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    01.07.2021

    Lazio Regional Administrative Court, judgment No. 7549 of 23 June 2021: cancellation of certain provisions of IVASS Regulation No. 40 of 2018, introduced by IVASS Order No. 97/2020 on horizontal cooperation and consistency assessment


    By judgment No. 7549, published on 23 June 2021, the Regional Administrative Court of Lazio, upholding the claims of the Sindacato Nazionale Agenti di Assicurazione - National Union of Insurance Agents -("S.N.A."), ruled on the application for cancellation of the following provisions under IVASS Order No. 97 of 4 August 2020 ("Order 97/20"):

    • Article 4.12, (b), amending Article 42 of IVASS Regulation No. 40 of 2 August 2018 ("Regulation 40/18"), entitled "Modes of business exercise by intermediaries”;
    • Article 4.18(2)(a), amending Article 56 of Regulation 40/18, entitled "Pre-contractual information"”;
    • Article 4.20, amending Article 58 of Regulation 40/18, entitled “Assessment of the contractor's requirements and needs”, in the part where paragraph 4-bis is introduced.

    More specifically, the S.N.A. challenged the above-mentioned provisions based on allegations related to both the procedural aspects of their adoption and their merits.

     

    In particular, the applicant alleged as follows:

    • the provision under Article 4.12 of Order. 97/20, according to which “The execution of the agreement under paragraph 4 [in which the horizontal cooperation agreement between intermediaries is formalised] shall be notified by the intermediaries to the respective principal insurance undertakings concerned”, was introduced, without prior public consultation on the point, in breach of the procedural guarantees laid down in Article 191.4 of Legislative Decree No 209/2005 – Codice delle Assicurazioni Private, Private Insurance Code – (“CAP”) [1] and in any event without any basis in primary legislation. Therefore, the provision at issue was adopted in breach of the law;
    • the provision under Article 4.18(2)(a) of Order 97/20, according to which distributors “shall make available to the public at their premises, including by means of technological equipment, or shall publish on a website, where used for the promotion and placement of insurance products, giving notice of such publication at their premises: (a) the list containing the name of the insurance undertaking/s with which the intermediary has business dealings, including on the basis of horizontal cooperation or letters of appointment”, was introduced despite the observations to the contrary made by the applicant being upheld during public consultation, which amounts to a further infringement of the provisions of Article 191 of the CAP referred to above [2]. Therefore, the provision at issue should be considered contradictory and adopted in excess of power; and, finally,
    • Article 4(20) of Order 97/20, insofar as it introduces paragraph 4-bis into Article 58 of Regulation No. 40/20, according to which “If distributors consider that the product is consistent with the requests and needs of the policyholder or the insured party, they shall inform the latter before the contract is signed, making a special declaration to that effect”, adds a bureaucratic burden without adding value to the obligations already laid down in paragraphs 1 to 4 of the aforesaid article. Moreover, such provision conflicts with the content of the IDD and EU Regulation No 2016/97 and with the principle of proportionality in respect of agreements providing for a low premium. Consequently, the provision at issue should be regarded as being adopted in breach of the law and in misuse of powers.

    The Regional Administrative Court upheld the S.N.A.’s application.

     

    More specifically, the Court found breach of the participation guarantees underlying the regulatory activity of the Institute provided for in Article 191 of the CAP in relation to the provisions of the aforementioned Article 4 paragraph 12 and Article 4 sub 18 paragraph 2 letter (a) of Order 97/20.

     

    First, the Regional Administrative Court found that Article 4, number 12, included in Order 97/20, was not the subject of public consultation scheme at the time, which amounts to a procedural violation of the participation guarantees provided for by the CAP.

     

    Second, the Regional Administrative Court found contradictions in IVASS' regulatory activity with regard to the amendment of Article 56 of Regulation 40/18 (concerning the obligation to publish the list of horizontal collaborations in the pre-contractual information). Indeed, the Institute, while unreservedly accepting comments against the adoption of such obligation, during Public Consultation, then proceeded to its inclusion in Order 97/20. In that regard, it was specified that, in accordance with the previous case law of the same court, "recourse to the consultation procedure provided for by  Article 191" is for the public entity not an option but a real obligation, under Article 97 of the Italian Constitution” [3]. Therefore, “the participation requirements laid down by Article 191 of the C.A.P. for the adoption of the Ivass regulations, far from reflecting the provision for a generic consultation with a merely informative purpose of the issuing Authority, must be assimilated[4].

     

    Finally, the Regional Administrative Court found that  the provisions of Article 4.20 of Order 97/20, in introducing paragraph 4-bis into Article 58 of Regulation 40/20, likewise appear to be challengeable from a substantive point of view in that, in the face of a further bureaucratic increase in the distribution procedure, they do not appear to offer further or better protection for clients. More specifically, the Court held that Article 58 of Regulation 40/18 already imposes an obligation upon the intermediary to offer insurance contracts consistent with the needs of clients. Therefore, the provision for a further obligation to provide the client, prior to the execution, with a document attesting to the consistency of the product does not appear to have a function as an assumption of responsibility on the part of the intermediary, who is already responsible for their actual consistency, nor to usefully enhance client protection.

     

    The  ruling at issue, by upholding S.N.A.'s application and cancelling the above provisions, again results in altering the regulatory compliance framework for insurance distribution recently amended by the challenged measure, effective only from 31 March 2021. It will remain to be seen whether the Institute will challenge the decision before the Consiglio di Stato  and whether insurance intermediaries, who in recent months have updated their internal procedures to comply with new regulations, will see the judgment of the  Regional Administrative Court confirmed, or the Consiglio di Stato  ruling in such a way as to restore the cancelled  provisions of Order 97/20.

     

     

     

    This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For further information please contact Michele Zucca, Anthony Perotto and Guido Foglia.

     

     

     

     

     

    News[1] See Article 191, paragraph 4 of CAP: «Regulations shall be adopted in compliance with open and transparent consultation procedures that allow any regulations under preparation and comments received to be made known, also by means of publication on the Institute's website. At the start of the consultation process, IVASS shall disclose the outline of the measure and the results of the regulatory impact analysis, which it shall carry out in compliance with the principles set out in Article 12 of Law No. 229 of 29 July 2003 and  IVASS regulatory provisions».

    News[2] In relation to the observations promoted by S.N.A. see: IVASS Order no. 97 of 4 August 2020, Outcome of the public consultation, Rome, 4 August 2020, Observation No. 81, https://www.ivass.it/normativa/nazionale/secondaria-ivass/esiti-pubb-cons/2020/provv-97epc/Esiti_Provvedimento_97_2020.pdf.

    News[3] See Regional Administrative Court of Lazio, Rome, First Division, 27 October  2010, No. 33031.

    News[4] See Regional Administrative Court of Lazio, Rome, Division II Ter, 23 June 2021, No. 7549.