Italy's Insurance Arbitrator: Regulatory framework and operational challenges

This article analyses the institution of the Insurance Arbitrator, focusing on the most critical profiles connected to the competence criteria and competition with other procedures.

On 23 May the Italian Insurance Supervisory Authority (IVASS) issued the “Technical and Implementing Provisions referred to in Article 13 of the Decree No. 215 of 6 November 2024, bearing the regulation concerning the determination of the criteria for the conduct of out-of-court settlement procedures for disputes with customers relating to insurance services and services arising from insurance contracts, etc.” (the Provisions).

The Authority has used these implementing provisions to dictate the rules for conducting proceedings before the Insurance Arbitrator. The provisions comply with Article 13 of the Ministerial Decree (the Decree)¹ and Article 187.1, paragraph 1², of Legislative Decree No. 209/2005 (Private Insurance Code, the Code).

The latter is not yet operational. IVASS has five months from the publication of the Provisions to publish the provision declaring the operation of the Arbitrator on its website. Presumably this will take place after the summer.

The introduction of the Insurance Arbitrator in the Italian legal system is in response to the obligations to comply with the provisions of Article 15 (Out-of-court dispute resolution)³ of Directive (EU) 2016/97 of the European Parliament and of the Council on insurance distribution. Italy complied with this directive through Legislative Decree No. 68 of 21 May 2018 and the subsequent Legislative Decree No. 187 of 30 December 2020.

However, one wonders how the body will fit into a context where there are already other systems of out-of-court settlement of disputes that may arise from concluding an insurance contract⁴.

First of all, it’s worth noting that the complainant can appeal to the Insurance Arbitrator once a complaint has been lodged with an insurance company and/or an intermediary. That is if they don’t respond within the 45 days provided for by IVASS Regulation No. 24/2008 or it they don’t respond satisfactorily. An appeal can’t be lodged when more than 12 months have passed since the date the complaint was lodged. Or when the facts that are the subject of the appeal date back more than three years from the date on which the complaint was lodged.

The appeal to the Arbitrator concerns insurance companies and brokers, whether domestic or EU/non-EU, that have an establishment in Italy or operate in our country under the freedom to provide services regime. It doesn’t include companies that, operating under the latter regime, have indicated to IVASS by next 30 July that they don’t wish to automatically join the Insurance Arbitrator, as they’ve joined a similar out-of-court dispute resolution system in their home country.

On this last point, IVASS clarified, when formally questioned by means of Consultation Document No. 1/2025 that preceded the issuance of the Provisions, that it had adhered to the letter of the Decree. This is clearly a systemic inconsistency that’s difficult to explain. And it creates a disparity between operators that’s not easy for complainants to understand and manage.

If we look at the powers of the Insurance Arbitrator, we notice the following.

The powers are delimited by Article 3 of the Decree, and the safeguard clause at the beginning of Article 187.1 of the Code.

The former, in defining the disputes referred to the jurisdiction of the Arbitrator, specifies that the latter is entrusted with “[...] the ascertainment of rights, including those of compensation, obligations and faculties inherent in insurance services or the failure to comply with the rules of conduct [...] inherent in the exercise of insurance distribution activities”: in this case, no monetary thresholds are envisaged to delimit the Arbitrator's jurisdiction.

Considering the fact that a prerequisite for activating the procedure before the Insurance Arbitrator is filing a complaint (which could also be addressed for information to IVASS), it appears complex to delineate the areas of competence, in part competing, between the extrajudicial dispute resolution body and the Insurance Authority.

The Authority has suggested, in terms of no particular clarity, that the Arbitrator be reserved for dealing with aspects of individual customer protection. While the complaint will be handled by the Institute exclusively for any supervisory and sanctioning profiles. It’s difficult to imagine a clear dividing line between the two areas.

With specific reference instead to disputes involving the payment of a sum of money, disputes concerning the following contracts that don’t exceed the monetary thresholds indicated below will be devolved to the jurisdiction of the Arbitrator (see Article 3 paragraph 4 of the Decree):

• EUR300,000 for life insurance contracts referred to in class I of Article 2(1) of the Code which provide for a death benefit; or EUR150,000 for all other life insurance contracts, including class I contracts, other than those referred to above; and
• 5 million for liability insurance contracts where the action is brought by the injured third party who is a direct claimant; or EUR2.5 million in all other non-life insurance contracts.

The further delimitation of the jurisdiction of the Insurance Arbitrator ratione materiae is in the safeguard clause in the first paragraph of Article 187.1 of the Code.

The latter provides that establishing the Insurance Arbitrator won’t affect the competences and cognition of out-of-court dispute resolution systems already concerning entities under Consob's supervision and concerning disputes with investors other than professional clients.

With respect to this last point, it’s perhaps not very clear who will be responsible for ruling, for example, on any complaints lodged on life products with a financial content, by non-professional clients.

If, then, to the above, we add the exclusions provided for in Article 3 paragraph 2 of the Decree (ie the Insurance Arbitrator has no jurisdiction over claims handled by the guarantee fund for hunting and road victims, nor over those falling under the jurisdiction of CONSAP and/or those concerning large risks), and the provisions of Articles 9, paragraph 1, letter l) and 11, paragraph 7, letter b) of the Decree, the purposes for which the Insurance Arbitrator is established would appear to be even less certain.

In fact, Article 9 paragraph 1 letter l) of the Decree provides that an appeal to the Insurance Arbitrator is inadmissible when it relates to a dispute that, at the date of the submission of the appeal to the Arbitrator, is already pending before a judicial authority or the Insurance Arbitrator themselves or is already the subject of an alternative dispute resolution procedure.

The second provision of the law (ie Article 11 paragraph 7 lett. b) of the Decree), on the other hand, provides that an appeal to the Arbitrator can’t be lodged if, after filing the appeal, a court application is filed or other out-of-court proceedings are instituted concerning the same dispute, which is still pending before the Arbitrator.

In essence, recourse to the Insurance Arbitrator will be possible, in addition to the cases and according to the limits indicated by the Decree and the Code as to the jurisdiction ratione materiae. But that’s only if the dispute referred to the jurisdiction of the Arbitrator isn’t, either at the date of the appeal or subsequently (while the appeal before the Insurance Arbitrator is still pending), being discussed before a court or the subject of another out-of-court dispute resolution procedure.

With reference to compulsory mediation, assisted negotiation and arbitration, we briefly note the following.

Compulsory mediation: pursuant to Article 5 of Legislative Decree No. 28/2010 for insurance contracts, mediation is compulsory as a condition for the admissibility of the court proceedings.

The procedure is generic in its indication of the insurance contracts for which mediation is mandatory. So the two procedures (mediation and Insurance Arbitrator) end up being alternatives in the event of a claim (which falls within the jurisdiction of the Insurance Arbitrator). But it will in fact be up to the claimant to decide which procedure to activate. We might wonder whether, in the event of an unsatisfactory outcome, a complainant who’s appealed to the Insurance Arbitrator will have to go through mediation before being able to go to court, in the event of a court application. This will increase the time and costs compared to the original intentions of the EU legislator. The Insurance Arbitrator, in fact, was conceived to lighten the load of disputes pending before the courts, with low costs for the complainant.

Assisted negotiation cannot be used in cases where mediation is compulsory. And since assisted negotiation must be used for disputes concerning the payment of a sum of money not exceeding EUR50,000, we can assume an alternative between recourse to the Insurance Arbitrator and assisted negotiation, left to the appreciation of the claimant.

With respect to arbitration, IVASS doesn’t make any pronouncement, at least in the outcome of Consultation Document No. 1/2025. It defers, in fact, to the complainant the appreciation of the advisability of resorting to one or the other procedure. Although this procedure isn’t frequently present in the policy conditions, and certainly absent in those applied to retail clients, it’s nevertheless a method of out-of-court settlement of disputes sometimes present in certain non-life contracts and in certain life contracts aimed at high-net-worth clients. Commonly referred to in the informal form, (which allows the parties to settle the dispute by simple negotiation), it is, even in this case, difficult to imagine how the complainant could opt for one or the other instrument, in the absence of a well-considered choice, supported by external counsel.

This procedure is intended to give complainants access to a simplified alternative dispute resolution system. But it could mean the subject who intends to use it has to have technical knowledge to avoid possible subsequent foreclosures, at least in the first phase of operation, considering the significant number of competing extrajudicial settlement procedures.