On August 6 2012 the insurance regulator, ISVAP, published amendments to Circular 574/D of December 23 2005 regarding passive reinsurance.
Among other things, the amended Article 4 of Circular 574/D stipulates that companies must "implement a reinsurance policy that also takes account of their liquidity, and if necessary adopt due contractual provisions". Companies must also:
"[have] due documentation on the agreed terms and conditions, and on the shares of each reinsurer. Moreover, for those contracts for which written proof is required under Article 1928 of the Italian Civil Code, they must see to enter into written agreements no later than four months after conclusion of the agreements concerend, and in any case as of the start date of coverage. For facultative placements, within the same terms, they must have the documentation proving the interests of the reinsurers, signed by each as to their respective shares. For the reinsurance of business classes with special characteristics (e.g. hail, which normally ends after February), the aforementioned term is six months."
The provisions of the circular apply to insurance and reinsurance undertakings with a registered office in Italy and also to the branches of reinsurance companies with registered offices in countries outside the European Economic Area.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.