On 26 August 2015, the Italian Insurance Regulatory Authority (IVASS) and the Bank of Italy published a joint letter, addressed to all insurers and intermediaries (including banks and financial intermediaries) calling on them to adopt new measures so that customers purchasing insurance policies paired with mortgages and other loans (so-called “Payment Protection Insurance” or “PPI”) are better protected.
In particular, the letter discusses the investigations and enquiries that both Authorities have conducted on the sale and distribution of PPI and the critical issues that have been identified. Such critical issues include:
- exclusions, limitations and waiting periods frequently contained in PPI policies often result in a significant reduction in the scope of coverage provided;
- offered terms and conditions are often not consistent with the requirements of transparency and integrity imposed by laws and regulations, or with the needs of the customer; and
- the costs for the purchase of PPI policies are often high and unjustified.
IVASS and the Bank of Italy have called on insurers and intermediaries to adopt the new measures and amend their structures and methods of distribution of PPI policies, in order to guarantee a higher level of transparency and to provide customers with products that are more in line with their needs.