To start with, in Italy the insurance discipline dictated by our Civil Code is mainly based on the loss occurrence principle, so that the insurer is held to provide coverage for an act or omission which occurs during the policy period from which the insured’s liability to pay compensation arises. The loss occurrence clause is more favorable to the insured party because it guarantees coverage even many years after the event that originated the claim and the loss. Furthermore, in the view of some authors, claims-made clauses appear to give an unreasonable advantage to the insurance company, knows exactly how long it is held to guarantee the insured party. Not only, this type of clause may result in a gap in insurance coverage because the insured party is nonetheless held to face claims till the expiry of the statute of limitations period. So it is thought to create an unacceptable and unlawful imbalance between the contracting parties’ rights and obligations. Before the recent Supreme Court decision, the Courts – including the Supreme Court – took different positions with respect to claims-made clauses. Briefly these are, – claims-made clauses are null and void, therefore not applicable; – claims-made clauses are but only if specifically approved by the insured party because they are so burdensome for the insured party as to require specific attention and specific approval; – claims-made clauses are valid and enforceable. As mentioned before, the Supreme decision we are talking about went through and examined all the reasons supporting the different positions relevant to claims-made clauses and stated that, in line of principle, these clauses are valid and enforceable but with some possible exceptions. The case at the basis of the new Supreme Court decision was – in very short terms – the following: – insured party: a hospital;
The decision will be a milestone in the Insurance industry for the following reasons. The Court has split the “claims made” clauses in two major categories: one related to the so called “pure” clauses and one related to the so called “impure” or “mixed” clauses. The “pure” clauses cover requests for damages received by the Insured for the first time during the policy period irrespective of the date the unlawful act was committed. Instead, the “impure” clauses cover requests for damages received by the Insured for the first time during the policy period provided that the related unlawful acts committed by the Insured also occurred during the policy period or in a limited period of time preceding the date of commencement of the policy (retroactivity period). The Court in line with its previous case-law (see judgements of the Court of Cassation n. 7273/2013 and 3622/2014), recognised the possibility to derogate from article 1917, I paragraph of the Italian Civil Code (that provides that “the insurer is bound to indemnify the insured for the damages which the latter must pay to a third party as a result of the events occurred during the period of insurance and depending on the liability provided by the contract”) and affirmed the validity of the claims clause, overcoming a case-law tendency of the Courts of first instance that deemed the clause invalid for being in violation of article 1917, of article 2965, as well as of articles 2965, 2932 and 2935 of the Italian Civil Code (see judgement of the Court of Genoa of 8 April 2008;
The claims made clause as interpreted by the Italian Supreme Court Articoli 14/06/2016 Diritto delle Assicurazioni the-claims-made-clause-as-interpreted-by-the-italian-supreme-court The Joint Division of the Italian Supreme Court with decision n. 9140 filed on 6 May 2016 ruled on the validity of the “claims made” clause in insurance contracts. The ruling sets out the following basic principles in relation to these clauses: “in insurance contracts covering civil liability towards third parties, the clause granting coverage subject to both the wrongful act and the request for damages occuring during the policy period or within specified time periods set by the contract (i.e. so called “mixed” or “non-pure” claims made clause) is not vexatious; such clause, under certain conditions, might however be declared void because the underlying interests does not deserve protection under the applicable law (“difetto di meritevolezza”), or ….[in case of consumers]…. because the clause causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer; the relevant evaluation must be carried out by the Court awarding on the merit [i.e. Tribunals and Courts of Appeal] and such evaluation is not subject to appeal before the Court of Cassation, provided that the judgement’s reasoning is adequate”. The decision will be a milestone in the Insurance industry for the following reasons. The Court has split the “claims made” clauses in two major categories: one related to the so called “pure” clauses and one related to the so called “impure” or “mixed” clauses. The “pure” clauses cover requests for damages received by the Insured for the first time during the policy period irrespective of the date the unlawful act was committed. Instead, the “impure” clauses cover requests for damages received by the Insured for the first time during the policy period provided that the related unlawful acts committed by the Insured also occurred during the policy period or in