CZECH REPUBLIC Law and Practice Contributed by: Eva Nováková, Michaela Šmotková, Martin Sztefek and Kateřina Chizzola Bardonová, JŠK, advokátní kancelář, s.r.o.
significant challenges, amplified by the growing use of digital platforms and artificial intelligence. Insurers face operational and reputational threats from cyber- attacks and data breaches, prompting regulatory action. The EU Directive 2022/2555 (NIS 2 Directive) has been transposed into Czech law through the Act 264/2025, Coll. (Cyber Security Act), imposing stricter cyberse- curity obligations on critical entities, including insur- ers. More importantly, the directly applicable EU Reg- ulation 2022/2554 (DORA) introduces comprehensive ICT risk management and resilience requirements for financial institutions, including insurers. The adoption of artificial intelligence and automation in underwriting, pricing, and claims handling brings efficiency gains but also risks related to algorithmic bias, transparency, and data governance. These developments increase the importance of compliance with GDPR and EU AI Act standards. Climate and catastrophe risks are gaining attention, particularly in property insurance. Although the Czech Republic faces moderate exposure compared to other regions, recent extreme weather events (such as tor- nados or increasingly frequent floods) highlight the need for robust catastrophe modelling and stress test- ing under Solvency II. Longevity risk is another emerging challenge, as rising life expectancy impacts annuity and pension portfo- lios. Regulators require enhanced reserving and sce- nario analysis to ensure sustainability. The CNB’s addresses these risks through prudential supervision, ICT risk management standards, and alignment with EU frameworks (Solvency II, DORA, AI Act), while maintaining strong consumer protection principles. 11.2 New Products or Alternative Solutions Given the cyber risks mentioned in 11.1 Emerging Risks Affecting the Insurance Market , we are seeing an increase in cyber insurance, although the increase has not been significant so far due to disproportion- ately large claims. At the same time, demand for D&O
insurance is growing, and it is becoming increasingly common. In relation to weather- and climate-related risks, there is also potential for the development of parametric insurance products or products incorporating para- metric features. This type of insurance is not yet well developed in the Czech Republic, although it clearly has potential, and a number of insurers active on the Czech market are known to be considering or in the process of developing such offerings. Demand is also increasing for insurance covering dependency on the assistance of others as a result of health conditions, driven in part by tax incentives effective from 2024. Insurers are responding by offer- ing various forms of dependency insurance or long- term care coverage. 12. Developments in Insurance Law 12.1 Significant Legislative or Regulatory Developments From a regulatory perspective, a key recent develop- ment is the amendment to the IRDA, adopted follow- ing the judgment of the Court of Justice of the EU in Case C-633/20, TC Medical Air Ambulance Agency . Previously, some market participants acted as poli- cyholders and offered customers the option to join a group insurance contract for a fee, without needing a CNB licence and subject only to limited obligations. The Court of Justice ruled that such policyholders qualify as insurance intermediaries and must comply with the IDD. Consequently, affected entities are now making organisational changes to obtain CNB licenc- es and meet full regulatory requirements. Another major issue is the implementation of the EU Regulation 2022/2554 on digital operational resilience for the financial sector (DORA), focusing on managing ICT third-party risk. The Czech market is also preparing for the IRRD Direc- tive. In October 2025, the Ministry of Finance issued a consultation paper on certain points of transposition, with ongoing discussions on funding mechanisms for insurer resolution.
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