Law Decree n. 183/2020, Brexit, UK Insurance companies operations in Italy and viceversa.
Summary: Law Decree n. 183/2020 regulates: i) what happens to UK companies authorized to carry out insurance business in Italy under the regime of establishment or freedom to provide services after the expiry of the transition period (31st December 2020); ii) which are their information duties towards policyholders and IVASS (the Italian Insurance Market Supervisor); iii) the provisions applicable to such companies during the period of temporary continuation of business; iv) the rights of the policyholders; v) the operations of the Italian insurance companies authorized to carry out insurance business in UK under the regime of establishment or freedom to provide services after the expiry of the transition period.
The legislator’s scope
The scope of the legislator is to regulate the operations of insurance companies based in the United Kingdom and Northern Ireland in Italy after the expiry of the transaction period (31st December 2020), which followed the withdrawal of the United Kingdom from the European Union.
Art. 22, paragraph 6 of Law Decree 183/2020 provides that insurance companies based in the UK and Northern Ireland, which at the end of the transition period were authorized to carry out insurance activities in Italy under the regime of establishment or freedom to provide of services, are canceled, from the day following that date, from the list of companies with registered office in another Member State kept by IVASS.
Such insurance companies, after the expiry of the transition period, shall carry on the business within the limits of the management of contracts and coverages in progress as of 31.12.2020 with the prohibition of signing new contracts.
The prohibition is also extended to the renewal of existing contracts, until their expiry or other term highlighted in the plan (see below) that insurance companies must submit to IVASS.
Actions required and applicable rules
The following paragraph 7 provides that the insurance companies mentioned above shall take the following actions:
by the 15th of January 2021 (term already expired) they shall inform policyholders and beneficiaries of the operating regime applicable to them (also by means of a communication on their website);
by the 31st of March 2021 they shall submit to IVASS a plan containing the measures to promptly and correctly execute the contracts and coverages in progress at such date, including payments for claims.
Paragraph 9 states that the UK and Northern Ireland companies shall continue to be compliant with the provisions of art. 193 of the Italian Private Insurance Code, which provides for the coordination of the action of the different supervisors, the one the State of origin and the one of the State of location of the establishment, or the exercise of the activity in the free provision of services and to any other provisions on insurance matters, including those on penalties.
IVASS can exchange information with the competent authorities of the Third states with respect to the European Union (in our case the United Kingdom of Great Britain).
Italian customers and insurance companies
Pursuant to paragraph 8, since the expiry of the transition period, clients are entitled to withdraw from contracts whose duration exceeds one year without additional charges, by giving written notice to the company, or exercise other forms of withdrawal from the contractual obligation. Automatic renewal clauses lose their effectiveness and the contracting party’s withdrawal takes effect from the expiry of the first year following the date of exercise of the withdrawal itself.
In accordance to paragraph 10, Italian insurance or reinsurance companies which, at the end of the transition period, were authorized to carry out insurance or reinsurance activities in the UK and Northern Ireland under the regime of establishment or freedom to provide services may continue to exercise their activities, without prejudice to the provisions of the rules contained in the Italian Private Insurance Code on the exercise of business in a third country and in compliance with the provisions of UK.
Our Insurance & regulatory team is available for any further information and / or assistance.
Andrea Maura Partner @ Legal Grounds ALIANT