David Maria Marino is a Partner in the Litigation & Regulatory department and is head of the Insurance and Financial Litigation team. He is based in the Milan office.
David provides assistance in insurance and reinsurance matters to domestic and foreign companies and intermediaries both in contentious and non-contentious matters with particular reference to drafting and review of policy wordings and assistance in regulatory and compliance issues, including relationships with the supervisory authorities.
He has developed a significant experience in multi-jurisdictional corporate and financial litigations on trust related matters.
Law 24/2017 on the management of healthcare risks and the liability of healthcare professionals was recently approved. The law focuses on the requirement that public and private hospitals establish structural, technological and organisational resources and implement risk management and internal audit functions that are typical of other regulated industries, such as banking and insurance.
IVASS (the Italian insurance regulator) has approved changes to its Regulation 14 of 18 February 2008 concerning portfolio transfers. The order affects domestic (ie, Italian) insurers and Italian branches of third-country insurers involved in a portfolio transfer transaction and those entitled to insurance benefits deriving from polices issued by the ceding undertaking. The changes aim to allow greater flexibility in the management of insurance business.
In March 2020 the National Association of Insurance Companies approved the new self-regulation codes for co-insurance in non-life and life insurance, replacing the previous codes. Essentially, the new codes set out standard clauses governing the relationship between co-insurers. They apply to co-insurance agreements entered into effective from 1 January 2020. The previous codes can be used only up until 31 December 2020.
With two measures introduced in August 2020, IVASS (the Italian insurance regulator) has approved changes and certain rules – effective as of 31 March 2021 – to various IVASS regulations concerning distribution and product oversight and governance for insurers and distributors. This article highlights the main changes.
In two separate orders, the Supreme Court has reiterated certain principles that should be used as guidance for interpreting insurance clauses with a view to ensuring a fair balance between the insured's rights and the insurer's obligations. The orders once again confirm the importance of insurance contracts being drafted with rigor and in accordance with clear and simple criteria in order to limit misinterpretation and possible litigation.
The Court of Cassation recently set out a number of important points on claims-made clauses, reaffirming that, among other things, the liability insurance loss occurrence scheme is not binding pursuant to Article 1932 of the Civil Code. Thus, it can be derogated from by parties, which are free to opt for the claims scheme model by including pure or mixed clauses in insurance contracts.
By a letter of 17 March 2020, IVASS (the Italian insurance regulator) and the Bank of Italy once again addressed the issue of policies connected to loan and financing contracts, recommending the adoption of verification procedures by the internal control functions of insurance undertakings and financial institutions in order to identify and remedy possible critical issues.
Section 46 of Institute for the Supervision of Insurance (IVASS) Regulation 40/2018 concerns (re)insurance distribution and provides that undertakings must, among other things, draft an annual report on the control over their distribution networks, which must be submitted to the board and the compliance division and delivered to IVASS. The deadline to submit the 2019 report and data relating to distribution networks is 29 February 2020.
The Institute for the Supervision of Insurance (IVASS) recently launched a public consultation on two separate documents containing additional rules implementing the local and EU laws on insurance distribution (and other ancillary provisions). The first consultation document relates to product oversight and governance, while the second introduces changes to existing IVASS regulations.
Employees injured at work are compensated by the National Institute for Insurance against Accidents at Work (INAIL), but can also bring an action before the civil courts against their employers or other liable third parties for damages not covered by INAIL. However, the criteria that the courts should follow to quantify so-called 'differential damages' remain unclear, which is relevant for third-party liability insurers exposed to indemnification claims arising from INAIL's recourse actions.
The China Banking and Insurance Regulatory Commission and the Italian Institute for the Supervision of Insurance recently entered into a memorandum of understanding setting out the basis for cooperation between the two supervisory authorities in the context of a broader plan of general cooperation between Italy and China. It will be interesting to see what concrete effects (if any) the memorandum will have, particularly in the context of the present unstable geopolitical situation.
IVASS (the Italian insurance regulator) recently clarified that warranty and indemnity (W&I) insurance policies do not fall within the scope of Article 4 of IVASS Regulation 29/2009 concerning risks connected to valuation gains and losses resulting from corporate transactions. The clarification is particularly helpful, as W&I insurance can be an important tool for completing corporate transactions smoothly and may favour the local market's development in line with international trends.
The European Commission recently adopted new rules to help insurers invest in equity and private debt and provide long-term capital financing. As a result of the new rules, insurers will have to hold less capital for investments in equity and private debt, including in small and medium-sized enterprises. The newly adopted rules take the form of a delegated regulation, amend the EU Solvency II Directive and follow on from the mid-term review of the Capital Markets Union Action Plan.
Similar to other jurisdictions, Italy has been affected by global phenomena such as technological advances, an ageing population, climate change and evolving legal and regulatory frameworks. So how has the Italian legal system adapted to emerging risks and the new needs of policyholders? This article examines a number of recent changes to the Italian insurance market in this context.
IVASS, the Italian insurance regulator, recently introduced Regulations 40 and 41 regarding the distribution of (re)insurance products and pre-contract information duties. Alongside these regulations, IVASS also published a report following a consultation phase. The clarifications that IVASS provided in the report represent useful guidance for both insurers and intermediaries.
The new EU Insurance Distribution Directive was recently transposed into the Italian legal system. The Italian insurance regulator also recently published separate consultation papers on its website regarding implementing measures on (re)insurance distribution, pre-contract information for the marketing and manufacturing of insurance products and new procedural rules for the application of fines in case of breach of insurance regulations.
In recent years, the attention that IVASS (the Italian insurance regulator) and the EU authorities have paid to the protection and needs of insureds has increased and been translated into market letters (among other initiatives). These market letters aim to encourage insureds to intervene in contracts through the introduction of protective measures or eliminate potentially punitive restrictions, thereby limiting contractual autonomy in various areas.
IVASS, the Italian insurance regulator, recently provided details of an investigation into (re)insurance intermediaries' general understanding of cybersecurity-related issues and the remedies that they have implemented to protect their businesses and clients against the adverse effects of possible cyberattacks. IVASS will conduct another survey in 2019 to check that insurance intermediaries have complied with the proposed measures.
Article 117 of the Insurance Code provides that premiums paid to intermediaries and monies used to settle claims or due by insurers must be kept in separate accounts, the holder of which can be an intermediary that acts expressly in such a capacity. No seizure or distraint of the separate account can be carried out by creditors other than policyholders and insurers. IVASS recently clarified a number of issues in this regard following an investigation into the compliance of intermediaries with said requirements.
IVASS, the Italian insurance regulator, recently published a consultation document which includes a proposal to amend Regulation 35/2010 on the disclosure duties for proposers and the advertising of insurance products. The consultation document's publication follows the recent approval of EU Regulation 2017/1469 and sets out a standardised presentation format for insurance product information documents.
The Supreme Court recently ruled for the first time on the application of an insured's general duty to pay defence costs to prevent or mitigate loss, as set out in Article 1914 of the Civil Code. The court stated that such a duty applies to both first-party and third-party liability insurance, and – more importantly – that in either case it applies to defence costs.
A recent decision by the Supreme Court provided an important clarification on punitive damages and public order. The court ruled that damages in tortious and contractual actions seek not only to restore the position of the damaged party as it was before the wrongful action or breach of contract, but also to serve as a punishment and deterrent.
A recent Joint Divisions of the Supreme Court decision further clarified the Court of Auditors' jurisdiction compared with that of the civil courts regarding the liability of directors and officers (D&O) of companies held in whole or in part by public entities. The matter is relevant for insurers that underwrite D&O-related risks and need to determine whether the insured may be exposed to civil liability and sued before the civil courts or exposed to public liability and sued before the Court of Auditors.
Following Decision 9140 by the Joint Sections of the Supreme Court in May 2016, information asymmetry and the protection of insurance contract clauses became widely debated topics. While the court focused on the need to assess the validity of claims-made clauses on a case-by-case basis, this approach could also be applied in principle to any insurance contract clause that is not regulated by the Civil Code or other legislation.
The minimum requirements for mandatory professional indemnity (PI) insurance for lawyers were recently approved by Decree 22. The mandatory PI requirements for lawyers cover damages, gross negligence, wilful misconduct, claims from clients and third parties and joint and several liability. The minimum limits vary depending on the turnover and number of professionals.
IVASS, the Italian insurance regulator, recently approved regulations on the look-through approach to determine the solvency capital requirements of insurers under the Italian Insurance Code, the EU Solvency II Directive and the European Commission Delegated Regulation. The solvency capital requirement will be determined by applying the look-through approach to collective investment schemes and market, underwriting and counterparty risks.
The Italian insurance regulator recently published a proposal to amend Regulation 35/2010 on the disclosure and advertising of insurance products. The proposed amendments concern the simplification of the information note for third-party car insurance and other damages, new cases of exemption from the obligation to submit an information note and new methods for submitting pre-contractual documentation.
The Italian insurance regulator recently published Consultation Paper 7, which amended Regulation 5/2006 by introducing new methods for transmitting requests and communications required to maintain the Single Register of Insurance and Reinsurance Intermediaries. The consultation paper proposes that insurance and reinsurance intermediaries adopt an electronic signature for requests or communications relating to the register.
The Joint Divisions of the Supreme Court recently published a long-awaited judgment on the validity and enforceability of claims-made clauses. In line with its previous judgments, the court established that in civil liability insurance contracts, claims-made clauses are not unfair. The grounds of the judgment establish a number of additional principles of law which appear reassuring for market players.
A recent Court of Cassation ruling established that the stipulation of a limit does not constitute an essential element of a civil liability insurance contract. The ruling demonstrates the importance of setting out clear provisions regarding the limits and sub-limits in civil liability policies, and the burden of proof concerning their application in particular.
IVASS, the Italian insurance regulator, recently published draft regulations on investments and assets covering technical provisions with aim of implementing Articles 37ter and 38 of the Insurance Code. The main changes include the introduction of the prudent person principle when selecting investments and assets covering technical provisions, and the strengthening of internal control systems.
A bill recently issued by the Social Affairs Committee proposes a number of points that are worthy of analysis – including, above all, a systemic intervention in the healthcare industry. The bill will be examined by other committees and Parliament and it is clear that the legislature aims to address the question of medical liability from a civil and criminal perspective as well as in broader terms of risk management.
The Insurance Supervisory Authority recently published a draft decision on complaints management by insurance intermediaries. The decision is designed to implement the European Insurance and Occupational Pensions Authority provisions and guidelines on complaints against intermediaries and raise awareness of the new provisions.
The insurance regulator and the Bank of Italy recently published a joint letter addressed to insurers and intermediaries with the aim of increasing the level of protection for parties that purchase insurance policies paired with mortgages and other loans (ie, payment protection insurance). The supervisory authorities have identified a number of potential areas of intervention for market operators in this regard.
The Italian insurance regulator and the Bank of Italy recently met consumers, insurance companies, intermediaries, banks and financial companies to discuss a European Court of Justice judgment on payment obligations of mortgage loans in the event of a borrower's total incapacity to work. The regulator and the Bank of Italy will request that products and sales practices meet the guidelines provided.
Decree-Law 74/2015 has amended the Insurance Code to implement the EU Solvency II Directive regarding the take-up and pursuit of insurance and reinsurance. Among other things, the amendments address the allocation of supervisory duties for insurance and financial products between the national financial supervisory authority and the Italian insurance regulator.
The Italian insurance regulator IVASS recently issued new rules regarding complaints handling by insurance undertakings in compliance with the recently enacted European Insurance and Occupational Pensions Authority guidelines. The new rules have been introduced as amendments to an existing IVASS regulation on complaints handling and include a number of significant changes.
IVASS, the Italian insurance regulator, recently issued Regulation 8 which describes the simplified procedures and compliance obligations that apply to relationships between enterprises, intermediaries and clients. The document intends to foster technological innovation by reducing paperwork. Many of its provisions are optional and aim to incentivise the development of simplification tools.
Many professional indemnity (PI) insurers offer policies covering the civil liability of certified chartered accountants and bookkeepers arising from the issue of conformity certification for taxpayers' tax returns. Recent legislative changes aiming to simplify tax matters had given rise to numerous uncertainties for PI insurers in this area, but the insurance regulator has now issued much-needed clarification.
The Italian insurance regulator recently approved regulatory amendments which govern investments to cover technical reserves, providing that insurers can offer loans to enterprises within certain limits and under certain principal terms. The amendments limit loan amounts in relation to the borrower's net equity and the insurer's technical reserves.
A decree was recently published which aims to facilitate recourse to new sources of financing by introducing a new category of asset to cover the technical reserves of life and non-life insurers. However, the opening of the corporate lending market to the contributions of insurers does not imply that the traditional separation between the insurance and banking sectors has been overcome.
The Italian insurance regulator recently published a draft measure containing amendments to the regulation on insurance complaints handling. It explained that the new provisions are necessary following the issue of European Insurance and Occupational Pensions Authority guidelines on complaints handling, which aim to ensure fair treatment of policyholders, beneficiaries and injured parties.
Based on recently issued European guidelines regarding implementation of the EU Solvency II Directive, IVASS (the Italian insurance supervisory authority) has proposed amendments to the national regulations on the role of insurance undertakings' corporate bodies and governance. The proposals aim to ensure transparency in the management of undertakings.
IVASS (the Italian insurance regulator) has conducted a survey on the sale of insurance policies (typically in the form of group policies) in conjunction with non-insurance products or services. While acknowledging that such sales are as widespread in Italy as abroad, and can contribute to the development of the insurance market, IVASS intends to verify whether consumers are provided with at least the minimum level of protection.
A new rule affecting the websites of life and non-life insurance companies recently came into effect. Affected insurers must now have suitable areas on their websites reserved for each policyholder, allowing policyholders to view their existing insurance policies, contractual conditions, payment status, expiry dates and, for life insurance policies, the redemption value and updated valuations.
The Court of Cassation recently ruled on the issue of proof of damage incurred by a consumer as a result of an insurer's unfair competition practices, which resulted in the consumer having to pay higher motor third-party liability insurance premiums than would have been required had the offence not been committed. In particular, the court clarified the acceptable evidence of the causal link between the offence and the damage.
Pursuant to a recent Inland Revenue measure, insurers must now log data concerning certain insurance premiums and contracts in a new data exchange system. The measure is intended to streamline and update the record-logging system by introducing procedures to improve transmission flows and quality control of data.
As part of the recently launched integration process of bank and insurance supervision, IVASS, the insurance regulator, has issued new guidelines for the supervisory inspection process for insurance and reinsurance companies. The principles underlying the new guidelines include a focus on risks, proportionality and objectivity of interventions, and effectiveness and flexibility of action.
In the context of the liberalisation measures recently adopted by Parliament with a view to increasing competition in the insurance sector, IVASS, the insurance regulator, recently issued a draft order that requires insurers to allow insureds to access information relating to their insurance contracts through dedicated areas on their websites.
A 2012 decree-law includes several new provisions governing third-party liability car insurance. These include the establishment of new terms for the submission of data to the claims database of IVASS (the insurance regulator), the introduction of a new report form for insurers in order to prevent fraud and the insurers' obligation to inform clients of the tariffs of competing companies.
In light of Italy's ratification of the UN Convention on the Rights of Persons with Disabilities, IVASS, the insurance regulator, has issued a letter calling on companies to adjust their health insurance policies with the aim of eliminating discriminatory provisions that limit or prohibit coverage of persons with mental illness or disabilities.
Decree-Law 179 recently introduced important changes to the insurance market, including with respect to compulsory motor liability insurance, insurers' websites, insurance mediation and the statute of limitations. A new law has partially amended the decree-law by reducing the originally planned 10-year term statute of limitations for non-life insurance contracts.
A new law has introduced important changes affecting the insurance market. Among other things, the law provides for a maximum duration for mandatory motor liability insurance policies, mandates that insurers provide up-to-date policy information on their websites and revokes the prohibition against insurance agents entering into cooperation agreements among themselves for insurance mediation.
The insurance regulator, ISVAP, has published amendments to Regulation 20/2008 regarding internal audits, risk management, compliance and outsourcing of insurers' operations. The amendments adjust certain provisions to accord with the International Association of Insurance Supervisors Insurance Core Principle 7 regarding the principles of corporate governance.
The insurance regulator, ISVAP, has published amendments to Circular 574/D regarding passive reinsurance. Among other things, the amended circular stipulates that companies must "implement a reinsurance policy that also takes account of their liquidity, and if necessary adopt due contractual provisions".
Under the legislative reform of Italy's professional bodies, anyone providing professional services is now required to take out an insurance policy covering the third-party liability that may derive from such services. Presidential Decree 137/2012 recently deferred the entry into force of this requirement.
A new decree aims to reorganise government operations and reduce public expenses. In the insurance sector, this will be done by merging ISVAP, the insurance regulator, and COVIP, a regulatory committee overseeing pension funds, into IVARP, the new regulatory body for the insurance and social security private sector.
As part of the recent reform of Italian law, the insurance regulator, ISVAP, has issued various regulations and draft regulations which will have a significant impact on insurance contracts and the internal structure of insurance companies. Payment protection insurance, anti-money laundering measures, passive reinsurance and investments covering technical reserves are among the areas covered.
The Court of Milan recently ruled on various issues affecting professional indemnity policies, including claims-made rules and prior knowledge/non-disclosure issues. A former statutory auditor of a company which had been declared bankrupt was found liable in respect of a claim brought by the receiver. When the auditor sought indemnification, the insurer denied coverage.
A recent legislative decree clarifies that a bank, credit institution or intermediary acts unfairly where it requires customers to purchase a payment protection insurance insurance policy, brokered by the same entity, as a condition of entering into a financing agreement, such as a loan agreement.
The Italian insurance regulator, ISVAP, has issued a note concerning rules of conduct for insurance intermediaries. The note supplements Article 48 of ISVAP's Regulation 5/2006 on insurance mediation and will have a significant impact on payment protection insurance and the bancassurance market, forcing players to rearrange their distribution models.
An order issued by Italy's insurance regulator, ISVAP, is intended to help insurance companies that face capital losses as a result of highly volatile markets, particularly in the context of bonds issued by governments. Given the present European markets conditions, the order continues to be highly relevant to insurance and reinsurance companies.
As part of a broad reform of professional services, new provisions have been introduced on professional indemnity policies. The requirement to obtain such a policy will affect architects, engineers, notaries, accountants, lawyers and, more generally, all those whose activity is governed by a professional body - that is, bodies which exercise statutory functions in regulating a relevant profession.
The Emilia Romagna Division of the State Auditor's Office has issued the latest ruling on the issue of insurance policies entered into by public entities to cover the administrative liability of public officials. Certain public officials were found liable for having caused the public entity for which they worked to enter into a policy that covered their personal administrative liability, the entity having borne the relevant costs.
Italy's insurance regulator, ISVAP, has recently approved two new regulations. One relates to the establishment and management of segregated assets and internal funds for undertakings carrying out life insurance business; the other relates to remuneration policies for insurance companies.
ISVAP, the insurance regulator, has announced a further analysis of the market for insurance policies connected to loans and financing agreements. The request is addressed to life and non-life insurance undertakings with registered offices in Italy, as well as Italian branch offices of non-life insurance undertakings with a registered office in a third country.
Italy's insurance regulator, ISVAP, has published a draft regulation that addresses organisational procedures and internal controls to prevent insurance undertakings and intermediaries from being exploited for the purposes of money laundering and terrorist financing.
ISVAP, Italy's insurance regulator, has approved a regulation which offers guidelines on investments and assets to cover technical provisions. Among other things, it introduces new rules on shareholdings in real estate companies and permitted alternative investments, and proposes the adoption of a framework resolution to formalise strategic investment policy.
ISVAP, Italy's insurance regulator, issued a regulation in Summer 2010 which, among other things, prohibited the same party from being both the beneficiary of insurance coverage and an intermediary of the relevant contract. This provision had a significant impact on the bancassurance market. Following a successful appeal against its measure, ISVAP has consulted on a similar rule.
Two Italian courts have issued significant decisions on index-linked policies. The Court of Parma ruled on the right of attachment over index-linked policies, while the Court of Milan considered the greater complexity and risks of index-linked products and the additional information requirements associated with them.
ISVAP, Italy's insurance regulator, clarified a number of points in relation to multi-year insurance contracts following amendments to Section 1899(1) of the Civil Code. The clarifications cover an insured's right of withdrawal from a multi-year contract and a restriction on an insurer's right to seek reimbursement for a multi-year discount if the insured withdraws from the contract.
The insurance regulator ISVAP is consulting on guidelines on investments and the qualitative requirements for activities to cover technical provisions. Following indications by the International Monetary Fund and the International Association of Insurance Supervisors, it also proposes specific investment-related governance rules for the adoption of a framework resolution that formalises the strategic policy of investments.
The Court of Cassation has re-examined the difference between limitation of liability clauses - which are unenforeceable unless specifically approved in writing pursuant to Section 1341 of the Civil Code - and clauses that define the limits of the risk to which an insurance contract relates.
ISVAP, Italy's insurance regulator, has published a regulation on disclosure duties (with particular reference to pre-contractual information to proposers) and the advertising of insurance products. Among other things, the regulation sets out new information requirements for non-life insurance policies and includes provisions on loan protection insurance and transparency in life insurance policies.
A 2008 decision by the Court of Genoa raised the issue of the invalidity of claims-made clauses due to their alleged conflict with Article 1917 of the Civil Code, which regulates insurance contracts on the basis of the loss occurrence scheme. The Court of Milan has now examined the issue and has diverged significantly from the earlier decision.
The Tax Agency has issued a resolution that clarifies the tax regime for activities ancillary to insurance and reinsurance activities. The clarification fills a significant regulatory gap - the agency observed that neither Italian nor EU value-added tax legislation expressly defines the terms 'insurance transaction' or 'activity ancillary to an insurance transaction'.
ISVAP, Italy's insurance regulator, has published two draft regulations. One focuses on the licensing and authorization of reinsurance activities, while the other is intended to ensure that a contracting party is adequately informed when entering into a life or non-life insurance contract through remote communications systems.
The Supreme Court has provided guidance on the scope of professional indemnity insurance policies. An employment consultant was sued by a client for alleged negligence in the drafting of a lease agreement. The insurer successfully argued that the activity did not fall within the scope of application of a professional indemnity policy covering claims arising from the typical activities of an employment consultant.
The Law on the Development and Internationalization of Companies and the Energy Sector has amended Article 1899 of the Civil Code, which relates to the duration of insurance cover. It makes provision for reductions in premium in respect of long-term coverage and clarifies the terms on which an insured may withdraw from a contract of over five years' duration.
Italy's insurance regulator has issued a draft regulation on insurance companies' compensation policies, stating that they must meet long-term objectives of profitability and business equilibrium and must avoid excessive exposure to short-term risk. Specific rules apply to personnel, internal controls managers, actuaries and even insurance and reinsurance intermediaries and suppliers of outsourcing services.
A new regulation from the Istituto per la vigilanza sulle assicurazioni private e di interesse collettivo, the organization with authority over Italy's insurance sector, aims to guarantee equal treatment between men and women in access to insurance services, specifically in respect of premiums and services offered.
Despite a 2005 Court of Cassation decision on their validity, claims-made clauses continue to present problems for insurers and insureds. The Genoa Court recently examined such a clause in light of the Civil Code and considered, among other things, whether its inclusion deprived an insurance contract of its basic rationale.
Italy's insurance regulator has published a document containing urgent measures for tackling the recent economic crisis. The most innovative aspect of the new regulations is that they allow insurance companies to refrain from aligning the budget value of short-term financial instruments with the price deducible from market trends at the end of the year.
The advocate general has filed conclusions on the proceedings for infraction brought by the European Commission against Italy regarding motor liability insurance. Among other things, the commission held that the fining of insurance companies that refuse to enter into an insurance contract with certain customers in certain regions contravenes the EU Treaty and prevents access to the Italian market.
The Istituto per la vigilanza sulle assicurazioni private e di interesse collettivo, the regulatory body with authority over the insurance sector, has issued a new regulation on complaints-handling procedures. Although substantially in line with previous circulars, it clarifies significant exceptions for certain insurers from other EU states that are established in Italy.
The Istituto per la vigilanza sulle assicurazioni private e di interesse collettivo, the regulatory body which has authority over the insurance sector, has issued a regulation including provisions on the internal auditing, risk management, compliance and outsourcing of insurance companies’ activities.
Administrative liability arises when a public official causes damage to a public body through fraud or gross negligence. Despite court decisions that administrative liability may not be covered by insurance policies, public bodies have attempted to insure their officials in this way. However, a provision in the 2008 Finance Act has effectively abolished administrative liability insurance.
The insurance sector regulator is continuing its implementation of the Insurance Code. One new draft regulation covers internal audits, compliance, risk management and outsourcing; a second deals with motor liability insurance, with particular reference to insurance certificates and claims notification forms.
The insurance regulator has published six draft regulations implementing the recently enacted Insurance Code. The regulations cover issues such as complaints handling procedures, classification of risks and the use and abuse of the term 'insurance'.
Under the consolidated act on public procurement, the procurement of goods or services by local public entities is conditional on the approval of the relevant expenditure budget. However, if a public official authorises an agreement for the procurement of goods or services without an approved budget, that agreement is considered to have been entered into directly by the public official and the service provider and the public official may be personally liable to said provider.