The Insurance Disputes Law Review: Italy
The field of insurance contracts is extensively regulated in Italy, especially as a result of provisions enacted at the EU level. The same complexity is reflected in litigation, with a high number of cases brought before Italian courts each year. Disputes cover not only traditional topics related to civil liability and damage compensation, but also claims for nullity of finance-related insurance products (such as unit- and index-linked policies) because of their alleged lack of compliance with the Italian Consolidated Financial Act, and claims for mis-selling and incorrect management of underlying assets and personal funds.
Contrary to other specific areas of dispute resolution – such as private enforcement, intellectual property and corporate litigation, which are subject to the jurisdiction of specialised courts or divisions – insurance disputes can be brought to the attention of any Italian court, provided that the general criteria on jurisdiction are fulfilled. Usually the place where the insured is domiciled will determine the local court's jurisdiction, so virtually every court in Italy decides on insurance disputes. For this reason, and also taking into account that the stare decisis rule does not apply in Italy, court decisions over insurance claims may vary significantly, offering quite a diversified picture in Italian case law, especially in the absence of clear leading cases rendered by the Supreme Court.
The legal framework
i Sources of insurance law and regulation
The most significant sets of provisions governing insurance contracts in Italy are:
- the Italian Civil Code (ICC),2 which establishes under Article 1882 et seq. the general rules on contracts and obligations, as well as the specific rules governing insurance contracts;
- the Insurance Code,3 which provides the general legal framework concerning insurance companies, intermediaries and brokers; and
- the Consolidated Financial Act (TUF)4 and the regulations of the Italian securities market regulatory authority, CONSOB, which govern the pre-contractual requirements to be met by the intermediaries' distribution network when selling insurance-investment products (such as unit- and index-linked life insurance policies).
Additional relevant provisions derive from the regulations issued by the Italian Insurance Market Regulatory Authority (IVASS), which establishes (1) specific rules regarding each type of insurance contract or some of their specific aspects; (2) transparency and disclosure requirements to be met in the pre-contractual phase of the conclusion of the insurance contract; and (3) post-sale requirements.
The Consumer Code5 is also part of the relevant legal framework if the policyholder qualifies as a consumer, and particularly in relation to contracts concluded at a distance or on unfair terms.
Finally, various EU provisions related to insurance undertakings have been integrated into the national legal framework.
Notable recent developments in the national legislative framework include the following:
- Legislative Decree No. 68/2018,6 IVASS Regulations Nos. 39, 40 and 417 of 2018 and CONSOB Regulation No. 20307/2018,8 implementing the EU Insurance Distribution Directive (IDD),9 also amending the Insurance Code and the Consumer Code. These provisions establish additional rules for intermediaries with particular reference to pre-contractual disclosure requirements and conduct rules, aimed at safeguarding the interests of policyholders.
- Law No. 124/2017,10 which provides, inter alia, new rules concerning competition in the insurance market and uniform criteria for determining the value of non-economic damages. In addition, it establishes that insurance companies will be compelled to offer discounts to customers in the field of motor insurance under certain conditions (vehicular third-party insurance is compulsory in Italy).
- Law No. 24/2017 (the Gelli-Bianco Law),11 which introduces the obligation for healthcare facilities to conclude a third-party civil liability policy and establishes specific procedures related to damages claims (see Section V).
- Legislative Decree No. 165 of 25 November 2019,12 which introduces amendments to Legislative Decree 129/2017, which implemented the Markets in Financial Instruments (MiFID II) Directive13 and the Markets in Financial Instruments Regulation (or MiFIR)14 in Italy, through the TUF. In particular, the Decree, among other things, abolishes the obligation for notification of the key information document for insurance-based investment products and provides sanctions for entities authorised to carry out insurance distribution activity.
IVASS also issued several notes providing rules for facilitating the activities of insurance companies and intermediaries following the covid-19 outbreak.15
ii Insurable risk
As a general rule, under Italian law, insurance contracts cannot cover risks connected to illicit or catastrophic events. For example, insurance contracts do not cover:
- events caused by fraud or gross negligence of the insured;
- the risk connected to the payment of a ransom in cases of kidnapping;
- administrative fines;
- the risk of temporary driving disqualification or suspension of a driving licence;
- damage caused to the public administration by public officials; and
- various catastrophic events, unless a specific clause is agreed.
All other risks are, in general terms, insurable, provided that there is an interest upon the contracting party to insure the specific asset or event.
In particular, with reference to the concept of 'insurable interest', Article 1904 of the ICC establishes that a non-life insurance agreement is invalid if the policyholder does not have an interest in the compensation of the damage. Moreover, if the interest never existed or if it ceased to exist before the conclusion of the contract, the latter is null and void. When the interest ceases to exist after the conclusion of the contract, then the policy is considered terminated. This provision is grounded on the fact that the existence of an interest is considered a fundamental element of the agreement under Italian contract law.
As a consequence, it is generally not possible to insure the assets of another subject against damages. However, interest is not necessarily connected to an ownership right, it being sufficient that a relevant relationship is in place between the insured person and the insured object (e.g., the Italian Supreme Court considers a house 'fire-insurable' by tenants, who bear the responsibility if the damaging event occurs).
Policyholders are free to insure their risks also with foreign companies, which must nevertheless comply with certain requirements. EU insurance companies can carry out their activities without having their registered office in Italy, under the approval of their home-country regulatory authority. Additional fulfilments might be required, depending on the type of insurance contract.
The nationality of the insurance company might impact the law applicable to some aspects concerning the merit of the dispute, as well as the enforcement of a possible negative judgment. With regard to finance-related products, for instance, the principle of home country control could lead to the application of the law of the country of the insurer for issues regarding the composition of the fund underlying the policy; moreover, if the insurer has no assets in Italy, the enforcement shall be started abroad, in accordance with the relevant rules of the selected forum.
The involvement of a foreign insurance company in an Italian litigation also implies some minor changes in terms of procedural rules, particularly aimed at granting a full right of defence to the party involved. The translation of the policyholders' writ of summons in a language known to the insurer might be requested under certain conditions, as well as the Italian translation of documents filed by the insurer in another language. In addition, foreign entities are granted with a longer minimum term of appearance.
iii Fora and dispute resolution mechanisms
In Italy there is no specific court dealing with insurance disputes, which tend to be decided predominantly by civil courts. When a policy is entered into with a consumer, the competent court is the one of the place of residence or domicile of the insured (although alternative criteria for jurisdiction may apply at the plaintiff's discretion).
As regards international disputes, the jurisdiction of the Italian courts is established pursuant to the Brussels Regulation16 and thus Italian ordinary courts may have jurisdiction depending on the cross-border elements contained in the insurance contract (e.g., if the policyholder resides in Italy).
As to the procedural rules generally applicable to all insurance-related disputes (i.e., also for foreign insurance companies), the plaintiff shall start compulsory mediation proceedings before initiating full legal proceedings in court; this constitutes a prerequisite for action. A court claim could therefore be lodged only if the mediation proceedings proved to be unsuccessful, as may be the case if the defendant does not attend mediation or the parties do not reach an agreement.
Italian law also provides for some alternative dispute resolution mechanisms, which are summarised below.
For disputes regarding compliance by the insurer or its financial intermediaries (e.g., banks, investment companies and other financial intermediaries) with the provisions of the Consolidated Financial Act (and relevant implementing regulations on distribution of insurance investment policies), claimants may refer the matter to the Arbitrator for Financial Disputes (ACF), established by CONSOB.
Arbitration clauses, on the other hand, are not common in insurance contracts with consumers and must be specifically negotiated and approved in writing if proposed by the insurer. Furthermore, for certain types of coverage (e.g., accidents and health insurance), IVASS provides specific requirements as to the seat of the arbitration.
This scenario is likely to be subject to future developments, as a ministry decree setting up a further alternative dispute resolution mechanism (as established by the recently introduced Article 187 ter of the Insurance Code) is expected soon and this is likely to follow the ACF model of specialised arbitral tribunals.
This would represent a voluntary venue for dispute resolution and would therefore be more accessible, even for individuals and small companies.
Insurance disputes can be classified into litigation focused on life insurance policies and litigation regarding third-party policies. The following insurance law issues have been hot topics in the Italian courts recently and they are grouped here into these two categories.
i Life insurance
With regard to life insurance policies, one of the main issues concerns the nature of unit- and index-linked policies and their qualification as insurance or financial products. Their potential qualification as financial products is particularly significant, as it results in the application of rules (the TUF provisions) other than those the insurance companies and intermediaries had in mind when these policies were sold (the Insurance Code provisions), thus exposing them to the risk of a negative outcome in the event of disputes. A law was passed with the aim of solving this problem, clarifying that the TUF also applied to unit- and index-linked products,17 but the results were not satisfactory. The application of the TUF provisions to these products was only partial and no clear provisions were passed in respect of the distribution of unit- and index-linked policies, which can be sold by either financial intermediaries or insurance brokers and agents, who have traditionally been subject to a different regulatory regime.
Because of this uncertainty and lack of clarity – which Parliament intends to eliminate by implementing the IDD – the Italian courts have developed different approaches, which the Supreme Court has also failed to reconcile. In fact, according to the Italian Court of Cassation, unit- and index-linked policies could be classified as insurance products when the demographic risk undertaken by the insurer prevails over the financial risk borne by policyholders,18 but this is to be assessed by the courts of first and second instance on a case-by-case basis. As a result, some courts have found that when any and all risks related to the investment are borne by the insured, the policy has a financial nature (with consequent application of the TUF rules);19 some others have instead applied the ECJ's interpretation, whereby unit- and index-linked policies are qualified as insurance contracts (with consequent application of the Insurance Code) when they provide for the payment of a premium by the policyholder in exchange for a service by the insurer upon the occurrence of an event linked to the insured party's life.20
Investors who lost (or partially lost) premiums invested in unit- and index-linked policies generally raised several different claims with the aim of being reimbursed for their losses.
A first set of claims is usually connected to an alleged breach of information and conduct duties in the intermediation stage, including lack of information on the features of the policies and the underlying assets, and their lack of compliance with the policyholder's risk profile. The breach of these duties is to be attributed to the intermediary, not to the insurance company, which lacks any standing before the courts (unless the policy is sold directly by the insurance company itself),21 and may only entail a claim for damage compensation. Policyholders cannot have the policy terminated or nullified based on breaches of information and conduct duties in the intermediation stage and cannot therefore ask for repayment of the invested premiums. However, although this position has been consolidated by Italian case law (as confirmed by the Court of Appeal of Potenza),22 the Court of Appeal of Turin recently adopted a different approach, whereby a lack of information on the features of a policy and its underlying assets, as well as inconsistency between the product and the policyholder's risk profile, may lead to the termination of the policy and the repayment of the invested premiums.23
Nonetheless, in a notable recent decision, the Court of Bergamo dismissed as inadmissible the termination claim brought by 33 policyholders in respect of unit-linked policies that had already been surrendered at the time when the litigation was launched. The judged argued that a surrender request is equivalent to a contractual withdrawal and it is not possible to terminate a contract that has already ceased to exist,24 irrespective of whether the alleged breach of information duties has actually occurred.
Another common set of claims pertains to the alleged nullity of index- and unit-linked policies for lack of a framework agreement, which is a written contract between the intermediary and the investor reporting information on possible future investments and the provision of related services by the intermediary. Such a contract is required by Article 23 of the TUF (Article 23) prior to any investment in financial products, under penalty of nullity of the investment made in the absence of a contract.
By qualifying unit- and index-linked policies as financial products, some courts25 have considered the lack of a framework agreement to lead to the nullity of the policy, for having been concluded in breach of Article 23. However, the topic is strongly debated as other courts have ruled (more reasonably in our view) that the framework agreement is not required if (1) the policy contains all the information required under Article 2326 or (2) if the distribution of the policy is carried out by brokers or insurance intermediaries, as this would lead to the application of the Insurance Code provisions (which do not require a framework agreement to be concluded).27 Others have taken the view that even if the framework agreement is required, the lack of it would trigger a repayment obligation for the intermediary rather than for the insurer28 (unless, of course, the product has been directly distributed by the insurance company).
On 4 November 2019, in relation to the purchase of financial products other than unit-linked policies, the Joint Divisions of the Supreme Court29 stated that when an investor claims the nullity of an investment for lack of a framework agreement, the judge is required to conduct a full investigation into the matter of the agreement, although clearly this cannot be done if the parties involved have not all been summoned before the court. As a result, claims for the declaration of nullity of unit- or index-linked policies sold in the alleged absence of a framework agreement, and through intermediaries that are not involved in the proceedings, should be dismissed on procedural grounds, without even entering into a consideration of the merits of the claim.
This decision by the Supreme Court is also important on another count, as it states that investors cannot abuse their exclusive right to claim the nullity of the framework contract by seeking a declaration of nullity in respect of selected parts of the investment instructions (i.e., those parts that have not led to successful results) if the investment as a whole has been beneficial to them. This argument was followed recently by the Court of Salerno, which on 5 March 2020 rejected an investor's request to declare the nullity of an investment made in a financial product for lack of a framework agreement, as the nullity was claimed only when the investor realised his investment had performed badly. According to the Court, the constitutional principle of good faith in the conclusion and implementation of a contract prevents individuals from abusing their rights by requesting remedies that appear to be inconsistent with their own prior behaviour (e.g., a request of surrender cannot be followed by a claim for the nullity of the same contract, regardless of the overall financial result of the investment).
Claims of nullity are generally not subject to limitation. However, because of the particular character of the nullity provided under Article 23, which can only be invoked by the investor, some courts have applied the limitation period of five years provided by law for the annulment of contracts.30
Finally, the Court of Verona31 has clarified that Article 1923 of the ICC (which excludes enforcement proceedings for the indemnification sum due by the insurer in the case of life insurance policies) should also apply to unit-linked policies of a financial nature.
ii Third-party insurance
With regard to claims related to third-party insurance, a recent decision of the Supreme Court finally settled one of the most debated issues, concerning claims-made clauses.
These clauses are contained in third-party insurance policies and generally establish that the policy will cover only those damages for which the third party raises a claim during the period of validity of the policy. However, these clauses can be formulated in different ways and, for example, may also provide that the policy will cover only those cases in which both the damage and the claim occur within the period of validity of the policy.
The validity of insurance contracts containing claims-made clauses was subject to extensive scrutiny by Italian courts, which in some cases declared them null and void as vexatious under Article 1341 of the ICC. The courts considered that those clauses limited the liability of insurance companies, with a consequent need for the explicit written consent of the insured for the contracts to be valid.
In some other cases, the validity of the whole contract was challenged, as it would have allegedly constituted an agreement that was outside the scope of lawful atypical insurance contracts, thus being unenforceable under Italian law.
The Joint Divisions of the Supreme Court were therefore requested to issue a decision on the topic. The judgment was rendered in September 2018 and, while it rejected the alleged grounds of invalidity reported above, it substantially declared that the validity of claims-made clauses shall be assessed on a case-by-case basis.32
In particular, the Court confirmed that insurance contracts containing claims-made clauses are not atypical, especially taking into consideration that recent laws expressly govern them. Moreover, such clauses cannot be considered vexatious, as they merely define the object of the contract and do not limit the liability of the insurance company. Accordingly, the potential invalidity of such clauses cannot generally be upheld and must be assessed depending on additional and specific elements, including the way they are formulated.
In line with this approach, a claims-made clause whereby the insurer undertakes to compensate the third party for damage only if the insurer or the policyholder receives the third party's claim within 12 months of the termination of the contract was recently declared to be vexatious by the Italian Supreme Court. According to the Supreme Court, in the absence of a specific request from the third party for compensation, it would have been nearly impossible for the insured to raise the claim within the requested time.33
Finally, legal costs are another topic of note. In particular, insurance companies are usually joined in the proceedings to indemnify the insured and the issue of the awarding and attribution of legal costs is usually debated. The Supreme Court, in a decision of 4 May 2018,34 held that the indemnification should cover not only the legal costs that the losing party pays to the counterparty, but also the costs related to the legal assistance provided to the losing party, even if these exceed the agreed cap (by an amount within the limit of one-quarter of the cap, as provided under Article 1917 of the ICC).
The international arena
In the context of litigation involving international parties, the issue of jurisdiction is often raised. A recent case focused on this topic in the context of civil liability litigation and in particular on the possibility of a damaged party suing in his or her own country the foreign insurance company of the counterparty. The Italian court applied EU Regulation No. 44/2001,35 which establishes different alternative criteria for identifying the court that has jurisdiction to decide the case. In its reasoning, the judgment found that, as a general rule, an insurance company may be sued before a court of the state in which the company has its registered office, in which the event occurred or, alternatively, in the place in which the litigation has been commenced by the subject who suffered the damage, provided that the insured and the insurer can be summoned in the same proceedings. In addition to those general criteria, the court clarified that under Article 9 of Regulation No. 44/2001, the insurer may also be sued before the court of the state in which the claimant is domiciled if litigation is commenced by the insured, the beneficiary of the policy or the person who concluded the insurance contract. Following an ECJ case law precedent, the court concluded that pursuant to Article 11 of Regulation No. 44/2001 all the above-mentioned criteria apply also to litigation commenced by the person who suffered the damage and who can therefore directly bring an action against the insurance company of the counterparty if that is possible under the domestic law of the person who suffered the damage (which it is in Italy).
ii Representatives of foreign insurance companies
With reference to third-party insurance, and specifically on the point of standing, a topic recently addressed by both EU and Italian courts concerned the possibility of suing directly the claims representative of a foreign company. Pursuant to Article 1 of Directive 2000/26/CE,36 every insurance company that issues its policies in foreign states has to appoint a claims representative in each Member State other than the one in which it has its registered office. The claims representative shall be responsible for handling and settling claims arising from the events referred to in Article 1. However, the Directive does not specify whether it is possible for the insured to sue the claims representative directly. On this point, the ECJ ruled that the representative is entitled to receive judicial notices on behalf of the company, but cannot stand trial on behalf of the company, as established by Article 18 of the Rome II Regulation (which considers the insurer to be the only subject that can be sued directly).37 On the other hand, the Italian Supreme Court later issued a decision that, according to some scholars, would be at odds with that of the ECJ as it held that the plaintiff would be entitled to bring an action before the damaged person's national court also against the representative of the company.38
iii Home country control
The topic of unit-linked policies is also often connected to the activity of international insurance companies in Italy. With particular reference to EU companies, one of the principles most often debated is that of 'home country control'.
In decisions rendered in 2016 and 2015, the Courts of Turin and Milan rejected policyholders' requests for the declaration of nullity of unit-linked policies, as these were linked to hedge funds not allowed under Italian law.39 The decisions were grounded on the principle of home country control, according to which the investments linked to the policy are governed by the rules of the law of the country in which the insurance company has its registered office. This holds true even if the policies are governed by Italian law. In this context, it is also worth noting that this principle has been applied recently by the Supreme Court.40
iv Punitive damages
Another issue that has been much debated among private insurance associations is the decision of the Supreme Court rendered in July 2017 concerning punitive damages.41 The decision was rendered in the context of the enforcement of a US judgment in Italy and substantively introduced the possibility of recognising the award of punitive damages against an Italian company in a foreign judgment. However, this matter did not touch upon insurance and is unlikely to have an impact on existing Italian insurance contracts, as punitive damages are still not insurable under Italian law. Furthermore, the decision will not result in the possibility of Italian judges awarding punitive damages, as a specific law would be required for that purpose.
Trends and outlook
i Healthcare disputes
The recently introduced Gelli-Bianco Law regarding hospitals and other healthcare facilities' liability is likely to have a significant impact on insurance litigation, with preliminary data registering an increase in disputes in the medical field since the entry into force of the Law on 1 April 2017.
On the one hand, the Law establishes that healthcare facilities are responsible for any damage they (or the operators working therein) may cause to third parties. On the other hand, healthcare facilities are now obliged to conclude a policy that covers the risk related to damages claims that may stem from this liability. Subjects who have allegedly suffered damage can bring an action against the insurance company directly. Under certain conditions and within certain limits, the healthcare facilities have the option to reverse the liability for the potential damages arising, on to the healthcare operator responsible for the illicit event. Moreover, the Law establishes the nature of the liabilities of healthcare personnel and healthcare facilities with consequences for the burden of proof, which may impact the outcome of proceedings and then the insurance company. In particular, according to the Law, healthcare facilities have a contractual liability in relation to the damaged parties in cases of medical malpractice. Hence, the damaged parties have to allege the breach of the contractual obligation and prove the damage suffered, while the healthcare facility has to prove that the damage was not linked to its conduct. Furthermore, the Law establishes that the healthcare personnel have a non-contractual liability and therefore the major burden of proof lies upon the damaged parties, who have to prove the negligence and wilful misconduct of the healthcare personnel.
Before bringing an action to court on grounds of the aforementioned liability, any interested party must initiate a compulsory preliminary attempt at settlement with the other parties involved (including the insurance company), with the assistance of an expert appointed by the court for the calculation of the amount of the alleged damage (the proceedings are governed by Article 696 bis of the Code of Civil Procedure). Alternatively, it is possible to seek the assistance of a civil mediator.
This item is therefore likely to increase in importance in the future because of the complexity of the matters, the number of subjects potentially involved and the multiple steps that govern relevant claims. However, it is now four years since the enactment of the Gelli-Bianco Law and the ministerial decrees necessary to implement and render effectively the procedural tools outlined above (such as a direct action against insurance companies) have not yet been issued. Nonetheless, in the meantime jurisprudence has been playing an important role as a 'regulatory substitute', offering interpretive solutions to implement the reasoning underlying the Law, in the absence of ministerial decrees. For example, the Court of Benevento42 also recently stated that the damaged party should bring the action against all the parties concerned (including the insurance company).
ii Unit-linked policies
As reported above, disputes related to unit-linked policies are widespread in Italy, with several pending proceedings throughout the country. These policies are nonetheless still one of the highest-selling products in the life insurance market, accounting for 34 per cent of the total premiums in 2017. Preliminary data for 2020 seems to confirm the positive trend.
iii Tampering policies
Another topic currently under the spotlight of Italian insurance-related press is that of tampering policies, which were introduced to the insurance market to protect companies from the risk of accidental or intentional contamination of food-related products, which may occur if the systems of production, conservation and distribution of the products are not hygienically appropriate or because of fraudulent acts of third parties. The withdrawal of the contaminated product from the market may have disruptive consequences: it may damage the company's reputation and usually results in high unexpected costs. Tampering policies prevent these consequences by providing reimbursement for the consultancy costs in the various phases of the crisis, the costs directly incurred for the withdrawal of defective products, the information to be provided to consumers and the re-distribution of new products. The area of product liability disputes is currently very active in Italy and tampering policies introduce a new relevant element to the scenario, whose developments shall be closely monitored in the future.
Insurtech (i.e., the application of new technologies to the insurance sector) is a growing field in Italy, even though its figures are low compared with the Anglo-Saxon market. Some insurance companies are also carrying out research aimed at verifying the applicability of blockchain technology to prevent disputes and, ultimately, litigation, especially in the medical and transport fields. Attention is also focused on aspects related to the internet of things and artificial intelligence. All in all, this sector is still in its infancy but it is likely to increase. Specialist areas of competence will therefore be required to deal with potential disputes in the future.
The spread of covid-19 is likely to impact insurance litigation.
Although there is still considerable ongoing debate and there are no case law precedents, it is probable that we will see health disputes in which insurance companies will try to exclude damages arising from covid-19 from insurance coverage. For instance, insurance companies may argue that covid-19 has increased insurance risk coverage and, according to Article 1898 of the ICC, this in principle allows them to withdraw from the contract. Moreover, they may also argue that the pandemic may be considered a catastrophic event, uninsurable unless specific provision is agreed between the parties. In contrast, healthcare personnel in medical malpractice cases resulting from the difficult situation caused by covid-19 could defend themselves by arguing that they may be held liable only for gross negligence or misconduct according to Article 2236 of the ICC. As a matter of fact, in the field of criminal law, Law-Decree No. 44 of 1 April 2021 converted into Law No. 77 of 28 May 2021 specified that healthcare personnel may be held responsible for crimes provided for in Articles 589 and 590 of the Italian Criminal Code only for gross negligence. Article 3 of the Law-Decree also provided an interesting overview of the criteria judges should follow when assessing healthcare personnel's negligence. In particular, judges should take into account the limited scientific knowledge about covid-19 and appropriate treatments at the time of the conduct, the limited material and human resources concretely available to deal with the number of cases and, finally, the limited technical and empirical expertise of non-specialised personnel. These criteria, which for now are reserved to criminal cases, might also be applied in future to reinterpret Article 2236 of the ICC with regard to gross negligence in cases of civil liability linked to medical malpractice.
Furthermore, as a result of the covid-19 pandemic, it is likely that there will be an increase in litigation for business interruption. The current pandemic has, in fact, caused huge losses through the forced closure of almost all companies. The outcome of these disputes will depend on the possibility of sustaining the existence of coverage against business interruption in relation to the covid-19 pandemic. In this regard, it will be necessary to verify on a case-by-case basis the applicability of 'property and casualty all risk' clauses, which usually cover business interruption through damage to insured goods. In the case of the pandemic, the business interruption was instead caused by measures adopted by the government. Many policies also have a 'civil authority orders' clause, according to which business interruption is insured if caused by an order issued by a public authority. To be effective, such clauses require the public authority order to have been provoked by events that affected the insured assets. However, a business interruption due to the covid-19 outbreak may not always cause damage to insured assets.
vi Class action
Although it is not directly linked to the insurance field, the Italian class action reform might have a significant impact on insurance litigation. The new class action legislation, Law No. 31 of 12 April 2019 (which finally entered into force on 19 May 2021 with no retroactive effects), introduced a large number of innovations. Under the previous legal framework, the class action procedure was expressly reserved to consumers and end users, whereas the provisions of the new Law have a broader scope. Claimants may seek compensation for any kind of damage and have access to a wider opt-in mechanism, which allows them to join the class action not only during the proceedings, within a prescribed time limit, but also after the court's favourable judgment on the merits; specifically, up to five months after the decision on the merits has been issued. Finally, another significant change concerns economic incentives: in the event of a successful outcome of an action, the common representative and the lead claimant's counsel may obtain a monetary reward. As a consequence of these changes, the Italian litigation scenario is likely to witness a significant increase in collective actions and all companies, including insurance companies, should be prepared to deal with such actions.
1 Andrea Atteritano is a partner at Hogan Lovells Studio Legale. The author would like to thank colleagues Serenella Kaluthantrige and Andrea Pannacciulli for their support in the preparation of this chapter.
2 Royal Decree No. 262 of 16 March 1942.
3 Legislative Decree No. 209 of 7 September 2005, published in the Official Gazette of the Italian Republic (OG) on 13 October 2005 (the Insurance Code).
4 Legislative Decree No. 58 of 24 February 1998, published in the OG on 26 March 1998.
5 Legislative Decree No. 206 of 6 September 2005, published in the OG on 8 October 2005.
6 Legislative Decree No. 68 of 21 May 2018, published in the OG on 16 June 2018, modified the Consolidated Financial Act (TUF) by introducing Article 25 ter, whereby the distribution of insurance investment products is governed by the Insurance Code.
7 Published by IVASS on 2 August 2018.
8 Published by CONSOB on 15 February 2018.
9 Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution, published in EU OG on 2 February 2016 (L 26/19) (IDD).
10 Law No. 124 of 4 August 2017, published in the OG on 14 August 2017.
11 Law No. 24 of 8 March 2017, published in the OG on 17 March 2017.
12 Legislative Decree No. 165 of 25 November 2019, published in the OG on 9 January 2020.
13 Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU.
14 Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No. 648/2012.
15 See notes published by IVASS in 2020 on 17, 23 and 30 March, 3 April, 8 June, 30 July, 1 October and 29 December.
16 Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction, and the recognition and enforcement of judgments in civil and commercial matters (the Brussels Regulation).
17 Law 28 December 2005 No. 262, which introduced Article 25 bis TUF to extend the application of Articles 21 and 23 TUF to insurance financial products. The provision only entered into force on 1 July 2007 following issuance of CONSOB's implementing regulation.
18 Supreme Court, 5 March 2019, No. 6,319. This evaluation should be made taking into consideration (1) the premium amount paid by the policyholder, (2) the duration of the policy and (3) the type of investment. The policy at issue provided death cover equal to 0.1 per cent of the counter value of the units of the fund linked to the policy and the Supreme Court objected that this amount, compared to the premium amount paid by the policyholder, was not enough for the balance of the obligations of the parties under the contract. Moreover, the Supreme Court also declared that even if the financial purpose prevails, the life insurance purpose must in any event be compliant with the general principles set out by the Italian Civil Code, by the Insurance Code and by IVASS regulations.
19 Court of Appeal of Milan, 11 May 2016. Court of Florence, 30 March 2020. See also Court of Crotone, 13 January 2020.
20 European Court of Justice, 31 May 2018, C-542/16 in line with its previous decision of March 2012 (Supreme Court, 18 April 2012, No. 6,061). See also Court of Bergamo, 12 November 2019, 21 November 2019 and 23 July 2021; Court of Rome, 28 May 2021 and Regional Tax Commission of Lombardia, 17 May 2021, Court of Florence, 11 February 2020 and Court of Viterbo, 16 September 2020.
21 Court of Reggio Emilia, 3 May 2019; Court of Asti, 14 October 2019; Court of Bergamo, 12 November 2019; Court of Forlì, 11 December 2019. See also Court of Viterbo, 16 September 2020 and Court of Milan, 7 April 2020 and 18 June 2020.
22 Supreme Court, Joint Divisions, 19 December 2007, No. 26,724; Supreme Court, Joint Divisions, 19 December 2007, No. 26,725. See also Court of Appel of Potenza, 22 June 2022.
23 Court of Appeal of Turin, 1 June 2021. See also Supreme Court, 30 April 2018, No. 10,333.
24 Court of Bergamo, 23 July 2021.
25 Court of Rome, 7 October 2020, Court of Rome, 6 August 2020, Court of Verona, 6 April 2021. See also Court of Treviso, 20 October 2017.
26 Court of Pavia, 7 March 2021, Court of Parma, 13 February 2017, No. 233; Court of Mantova, 6 May 2016, No. 533; Court of Verona, 28 September 2016; Court of Rimini, 12 August 2016, No. 6,532; Court of Appeal of Turin, 4 March 2019, No. 402.
27 Court of Bergamo, 12 November 2019. See also Court of Bergamo, 21 November 2019, Court of Bergamo, 23 July 2021 and Court of Rome, 28 May 2021.
28 Court of Salerno, 24 May 2016; Court of Bari, 3 March 2011, No. 801; Court of Pesaro, 22–23 October 2020, No. 1,132.
29 Decision No. 28,314.
30 Court of Ravenna, 12 October 2017 and Court of Prato, 8 August 2018.
31 Court of Verona, 17 April 2019. See also Supreme Court, Joint Divisions, 31 March 2008, No. 8,271.
32 Supreme Court, Joint Divisions, 24 September 2018, No. 22,437. In this context, see also more recently Court of Brescia, 2 May 2019.
33 Supreme Court, 13 May 2020, No. 8,894.
34 Supreme Court, 4 May 2018, No. 10,595.
35 Council Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, currently repealed by the Brussels Regulation.
36 Directive 2000/26/EC of the European Parliament and of the Council of 16 May 2000 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles, currently repealed by Directive 2009/103/EC of the European Parliament and of the Council of 16 September 2009 relating to insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to insure against such liability.
37 European Court of Justice, 10 October 2013, C-306/12.
38 Supreme Court, 18 May 2015, No. 10,124; See more recently Supreme Court, 13 November 2019, No. 29,352.
39 Court of Turin, 17 March 2016; Court of Milan, 11 February 2015, No. 1,884.
40 Supreme Court, 5 March 2019, No. 6,319.
41 Supreme Court, 5 July 2017, No. 16,601.
42 Court of Benevento, 1 November 2019; Court of Venezia, 5 February 2020. See also Court of Busto Arsizio, 18 January 2021.