CZECH REPUBLIC Trends and Developments Contributed by: Eva Nováková, Michaela Šmotková, Martin Sztefek and Kateřina Chizzola Bardonová, JŠK, advokátní kancelář, s.r.o.
tection in remote selling of financial products. New requirements include layered pre-contractual disclo- sures (with listed key information displayed in the first layer), clear and continuous “withdrawal” buttons for online policies, and a duty to provide “adequate expla- nation” of key insurance terms. Enhanced safeguards against misleading practices (“dark patterns”) were also introduced to ensure transparency and fairness. These measures will directly impact digital insurance distribution channels, requiring updates to online con- tracting platforms and compliance processes. Digital resilience and technology Another major development was the implementation of the EU’s Digital Operational Resilience Act (DORA), effective January 2025, which sets strict requirements for managing ICT risks and third-party ICT providers. Insurers and intermediaries must implement robust frameworks for ICT risk management, incident reporting, and resilience testing. Larger insurers have launched dedicated programmes to integrate DORA into governance, while smaller distributors often rely on external consultants for gap analyses and compli- ance support. The regulation also emphasises oversight of third- party ICT service providers, such as cloud services, requiring contractual safeguards and continuous monitoring proportionate to their significance for the regulated entity. Designated critical ICT providers are subject to direct regulatory supervision. Market feedback indicates rising demand for cybersecurity audits, threat-led penetration testing, and automated incident-reporting tools, driven by compliance with DORA. While compliance entails short-term costs, insurers increasingly view DORA as an opportunity to strengthen resilience and customer trust, with some leveraging enhanced digital security as a competitive advantage. Other cybersecurity regulations also gained impor- tance in 2025. The transposition of NIS 2 (Act No 264/2025 Coll., on Cybersecurity) and CER (Act No 266/2025 Coll., on Critical Infrastructure), together with the EU Cyber Resilience Act, introduced stricter requirements for cybersecurity risk management, incident reporting, supply chain security, critical infra-
structure resilience, and software and hardware prod- ucts cybersecurity. These changes drive demand for cyber and liability insurance and require alignment of products and compliance frameworks with Czech and EU standards. AML and compliance Another important development was the amendment to the Czech AML Act (No 253/2008 Coll.), effec- tive early 2025, implementing key elements of the EU AML Package. For insurers and reinsurers, the changes include stricter enhanced due diligence for politically exposed persons, mandatory appointment and notification of an AML contact person to the Financial Analytical Office, and expanded identifica- tion requirements, particularly for remote verification. The scope of obliged entities was broadened, and the definition of “business relationship” now covers legally established relationships comparable to contractual ones. Non-compliance may result in fines of up to CZK10 million, underscoring a stronger enforcement approach. Recovery and resolution framework The market is also preparing for the Insurance Recov- ery and Resolution Directive (IRRD). In October 2025, the Ministry of Finance launched a public consultation on key transposition issues, including funding mecha- nisms for insurer resolution and the potential exclu- sion of technical provisions from bail-in or conversion tools. The consultation also seeks views on whether funding should be ex ante, ex post, or hybrid, and on how resolution funds should be managed. Materials issued by the Ministry to open the consulta- tion indicate a preference for ex ante or hybrid funding models to ensure sufficient resources for resolution. However, the market strongly favours ex post funding, citing the robust capital adequacy of Czech insurers, which remains exceptionally high due to CNB’s con- servative supervisory approach. Discussions on the final design of the funding mechanism are ongoing and are expected to continue even throughout 2026. ESG regulatory updates In 2025, ESG rules became more relevant, mainly through the Accounting Act, which requires insurers and other large companies meeting specified criteria
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