On 16 June Legislative Decree No. 68/2018 aimed at implementing the IDD (the “Legislative Decree“) was published on the Italian Official Journal.
The Legislative Decree will significantly impact the rules currently in force in Italy on insurance mediation set out by the Italian Insurance Code and the Italian Consolidated Financial Act.
Main changes to the current legal framework on insurance distribution include:
- application to ancillary insurance intermediaries, that must be enrolled in a specific section of the Register for insurance intermediaries;
- establishment of a new authority for the enrolment of the insurance and reinsurance intermediaries in the Register for insurance intermediaries. IVASS will be in charge of the supervision upon this new authority;
- specific rules for personalized advice to clients and standards for sales where no advice is given, additional pre-contractual information is to be provided when advice is given;
- distributors shall not be remunerated or remunerate or assess the performance of their employees in a way that conflicts with their duty to act in accordance with the best interests of their customers;
- the nature of the remuneration received and the existence of a conflict of interest must be communicated by the intermediaries to their clients;
- specific provisions are set out for cross-selling: (i) of an insurance product together with an ancillary product and (ii) of an insurance product ancillary to a good or a service which is not insurance;
- product oversight and governance (POG) requirements are set out for manufacturers and distributors so that the selling of the insurance product is in line with the target market identified by the manufacturer. In particular the manufacturers must transmit to IVASS the process for the approval of each insurance product, if so requested by the regulator;
- IVASS shall adopt secondary measures for the distribution of insurance based investment products (IBIPs) in order to ensure the consistency of the rules applicable to IBIPs regardless of the insurance distribution channel adopted (in particular, IVASS secondary measures on inducements will be in line with the provisions set out by MIFID II and the supervisory competences of IVASS and Consob respectively are to be clarified);
- the Legislative Decree introduces changes to the Italian Consolidated Financial Act in order to coordinate IVASS and Consob supervisory powers over banks and financial intermediaries when distributing IBIPs, by excluding distribution activity carried out by insurance undertakings from the scope of Consob supervision;
- an Alternative Disputes Resolution systems shall be made available to clients of insurance contracts and the relevant rules will be set out by IVASS;
- the Legislative Decree also strengthens the current sanction system (including both administrative fines and other measures) applicable to insurance undertakings and intermediaries for breach of the rules on insurance distribution.
The Legislative Decree will enter into force on 1st July 2018, however, its content will be applicable on 1st October 2018, as provided by the EU Directive 2018/411 of 14 March 2018. Please click here to download the Legislative Decree (available in Italian only). We remain at your disposal for any clarifications you may need.