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Italy: Insurance Policies combined with financings

Alessandro Paccoi

23 October 2015
On 26 August 2015 the Italian Authority for the Supervision of the Insurance Sector (IVASS) and the Bank of Italy sent a letter to both the insurance companies and insurance intermediaries, including banks and financial intermediaries, whereby they ask to raise the level of protection of clients in the sale of insurance policies combined with mortgages and loans (PPI - Payment Protection Insurance), pointing out some possible areas of intervention and suggesting some "guidelines" to be followed by the above mentioned players, concerning the structure and the distribution methods of such insurance policies.

The Authorities, indeed, detected the spread of expensive policies in Italy providing for limitations which trigger a significant reduction of the effectiveness of the guarantees contained therein, and often issued in favour of individuals not even entitled to obtain similar policies (i.e. policies for employees of private companies offered to public employees).

As a consequence of the above, IVASS and Bank of Italy:

  • asked to take steps to overcome, in the shortest time possible, the problems detected in the production and distribution of this kind of insurance policies;
  • expect the insurance companies and intermediaries to review the policies' structure and their placement mode, in order to ensure that these products meet the risks-cover needs of customers and that relevant distribution is based on standards of fairness;
  • asked the insurance companies and intermediaries (i) to implement specific internal policies for handling the insurance policies already entered into with the customers and any possible complaints arising therefrom, and (ii) within 90 days as of publication of the letter at stake, to approve an illustrative plan explaining the initiatives to be implemented to make the insurance policies compliant with the "guidelines" issued by the Authorities. Such plan should be then implemented in the next 90 days as of the date of its approval (i.e. within the end of February 2016).


Alessandro Paccoi

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