The effects of the health emergency linked to the spread of Coronavirus are affecting all sectors of the economy
The costs that we are paying in terms of human lives and the decrease in GDP are inducing states and supranational organizations to implement somewhat coordinated interventions in order to create conditions for a speedier restart of the economy. All are trying to learn from the mistakes of the past—like cuts in healthcare spending—and taking advantage of the accelerations the situation we are experiencing has imposed, like “massive” smart working, and the digitization of education and justice.
In this context there are initiatives that have affected the insurance world, which is being called to face this particular moment with an eye towards the future. Insurance companies will most likely see an increase in claims and litigation attributable to Coronavirus, but there’s more to it than that. Depending on the the political and economic choices made in regards to timing of recovery, the sector will be largely affected by a decrease in spending by potential customers.
That being said, the EU level has reported new interventions of the EIOPA (European Insurance and Occupational Pensions Authority) as of March 17 and 20.
The first intervention includes requests aimed at the insurance market to keep capital requirements under control. This intervention was followed by the communication of IVASS (the Italian Institute for Insurance Supervision) on March 30, 2020, informing that it had sent a letter to insurance and reinsurance companies in Italy requesting them to adopt extreme prudence in the distribution of dividends and payments to company representatives at both the individual and group level.
The second intervention includes a series of recommendations regarding the temporary flexibility of terms— due to COVID-19, for supervisory and public disclosure information. These measures were recalled by IVASS on March 30 as measures in favor of the insurance market. The document in question, which contains numerous extensions in relation to deadlines set by the regulations issued by the Institute, follows a first group of measures in favor of the sector published on March 17, 2020, which also affected the insurance distribution.
It is important to note that, at the domestic level, the extension granted by IVASS on the deadline for responding to complaints from businesses and intermediaries has been increased from 45 days to 75 days. The deadline for responding to customer information requests has been increased to 35 days, as opposed to 20, and the suspension of the terms of the administrative procedures pertaining to IVASS itself, are suspended from 23 February through 15 April 2020, pursuant to art. 103, paragraph 1, of the Law Decree of March 17, 2020, n. 18 (“Cura Italia” Decree converted into a definitive law of State on April 24, 2020 published on the Italian Republic Official Gazette on April 29, 2020).
Still in the context of the “Cura Italia” Decree, (art. 125, paragraph 2), the process provides for a 15-day extension of the term pursuant to art. 170 bis of the Insurance Code (i.e. Legislative Decree n. 209/2005) for expired and not yet renewed MTPL contracts and for contracts that expire in the period between February 21, 2020 and July 31, 2020.
The new paragraph 2, approved in the conversion process, provides the faculty for the insured to request the suspension of the MTPL policy for the period requested by the insured itself and until July 31, 2020, without the application of penalties or charges. The duration of the contracts is extended by a number of days equal to those of suspension without charges for the insured, while during the suspension period the rule specifies that the vehicle cannot circulate or park on a public road or on an area equivalent to a public road.
We close by noting that IVASS has a section on its website dedicated to collecting inquiries from operators, measures, and service information for users, including those mentioned above. Also included are the interventions of the Italian government and the international bodies such as EIOPA (European Insurance and Occupational Pensions Authority) and IAIS (International Association of Insurance Supervisors).
If you would like more information, or have questions about these new interventions, please contact Andrea Maura in the Aliant® Italy member office.