CZECH REPUBLIC Law and Practice Contributed by: Eva Nováková, Michaela Šmotková, Martin Sztefek and Kateřina Chizzola Bardonová, JŠK, advokátní kancelář, s.r.o.
tracting states to mutually recognise arbitration agree- ments. This framework is reflected in Sections 120 et seq. of the Act on Private International Law, which are likewise aligned with the UNCITRAL Model Law. 9.7 Alternative Dispute Resolution Civil courts are the dominant method of resolving insurance disputes in the Czech Republic. Arbitration and mediation do not play a significant role, although mediation is sometimes ordered in court disputes. Of the alternative methods of resolving legal disputes, the proceedings before a financial arbitrator are more significant. These proceedings may be conducted in matters of life insurance disputes and only on the ini- tiative of the consumer. They result in a decision of the financial arbitrator, which may become enforceable; however, at the initiative of any party to the proceed- ings before the financial arbitrator, that decision may be challenged and annulled in subsequent civil court proceedings. The Bureau of the Czech Insurance Association’s ombudsman is the entity authorised to protect con- sumers in accordance with Section 20f of the Con- sumer Protection Act in disputes relating to non-life insurance (ie, disputes not handled by the financial arbitrator). The Bureau of the Czech Insurance Asso- ciation’s ombudsman also initiates proceedings at the initiative of the consumer, and their outcome may only take the form of an agreement between the insurer and the consumer, rather than a binding decision. The Bureau of the Czech Insurance Association’s ombudsman assesses the dispute impartially and subsequently submits a legal opinion to both parties together with a proposed settlement agreement. 9.8 Penalties for Late Payment of Claims The insurance benefit is due within 15 days from the date of conclusion of the investigation of the loss event. The investigation should take three months; however, if it is not possible to finish the investigation of the loss event within three months, the insurer must inform the insured of the reasons why it is not possible and, at the insured’s request, provide a reasonable advance payment of the insurance benefit.
The penalty for failure to provide insurance benefits when due is default interest, which is calculated according to the CNB repo rate (set on the first day of the half-year when the insurer became in delay) plus 8%, for the duration of the delay. Other penalties like damages are uncommon in insur- ance cases as it is typically difficult to establish a causal link between the late payment of the insur- ance benefit and any loss suffered by the insured. Czech law does not recognise the concept of punitive damages. 9.9 Insurers’ Rights of Subrogation According to Section 2820 of the Civil Code, the insurer is subrogated to the rights of the insured aris- ing from the loss event at the moment the insurance benefit is paid. From that point, the insurer acquires the right to recover damages or assert similar claims against third parties and may exercise those rights in its own name without any formal requirements, such as an assignment agreement. The insurer’s subrogated rights are limited to the amount of the insurance benefit paid and cannot exceed that amount. Subrogation is further restricted where the liable party is a person living in the same household as the insured, unless the loss was caused intentionally. The insured has to provide the insurer with all relevant information and documents in this matter. In light of Supreme Court decision No 23 Cdo 2633/2023, it is strongly advisable for insurers to carry out a thorough investigation and obtain all necessary documentation from the insured before paying the insurance benefit, as the Supreme Court held that it may be impossible to compel the insured to provide such documentation after payment has already been made.
10. Insurtech 10.1 Insurtech Developments
One of the most significant ongoing developments in the Czech insurance market is the continued effort by insurers to operate on a fully paperless basis, cov- ering the entire insurance life cycle, including distri-
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