Guidelines for clear and simple Insurance Policies
I. The Guidelines’ approval and IVASS letter to the market
The Italian Insurance Regulator (“IVASS”) brought to the insurers’ attention the need to simplify insurance contracts and wordings.
Following IVASS suggestion, the Italian Insurers Association (“ANIA”), some Italian Consumers Associations, the Italian Brokers Association (AIBA) and the Italian Antitrust Authority drafted a set of guidelines on the structure and language of insurance policies wording (the “Guidelines”).
By letter dated 14 March 2018 (the “IVASS Letter to the market”), IVASS exhorts the insurers to comply with the Guidelines.
According to IVASS Letter to the market, insurers should comply with the Guidelines within the following timeframe:
(i) for new insurance products, from the 1st of January 2019.
(ii) for the main products currently marketed, by the end of 2019.
Moreover, according to IVASS Letter to the market, the cover of the reviewed/new products shall mention the wording compliance with the Guidelines.
From 1 January 2019 onwards (and later on a quarterly basis), the insurers shall inform IVASS about which products have been reviewed in accordance with the Guidelines (such information will also be published on IVASS website).
II. Scope and content of the Guidelines
IVASS Letter to the market is expressly addressed only to (i) Italian insurers and (ii) non-EU insurers carrying on business in Italy under the right of establishment.
Accordingly, the Letter to the market is not expressly addressed to EU-insurers carrying on business in Italy under the freedom to provide service regime and/or the right of establishment. However, with communication on 18 April 2018, IVASS made it clear that it considers important – in order to protect Italian insureds – that also EU insurers comply with the Guidelines within the timeframe set by IVASS Letter to the market and provide quarterly information to IVASS on which products have been reviewed.
The Guidelines do not differentiate between consumer and non-consumer policies, although there are hints that they may have been conceived to apply solely or primarily to consumer products.
As a consequence, it seems that the Guidelines would apply to all insurance contracts.
Below is a short summary of certain principles and rules set by the Guidelines.
II.1 General provisions:
- There shall be no distinction between general and special conditions. Rather, the policy shall be divided in subsections.
- The policy can be in either hard copy or electronic format.
- Bold, different colours, small capitals are indicated as ways to “highlight” the clauses dealt with by Art. 166, Section 2 of the Private Insurance Code (e.g. those limiting the rights of or imposing waivers on the insured).
- The language of the contract shall be simplified.
- The heading shall mirror the content of the clause.
- “Explanatory boxes” may be included within the policy.
- In case of amendments of the terms of the contract, a new policy – instead of an endorsement – should ideally be issued.
II.2 The policy structure:
- The commercial name of the insurance product shall be included in the cover and shall not be misleading.
- The policy cover should include the name of the insurer, its logo, the insurer’s group name, the commercial name of the contract and the number of its edition.
- The policy should include a presentation page
- The policy shall have a table of contents.
- Pages should be numbered including the total number of the pages (e.g. 3 of 16 or 3/16).
- The policy schedule should include some information (e.g. details of the insured, commercial name of the product, optional and standard coverages, premium, deductible, limit, insured good/interest).
- Glossary and definitions should be included in the contract or in a separate document.
- The articles of the policy which merely repeat/recall law provisions may be all included in a separate policy attachment.
- Any cover shall be dealt with in a separated section and in chapters (so as the customer is able to compare different insurance offers). The scope of the cover shall be described in a clear and exhaustive way and by an easy language (avoiding – as far as possible – jargon or convoluted wordings). The Guidelines propose different solutions for the description of the coverage scope (the relevant choice shall be made also taking into the forth coming POG regulations)
- The criteria for the assessment of the damages and the quantification of the indemnity shall be explained clearly.