusions for certain non-life insurance products, life insurance contracts with services due only in the event of death or accident and pension schemes. The new category of insurance-based investment products thus appears to significantly expand the definition currently given by article 83 of the Intermediaries’ Regulations of “insurance-based financial product” (which, as mentioned, includes the policies and operations of life sectors III and V): class I policies with separate management and “multi-sector” policies, so far excluded according to Italian law, can fall within the regulations established for insurance-based investment products. A de facto distinction between life policies and damage policies might therefore arise in a more distinct way, which would undermine in the future, from a classification point of view, the separation of policies into “sectors”. However, since the aforesaid MiFID II provisions have been repealed as a result of the enactment of IDD—which includes a more detailed regulation of the topic, starting from the new definition (and exemptions) of insurance-based investment products already given by MiFID II (and the PRIIPS regulations)—it is appropriate to recall the important aspects introduced by this Directive with specific emphasis on insurance-based products.

Regulation 35 at present stage when the present paper has been delivered to the Editor, is under review by IVASS see Consultation Document 3/2017 which will implement the new set of pre-contractual documents information for non life insurance product.

The Court of Cassation has endorsed this approach, holding in particular that the primary duties of insurers and brokers “arise from articles 1175, 1337 and 1375 civil code; and that violation thereof amounts to negligence, pursuant to art. 1176, para. 2, civil code.” Civil Court of Cassation 24 April 2015, n. 8412. In this case, the Court of Cassation discussed how the general duties of conduct according to good faith and fairness, set out in articles 1175, 1337 and 1375 Civil Code, had an impact on the conduct of professionals in an insurance contract. Following an interesting reasoning, the Court held that the primary duties of the insurer and his brokers or promoters included those of providing “thorough, clear and complete information and of offering the contracting party insurance policies that are actually useful for the insured party’s needs”, i.e. “consistent with the profile of risk or pension needs” manifested thereby. These duties, continued the Court, “are general in nature” and “prevail over regulatory standards, such as the supervisory authority’s rules and, a fortiori, over the indications given in documents with no regulatory power, such as memorandum from the supervisory authority”.

The section is called General Criteria in the financial markets regulations. On this matter see Alpa and Gaggero (1996), p. 65. In relation to the intersection between insurance regulation and finacial regulation see P. Marano, The ‘Mifidization’: The Sunset of Life Insurance in the EU Regulation on Insurance? (August 31, 2016). Liber Amicorum for Professor Ioannis Rokas, 2016. Available at SSRN: https://​ssrn.​com/​abstract=​2832952.

Art. 183 Insurance Code:

needs and act in such a manner that they are always appropriately informed (Omissis).

This differentiation could be reduced in the light of IDD implementation and product governance discipline. Chapter V of IDD entitled “Information requirements and conduct of business rules” includes art. 25 that specifically applies to the product and oversight arrangements. For an overview of the impact of POG discipline see Velliscig (2018).

See in this respect Civil Cassation, 12 October 1998, no. 10086.

The first ruling where this trend can be found is Civil Cassation, 20 November 1990, no. 11206; likewise Civil Cassation, 4 April 1991, no. 3501; Civil Cassation, 17 May 2004, no. 9342, Civil Cassation, 24 November 2003, no. 17840; Civil Cassation, 19 January 2001, no. 784.

See Bugiolacchi (2009), p. 1598; Nitti (2010), pp. 527–603.

See S. Rodotà, Diligenza (diritto civile), in EdD, 1962; L. Rovelli, Correttezza, in Dir. Civ., 1989; A. Di Majo, entry obbligazione (teoria generale), in EGI, 1990.

On this point M. Bianca, in Diritto civile, book IV, L’obbligazione, 1990, p. 90; P. Perlingieri, Recenti prospettive nel diritto delle obbligazioni, in Vita not., 1976.

As for the transparency of investment services and for a short discussion of banking transparency, please refer to C. Rabitti Bedogni, Commentary to art. 21, in Il testo unico della intermediazione finanziaria, Commentary to Leg. Decree 24 February 1998, n. 58, 1998, p. 175; L. Gaffuri, I Servizi e le attività di investimento, Milan, 2010.

In relation to critical aspects of conflict of interest as means of disclosure see Kochenburger et al. (2010), p. 21.

It is to point out that in the insurance sector conflict of interest was first addressed by IVASS in its Circular 551/2005, than abrogate by Regulation n. 35/2010. The regulation of conflict of interest will be revised in light of the implementation of IDD.

Kochenburger et al. (2010), p. 21.

Court of Milan, 25 July 2005; Court of Rome 13 June 2005; more recently Court of Appeal of Milan, 25 January 2008, in BBTC, 2010, 2, II, p. 150 with note by Houben; Court of Milan, 19 April 2011, in BBTC, 2011, 6, II, p. 748 with note by Girino; Court of Milan, sect. VI, 12 November 2013.

A further consequence of the reclassification of the contract is the non-applicability of article 1923 Civil Code on the prohibition of executive or precautionary actions. Several rulings have confirmed the non-applicability of art. 1923 civil code to linked policies. See, for example, Court of Cagliari, 2 November 2010, in Riv. giur. sarda, 2011, I, 387 ff. with note by Landini, who stated that contracts stipulated by insurance companies, where not entailing the demographic risk, cannot be classified as pure insurance contracts, so that they can be encompassed in the bankrupt’s estate. See also Court of Parma, 10 August 2010, in Assicurazioni, 2010, 781 ff. with note by de Francesco; in Giur. it., 2011, 1560 s., with note by Gobio Casali; in Nuova giur. civ. comm., 2011, I, 189 s., with note by Palmentola; in Società, 2011, 55 ff. with note by Guffanti; according to whom the ban on executive and precautionary actions provided for in art. 1923 Civil Code does not apply to index linked and unit linked life policies if it is ascertained that they do not have a pension function, which is typical of life insurance, but are instead true financial investments.

On the matter of nullity of a contract by reason of a defect of form, the applicable provision is article art. 1418 para. 2 Civil Code, whereby non-fulfilment of one of the conditions set out in article 1325 Civil Code produces the nullity of the contract. One of the conditions required by this provision is the written form “when it is required by law or else the contract is null”. In the case of financial intermediation contracts, the written form is required by law otherwise the contract is null: article 23 paragraph 1 of the TUF, in fact, provides that contracts for the provision of investment services are drawn up in writing and that these contracts are null if they are not in the required form.

Baratella, La forma scritta e i c.d. contratti di intermediazione finanziaria nella ricostruzione giurisprudenziale, in Resp. civ., 2010, 688 ff..; Barenghi, Disciplina dell’intermediazione finanziaria e nullità degli ordini di acquisto (in mancanza del contratto-quadro): una ratio decidendi e troppi obiter dicta, in Giur. mer., 2007, 59 ff.; D’Auria, Forma “ad substantiam” e uso selettivo della nullità nei contratti di investimento, in Corr. mer., 2011, 703 ff.; Della Vecchia, Forma dei contratti e obblighi informativi nella prestazione dei servizi di investimento, in Società, 2011, 682 ff.; Della Vedova, Sulla forma degli ordini di borsa, in Riv. dir. civ., 2010, II, 161 ff.; Maragno, La nullità del contratto di intermediazione di valori mobiliari per difetto di sottoscrizione dell’intermediario, in Nuova giur. civ. comm., 2010, I, 932 ff.; Nocco, Ordine di negoziazione di titoli “Parmalat” ed inosservanza della forma scritta, in Danno resp., 2011, 865 ff.; Sangiovanni, Mancata sottoscrizione e forma del contratto di intermediazione finanziaria, in Corr. mer., 2011, 140 ff.

In this sense, for example, Cass. 11 January 2005, no. 367; Cass., 3 April 2000, no. 4005; Cass., 18 February 2000, no. 1875.

Civil Cassation sect. III 18 April 2012, no. 6061 in Dir. economia assicur. (From 2012 Fiscalità assicur.), 2013, 1,I with note by Gagliardi.

Court of Bologna, sect. III, 06 July 2015, no. 2146 see in DeJure.

Civil Cassation, sect. III, 24 April 2015, no. 8412, in Diritto & Giustizia 2015, and Responsabilità civile e Previdenza 2015, 3, 970.