The Role of the Board of Directors and of Controls in the Light of the new Italian Insurance Regulatory Framework, from an In-house Counsel Perspective

Abstract

The Italian legal and regulatory framework has dramatically changed in recent years. In 2006 Legislative Decree 209/2005 came into force laying down the Code of private insurance that, by implementing the European Directive No. 2002/92/EC has reorganized and streamlined the entire pre-existing regulatory framework by removing a significant number of provisions of law. Isvap (Institute for the Supervision of Private Insurance in Italy) has implemented the provisions of the Code by introducing specific disciplines in different subjects by issuing various regulations that provide, inter alia, stricter checks and internal audit, risk management, as well as a new, more efficient, corporate governance system. The innovations introduced by Basel 2 and Solvency II have also contributed to the change, providing the specific control functions and the formalization of policies by the Board of Directors in key management areas, as well as an adequate and transparent organizational structure and separateness of functions and inspections. The role of the Board of Directors shall thus ensure thoroughness, functionality and effectiveness of the control system through gradual identification of management areas for which it is bound to define and formalize strategies and policies, consistently with the peculiarities of the Insurance Company and with the nature and extent of corporate risks. This article thus aims at describing, from the viewpoint of the In-house Counsel, the role of the Board of Directors and of controls in the light of the new Italian insurance regulatory framework, which shall be outlined as a whole, highlighting the most significant aspects.