On the 10th of May 2023, IVASS Provision No.131/2023 was published on the website of the Institute for the Supervision of Insurance. This document contains amendments and additions in the field of sustainable finance to the following four regulations in order to bring the Italian secondary legislation in line with the already directly applicable European regulations.
– IVASS Regulation No. 24/2016, outlining provisions concerning investments and assets as technical reserve coverage. This regulation has been amended to bring it in line with the amendments and additions made by Delegated Regulation (EU) 2021/1256 and to Delegated Regulation (EU) 2015/35 on the integration of sustainability factors and risks in the investment decision and insurance and reinsurance companies distribution processes.
Includes additions, in order of «sustainability factors», «sustainability preferences» and «sustainability risks», in compliance with the aforementioned European legislation.
In particular, sustainability risks are included among the general principles in investment management referred to in Article 4 of Reg. 24/2016.
The investment policy must take into account “the sustainability preferences of the company’s customers which have been assessed in the product approval process pursuant to Article 30- decies of the Insurance Code” as well as the potential long-term impact of the strategy and investment decisions made on sustainability factors.
– IVASS Regulation no. 38/2018, outlining provisions concerning the system of corporate governance . This regulation has been amended to bring it in line with the amendments and additions made by Delegated Regulation (EU) 2021/1256 and to Delegated Regulation (EU) 2015/35 on the integration of sustainability risks in risk management, and on the insurance and reinsurance companies policies of remuneration;
In IVASS Regulation No. 38/2018, IVASS Provision no. 131/2023 adds «sustainability risks» among the risks that must be covered by the corporate governance measures put in place by the insurance company to which IVASS Regulation no. applies. 38/2018.
In Chapter II which contains the rules on “Risk management system” added are the strategies, processes and procedures of Risk Management aimed at identifying, measuring, assessing, monitoring, managing and representing the current management risks – ongoing and prospective – including sustainability risks. Sustainability risk management is integrated with the tasks of the
risk management function and the actuarial function. Also in the context of remuneration policies, in relations with insurance and reinsurance intermediaries, as well as suppliers of outsourced services.
– IVASS Regulation no. 40/2018, outlining provisions concerning insurance and reinsurance distribution. The amendment aims to align the regulation with the amendments and additions made by Delegated Regulation (EU) 2021/1257 and to Delegated Regulation (EU) 2017/2359 on areas of conflict of interest, and rules of conduct related to investment advice on insurance-based investment products that integrate the sustainability preferences of the policyholders, with
particular regard to assessing adequateness; and finally.
With regards to the amendments related to IVASS Regulation No. 40/2018, these in particular, are aimed at supplementing the information obligations of insurance intermediaries and insurance companies by including information on sustainability factors and on the duty to respect the clients sustainability preferences.
In particular, in the area of pre-contractual information, included in the information that will be provided to the customer, the Companies must furnish information on the characteristics and «sustainability risks» required by European provisions.
In the distribution of insurance based investment products, any eventual sustainability preferences of the policyholder must also be taken into consideration in the context of adequacy assessment pursuant to Article 68-novies of IVASS Reg. No. 40/2018. The adequacy of the product also with regard to sustainability preferences must be the subject of an express declaration of compliance (Article 68-decies) by the intermediary.
In the event that no insurance investment product is able to satisfy the sustainability preferences expressed by the policyholder – and they decide to adapt their own sustainability preferences for the purpose of making a contract, a declaration of adequacy pursuant to Article 68- decies, must mention the aforementioned adaptation, specifying the reasons.
– IVASS Regulation No. 45/2020, outlining provisions concerning governance requirements and oversight of insurance products. The regulation has been amended in order to align it with the changes and additions made by Delegated Regulation (EU) 2021/1257 and to Delegated Regulation (EU) 2017/2358 – regarding products that take into account customers sustainability objectives – regarding identification of the relevant market, including negative results, also in terms of product testing, the monitoring, reviewing and information flow between manufacturer and distributor.
Lastly, the Provision amends IVASS Regulation No. 45/2020 in the places where the reference market is identified. In identifying the reference market, the sustainability factors of the product must be considered.
With regard to testing, monitoring and reviewing products, the compatibility of costs and charges with the identified reference market must also take into consideration any eventual objectives related to sustainability (Article 8 of IVASS Regulation No. 45/2020). In the intermediation activity, the distributor must also take into account any sustainability objectives insisted on by the customer. Finally, sustainability factors must also be taken into consideration in the drafting of the Policy on the governance and control of insurance products.
IVASS Provision no. 131/2023 enters into force the day after that of its publication in the Official Gazette of the Italian Republic.
IVASS Provision no. 131/2023 enters into force the day after that of its publication in the Official Gazette of the Italian Republic.