The long-lasting question of legitimacy of the claims-made clause is back under the examination of the Supreme Court. On 19 January 2018 the Third Section of the Supreme Court, Judge Rapporteur Councilor Rossetti, considers void -in various respects- the clause which does not qualify the "claim" as the harmful fact committed by the insured person, but qualifies as such only the request for damage compensation presented by a third party. The matter has been reported to the First President of the Supreme Court for the possible referral to the United Sections.
The claims-made clause has already been the subject of numerous rulings and in recent years, has been considered valid provided that a case-by-case judgment is made on its “worthiness" in coordination with the other policy conditions. A main criticism put forth by the Section to the claims-made clause, is that the clause would breach the principle of negotiation autonomy of the parties. By abusing the general rule contained in Article 1322 of the Italian Civil Code, the commercial practice created pacts that – in the opinion of the Supreme Court – would be able to overturn the insurance contract into a real gamble. In fact, if it is true that the parties are given ample freedom to decide what kind of risk to assure, on the other hand, there would be no possibility of agreeing on the definition of "claim", which must inevitably constitute an uncertain, possible, harmful and undesirable event.
Going further, the Third Section noted that the possibility of admitting that the claim can be constituted by a request for damage compensation by a third party, contrasts with the characteristics of the event as defined above. The claim for damages would not be harmful in itself (but only because defined as such by the parties) and the obligation of the insured to compensate damages (the real harmful and unwanted event), would arise at the time of the commission of the damaging fact, regardless of the existence of a claim for damages.
Furthermore, following this reasoning, the insured could paradoxically have an interest in the occurrence of the harmful event (the claim for compensation) in order not to lose insurance coverage in case of expiration of the contract. This is in open contrast to the principle according to which the insured risk must relate to an unwanted event.
In case of the insured’s death, the clause would leave the heirs uncovered. In fact, as established by the Civil Code in Article 1896, the insurance contract is terminated upon termination of the existence of the risk. Therefore, in principle, with the death of the insured person, the risk of causing damages to third parties certainly ceases but, on the contrary, the possibility of verification of the claim as intended in the claims-made clause, does not cease. In fact, it is still possible, after the insured’s death, that third parties request compensation of damage to heirs who would not be entitled to it, because the insurance contract would have ceased on a previous date corresponding to that of the death of the injuring party.
Summarizing the Third Section emphasizes how this particularly widespread commercial creation originates unacceptable legal paradoxes leaving the last word on the validity of these clauses to the United Sections. The latter could now be called to provide an interpretation that, as noted in the order, should consider the principles of solidarity and good faith that must be at the basis of every negotiating agreement.
In the event that the United Sections declare the claims-made clause as unlawful, there would be considerable repercussions on the way we conceive liability insurance, calculate the risk and quantify the premium owed by the insured. This is because this clause, that is now at the basis of most of the contracts pursuant to Article 1917 of the Italian Civil Code, and on which the operators (insurers, brokers and the insured themselves) place particular trust, would be eliminated.
On the other hand, should the Legislator intervene and canonize the much-discussed clauses, the Constitutional Court itself could be called to finally resolve the issue that has been pressuring the (legal and non-legal) operators of the sector for years and whose answers have the potential to overturn - we will see if for better or worse - the Italian insurance market.