The Italian insurance market authority, ISVAP, has recently published a draft regulation, which is currently under public consultation. The draft regulation sets out the rules which life insurance companies should follow in managing segregated assets ("gestioni separate").

If approved, this regulation will only apply to insurance companies with a registered office in Italy or to the Italian branch of a third country insurer. It will regulate all aspects of segregated assets such as the mandatory provisions which must be included in internal regulations for segregated assets, the rules under which segregated assets can be set up and rules for the segregation of assets that had previously belonged to the insurer’s reserves. In addition, the rules cover the various types of investments allowed.

ISVAP has made it clear that one of the main aims of the regulation will be to ensure that all insureds have the same rights and opportunities (mainly in terms of participation to the benefits) that are offered to professional investors. In order to do so, the draft regulation requires the management bodies of insurance companies to determine the main criteria which will need to be applied in terms of investment and dis-investment in these segregated assets. This has been introduced in order to avoid situations where some institutional investors are able to invest in segregated assets in order to benefit from past profits accrued by such funds and therefore eroding the profit share of the non-institutional investors.

The deadline for feedback is 15 February 2010. ISVAP do not expect the new rules to have a significant financial impact upon firms.