Serious Misconduct and new Law 1/2026: mandatory insurance and implications for public officials

New liability caps, compulsory cover and practical consequences for those managing public funds

On 22 January 2026, Law No. 1/2026 came into force, introducing significant changes to the role of the Court of Auditors and to administrative liability for financial loss to the State. The reform represents a comprehensive and far-reaching revision, redefining key concepts, compensation limits and new insurance requirements. The first major change concerns the formal definition of “serious misconduct”. Under the new framework, serious misconduct arises from:- a manifest breach of applicable legal provisions;- a clear misrepresentation of facts or statements that are plainly inconsistent with the official records of the proceedings.This marks a significant shift from the past, when the scope of serious misconduct was broader and not expressly codified. Serious misconduct does not apply where a public official acts in accordance with established case law or opinions issued by competent authorities. Based on the wording of the law, this exemption should cover compliance with rulings of the Council of State and guidance issued by ANAC or the State Attorney’s Office. For holders of political office, a presumption of good faith (unless proven otherwise) applies where decisions taken within their remit have been proposed, endorsed or signed off by the heads of technical or administrative departments. Another key development is the introduction of a quantitative cap on liability for financial loss: a public employee may be required to compensate no more than 30% of the assessed damage and, in any event, not more than twice the gross annual salary received in the year when the harmful conduct began. This measure is designed to prevent disproportionate personal exposure and to safeguard confidence in public administration. The most significant innovation, however, is the mandatory insurance requirement for serious misconduct for all individuals managing public resources who fall within the jurisdiction of the Court of Auditors. Pending further government clarification, the obligation is expected to apply broadly to those involved in expenditure procedures, procurement, authorisations or activities with financial implications for public bodies. From a procedural standpoint, the law also provides that the insurer granting cover for serious misconduct becomes a necessary party to proceedings before the Court of Auditors. This mandatory involvement may increase administrative and defence costs for insurers, potentially leading to technical tariff adjustments and higher premiums for serious misconduct policies, both for new contracts and renewals. Verlingue provides structured insurance solutions to protect individuals in positions of responsibility. We deliver tailored financial protection and specialist support in administrative and criminal liability, safeguarding professionals against risks arising from decisions and actions taken in the course of their duties within this evolving regulatory landscape. Our approach combines protection, advisory and prevention, ensuring operational continuity and peace of mind, even in complex situations.