The legal framework for the insurance sector is primarily based on EU legislation.
The tools used by the European Union have different features according to whether they are binding or non-binding and to how they are applied in Member States: Regulations, Directives, Decisions, Recommendations and Opinions (pursuant to article 288 of the Treaty on the Functioning of the European Union).
Regulations are of general scope, they are binding in all their elements and directly applicable in the Member States, without the need for transposition into national law; therefore they represent the tool for achieving full harmonization, reducing national discretion and avoiding that regulatory discrepancies between Member States may result in an unlevel playing field between economic operators.
Directives are addressed to Member States and bind them as to the results to be achieved, but leave to the national authorities the choice of form and methods to be used in their implementation.
The regulatory and implementing technical standards (RTS and ITS), drafted by EIOPA (European Insurance and Occupational Pensions Authority) and adopted by the European Commission with Regulation, are also of growing relevance in the insurance framework. They are aimed to harmonize more complex and specific aspects of the market regulatory system so as to make it more comprehensive, homogeneous and unified.
The Guidelines issued by EIOPA, as third-level measures, are aimed to support convergence in the application of the provisions contained in the Directives.