The classification of index and unit linked policies as insurance or financial products continues to be debated in Italy, notwithstanding the Supreme Court’s decision no. 6061 of 18 April 2012.
The issue arises from the enactment of Law no. 262/2005 – entered into force on 25 January 2007 -, which extended the application of the Italian Financial Act over “financial products issued by insurance companies“, formerly governed by the Insurance Code. Based on the principle of tempus regit actum, most of the Italian Courts ruled that linked policies issued before 2007 could only be governed by the Insurance Code (see decisions by the Courts of Treviso 13 July 2005, Lecce 15 January 2007, Rome 20 march 2009, Naples 5 June 2009). According to some others, Law no. 262/2005 shed light on the financial nature of such products, subject as such to the Italian Financial Act independently on the time when they have been issued (see decisions by Courts of Venice 24 June 2010, Milan 23 July 2010, Parma 10 August 2010).
The Supreme Court [see our post of 9 April 2014] unfortunately failed to take a clear position in this debate and preferred a case by case approach, asking Italian Judges to apply a sort of risk factor test, whereby the disputed policy will be classified as insurance product only if the demographic risk taken by insurance companies prevails over the financial risk assumed by consumers.
The new scenario is far from being clear.
Some Courts refuse to apply the risk factor test to policies issued prior to 2007 (see decisions by the Courts of Bari 4 July 2012 and Milan 15 October 2013) and continue applying the Insurance Code, relying on both the tempus regit actum principle and the ECJ decision of 1 March 2012 (decisions by the Courts of Bologna – 5 June 2014 – and Rome – 26 May 2012 – are particularly clear in this respect).
Despite these precedents, most of the Courts applied the risk factor test, which has been nonetheless differently interpreted, in the absence of clear indications by the Supreme Court. As a result, Courts applied the Insurance Code in some cases (see decisions by the Courts of Rome 2 May 2012, Mantua 15 January 2013, Bologna 3 December 2013, Livorno 12 February 2015, Viterbo 2 April 2015, Milan 16 April 2015, Bologna 20 May 2015, Bologna 6 July 2015, Rome 1 August 2015) and the Financial Act in some others (see decisions of the Court of Appeal of Bologna, 28 July 2016, Courts of Mantua 26 June 2012, Monza 12 December 2012, Rome 21 June 2013, Rimini 3 April 2014, Turin 17 March 2016, Salerno 24 May 2016).
Among these wavering trends of Italian case law, it may be possible to identify a fil rouge, summarised by a recent decision by the Court of Grosseto of 7 January 2016.
Linked policies are usually classified as financial products (subject as such to the Italian Financial Act), if the repayment of the invested premium is not granted, as consumers’ financial risk prevails in such a case over the demographic risk taken by the insurance companies. In the opposite scenario, in which repayment is fully granted, the Insurance Code applies. When the invested premium is only partially granted, the Judge is requested to examine further features of the disputed contract and conduct an overall analysis.
In such context, a full and detailed assessment of the features of linked policies (and more in general financial-related products issued by insurance companies) before their distribution within the Italian market is necessary to prevent any regulatory and litigation risk.