Uninsurable risks under IVASS Regulation 29/2009

IVASS (the Italian insurance regulator) Regulation 29/2009 details, among other things, the list of uninsurable risks in Italy.

The list also includes risks connected to valuation gains and losses resulting from corporate transactions (Article 4(2)).

Opinion of legal scholars

Some legal scholars had questioned whether warranty and indemnity (W&I) products fall within the scope of Article 4 of IVASS Regulation 29/2009, notwithstanding market players' increasing appetite for this kind of insurance.

IVASS's position

On 25 July 2019 IVASS clarified that W&I insurance policies do not fall within the scope of Article 4 subject to the following conditions:

  • With regard to the seller's side of W&I insurance, policies should aim to cover risks connected to the W&I obligations undertaken by the seller in case of a breach thereof.
  • With regard to the buyer's side of W&I insurance, policies should aim to cover duly identified obligations whose risk can be properly assessed under an actuarial perspective and whose breach does not trigger indemnification of a level equal to the consideration of the transaction.

IVASS's clarification is particularly helpful, as W&I insurance can be an important tool for completing corporate transactions smoothly and may favour the local market's development in line with international trends.

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