Untitled Quiz

Fundamental Principles of the Insurance Code

• The Insurance Code (CdA) aims to protect the insured party
• It ensures a stable, transparent, and competitive insurance system.
• IVASS (Institute for Insurance Supervision) is the regulatory authority
• It can regulate and control insurance companies and intermediaries.
• The intent is to ensure transparency, solvency, and behavioral correctness.

IVASS Supervision: How It Works

• IVASS regulates market access for insurers and oversees financial soundness.
• IVASS supervises the governance system and controls the transparency of information provided to clients.
• An insurance company wanting to operate in Italy needs IVASS authorization.
• It must demonstrate sufficient capital and an adequate organizational structure.

Insurance Distribution

• Insurance companies, intermediaries registered in the Single Register (art. 109), and accessory intermediaries (e.g., travel agencies) can sell policies.
• Activities excluded from insurance distribution involve giving generic information without assisting in the stipulation, managing claims on behalf of companies, or simply providing names of policies or companies.
• A salesperson recommending an insurance policy for a smartphone during purchase is not an insurance intermediary if they don't conclude the sale or assist in signing the contract.

Intermediary Registration System

• Registration requirements: integrity and professionalism, civil liability insurance, and mandatory continuous training are necessary for intermediaries.
• IVASS manages an electronic register with differentiated sections for the various types of intermediaries.

Solvency II: A Pillar of Stability

• Solvency II is a European system to ensure insurance companies have sufficient capital to cover assumed risks.
• Two calculation methods: standard formula (uniform method established by the EU) and internal model (personalized, subject to IVASS authorization).
• Key elements: Solvency Capital Requirement (SCR), eligible own funds (tier 1, 2, 3), and risk assessment (e.g., equity, credit, operational).
• A company mainly insuring catastrophic events must hold more capital than one insuring bicycles.

Balance Sheet and Accounting Records

• Insurance balance sheets are regulated by IVASS
• Includes a management report, balance sheet, income statement, and information on solvency and financial condition.
• Every company publishes the SFCR (Solvency and Financial Condition Report) containing details on financial health and risks.

Other Interesting Aspects

• Intermediaries must provide transparent and comparable information before the contract signature.
• There is a ban on bundling which means clients cannot be forced to subscribe to other policies (e.g., life, accident) to have R.C. Auto.
• Banks used to impose mortgages with attached life policies, which is now prohibited for R.C. Auto.

Ownership Structures and Equity Interests

• Companies must disclose every relevant equity interest.
• There are rules on indirect control and suspended voting rights if requirements aren't met.
• IVASS can suspend the voting rights of shareholders not meeting the set obligations.

Reinsurance

• Reinsurance is insurance for insurance companies, where a company transfers part of its risk to another company (reinsurer).
• Requisites: compliance with solvency standards, assessment of assets and liabilities, and adequate technical reserves are required.
• An Italian company insuring seaside resorts against storm damage can transfer part of the risk to a specialized German company.

Quick Review of Key Concepts

• IVASS: Insurance supervisory authority in Italy.
• Solvency II: EU regulation to ensure the financial solidity of companies.
• Obligation to Contract: Companies can't refuse R.C. Auto insurance.
• Insurance Distribution: Only authorized parties can sell policies.
• Preventivass: IVASS public comparator to compare auto insurance prices.
• Internal Model: Personalized calculation system for solvency capital.
• SFCR: Document describing the company's financial health.

Types of Insurance: Damage and Life

• Damage Insurance covers the risk of economic losses due to unforeseen events (e.g., fire, theft, accidents)
• Life Insurance is regulated by art. 2, paragraph 1 on policies covering of human life, polices related to common funds or indices, policies related to capitalization as well as management of group funds for social security.

Categories of Damage Insurance (art. 2, comma 3)

• Accident and health.
• Damage to land vehicles, railways, aircraft, ships.
• Fire, damage to other assets.
• Civil liability (auto, aircraft, maritime, general).
• Credit and surety.
• Pecuniary losses (income, profits, rent, etc.).
• Legal protection and assistance.
• A “Home” insurance policy covers: Fire (n.8) + Theft (n.9) + Family R.C. (n.13).

Deductible and Excess

• Deductible: Fixed amount borne by the insured in the event of a claim.
• If there is a €200 deductible and the damage amounts to €800, the insurance pays €600.
• Excess: Percentage of the damage borne by the insured.
• If there is a 10% excess on a damage of €1,000, the insurance reimburses €900.
• The distinction between excess and deductible is subtle but important for those selling or buying insurance.
• Deductible Definition: A fixed amount that remains the responsibility of the insured in the event of a claim.
• If the damage is less than the deductible, the insurance pays nothing. If higher, it only pays the exceeding amount.
• The amount is predetermined and known to the client.
• Excess Definition: A percentage of the damage that remains the responsibility of the insured.
• The insurance pays only a part of the damage, in proportion.
• Often has a minimum and/or maximum excess amount to prevent figures from being too low or too high.
• Franchises are more probable when selling insurances in Retail, especially for warranty extensions or accidental damage coverage on electronic devices.

Catastrophic Policy

• The Code does not specifically mention the “catastrophic policy.”
• The concept is linked to damage policies for events, such as earthquakes, floods, eruptions.
• In Italy, mandatory coverage for catastrophic risks has been introduced in some circumstances through separate regulatory interventions (not in the Code itself).
• Since 2024, Italian companies must have coverage for catastrophic events under the 2023 Budget Law.

Mutual Insurances

• Mutual insurance companies are indirectly mentioned in the Code as special forms not prohibited, provided they respect the authorization and supervision obligations like any other company.
• They are not "tontine associations."
• Mutuals operate on a principle of solidarity among members, who share risks and benefits and are more common in Northern European insurance systems.

Who is authorized to sell insurance?

• According to Art. 109 of the Code are licensed agents(representatives of one or more companies), brokers(independent intermediaries), Banks and Post Offices(as registered intermediaries), accessory intermediaries.
• Required: Registration in the Single Register of Intermediaries (RUI).

Conclusion and recommendations:

• An overview is provided concerning regulations and what one needs to offer insurance policies.
• Study the classification of damage and life branches as if they were "school subjects."
• Imagine the deductible as a "minimum uncovered" amount that the insurance never pays.
• Remember that only those registered in the RUI can offer policies.
• MediaWorld (operating in Italy as Mediamarket S.p.A.) is registered in the Single Register of Insurance Intermediaries (RUI) of IVASS with Registration number E000582744
• As listed in Section E - Collaborators of intermediaries enrolled in sections A, B or D offer insurance on electronic products and appliances and offer warranty and damage protection products.
• The listing can be consulted through Registro Unico degli Intermediari assicurativi e riassicurativi (RUI) or Single Register of Insurance and Reinsurance Intermediaries (RUI)
• Article 109 (4) requires intermediaries communicating changes in legal information promptly. Updates are listed in IVASS Regulation n. 40/2018
• MediaWorld, through Mediamarket S.p.A., registered in section B of the RUI can offer damage insurance to electronic products and appliances.
• Branches covered are Ramo 9 offering cover on damages to goods. Ramo 16 that covers monetary loss and Ramo 18, assistance.
• It is not licit to offer Life Products, non explicitly authorized, Health / Accident Policies and policies with complex financial protection.

Mediaworld Obligations:

• Article 120 and 185 requires disclosure of the informative documentation, transparency and potential conflicts of interest.
• It is obligatory to offer consultation so that the customer may weigh various options.
• All payments should be separate from the companies patrimony.

Practical Examples:

• Cross selling where purchase is tied to a product is prohibited.
• Be wary of clients over 65 or non digital and offer a thorough and easy explanation of the product they intend to purchase.
• Provide mandatory education of 60 hours and yearly updates of 30 hours as specified by Regulation IVASS 40/2018, art. 89 including policy types, transparency, potential conflicts of interest and the regulation pertaining to the treatment and use of sensitive data.

Mediaworld Policy Examples:

• Washing machine guarantee extension covers damage from the 3rd to the 5th year that includes repair and replacement with standard value in case of damages.
• Smart phone protection covers accidental, liquid damages, theft, no cover on mal use.

General Recommendations:

• Check that client has received pre contract papers, clarifying the optional status of the product, registering compliant information, data storage for 10years, activation of the policy, collection of receipts and contact information.
• Tools: Use Preventivass.it, IVASS and ANIA sites to remain current and follow the internal selling polices.

Documentation requirements:

• Comply with Directive IDD and Private Protection Code: DIP and additional DIP must be delivered to the customer.
• Art. 120-bis requires costumers to know compensations MediaWorld receives as a fixed bonus to each product or a retribution from the company.
• Should the customer not express his intentions for a product: a “contract less sale” will be made and signed.

Obligations regarding the distribution of proceeds:

• All payments made should avoid use in relation to MediaWorld assets and should be transfer to the corresponding insurance company.

Limitations and Responsibilities:

• Tying where products are purchased together is prohibited, client can elect an insurance package: it is permitted for a customer to propose an offers with a discount if the policy is optional and described as separated on billing.
• Vulnerable client assistance is required when dealing with the elderly that posses language or technical difficulties by explaining and leaving the necessary time to reflect through simplified procedures.

Mandatory professional formation (Regolamento IVASS n. 40/2018):

• Mediaworld must assure that personnel has concluded 60 hours of preparation and at least 30 hours of yearly updates on policy types and data treatment and are up to date with all policies.

Penalties:

• IVASS can apply sanctions and fines up to 600.000 euros, cancel or suppress a license and can provide public notification of the incident as per Art. 325 rules.

RUI register:

• Definition: Register of all authorized persons to sale and advise on insurance matters for protection.
• Administered by IVASS and insures competence and safety for consumers.
• Covered are persons selling policies such as banks, media companies as well as advisors.

General Insurance Terminology:

• Agency or Mandate: offices of a company.
• Complementary Insurances: expanded versions of a primary.
• Bank Insurances: sales via a partnership.
• Technical Basis: elements used to produce the costs.
• Uploading: the amount of fees to include in the premiums.

Risk and Accident Management:

• Antidote: duration since the beginning of the insurance.
• Antifraud Database: register against fraud in auto coverage.
• Bonus Malus: variable system that applies premium in auto policies based on damage.
• Downtime: lack of payment that can occur for accidents.

Legal Terms:

• Risk evaluation documents.
• Surveillance Authority.
• GDPR norms.
• Liberty of service for European customers.

Relevance for media products:

• MediaWorld can offer insurance to partnership with financial groups that helps offers comprehensive product protection, use products for damage and maintain policy details.

Rules for private insurance:

1. art 1882 - obligation of the contractor to pay in order to maintain insurance.
2. art 1888 - insurance policies should be registered in writing.
3. art 1910 - one must register all insurance plans.

Extra rules in the Italian codes:

1. Art 106: Defines whom can underwrite insurance

• 1 . Art. 1903 – Insurance Agents: relevant to define the operational limits of intermediaries in the stipulation and management of contracts1.

• Art. 109 – Single Register of Intermediaries (RUI): governs the mandatory registration for intermediaries, including employees -For MediaWorld, the critical aspects include compliance with RUI rules, adherence to the prohibitions of combinations.

• Art. 1891 - Insurance on behalf of others or on behalf of whom it belongs

• Recognizes that the contract can also be stipulated in favor of third parties (useful for MediaWorld that sells insurance to final customers).

• Art. 1892 - Inaccurate declarations and reticences with fraud or gross negligence

• If the insured lies or omits important info, the insurer can request cancellation of the contract.