The Italian Supreme Court, by judgment no. 18736/2014, deposited on May the 6th 2014, has clarified the principle that, in case of criminal proceedings, life insurance policies can be subject to real precautionary measures, such as precautionary attachment. Indeed, the prohibition provided for Article 1923 of the Italian Civil Code - “execution cannot be levied on sums due by the insurer to the contracting party or to the beneficiary, nor can such sums be subject to provisional remedies” – does not operate in said circumstances.

According to the judges, the scope of application of the aforementioned rule must be limited to patrimonial guarantee in case of liability under civil law, whereas criminal liability does not fall within its scope. The reason is that precautionary attachments under criminal law are to be deemed differently than provisional remedies provided for by civil law: indeed, the former do not depend on civil wrongs nor on the presence of quantified damages; on the contrary, precautionary attachments aim to confiscation, that is to say a sanction which only considers the relationship between the confiscated thing and the crime.

To sum up, life insurance policies are guaranteed against execution and provisional remedies merely under civil law, whilst they can be seized under criminal law.

In light of the above, the Italian Supreme Court rejected the appeal by a taxpayer suspect of  “dichiarazione fraudolenta mediante altri artifici” (fraudulent attestation by means of artificiality, a crime provided for by Article 3 of Legislative Decree no. 74 /2000) to whom three insurance policies, amounting to more than 5 million Euros, had been attached. The release from seizure application had already been rejected by both the magistrate in charge of preliminary investigations and the Court.

Please note that the protection granted by Article 1923 operates also in case a contracting party maliciously reduces his assets at the creditors’ detriment, and does so by  paying premiums to an insurance company: if so, creditors are entitled to make up for it through the sum due by the insurer (up the amount of the premiums paid).

It is likely that the judgment at hand will bring about repercussions in the market, as the alleged impossibility for life insurance policies to be attacked by creditors highly contributes to the success of said products.