CZECH REPUBLIC Trends and Developments Contributed by: Eva Nováková, Michaela Šmotková, Martin Sztefek and Kateřina Chizzola Bardonová, JŠK, advokátní kancelář, s.r.o.
to prepare sustainability reports. Initially, this obliga- tion applied to firms with at least 500 employees, but the threshold increased to 1,000 employees from Jan- uary 2026. The Capital Market Act requires institution- al investors holding shares of EU-listed companies to have an engagement policy that also covers environ- mental and governance aspects. While future EU rules are expected to extend these obligations to smaller companies, Czech law has not yet implemented such changes. In short, 2025 brought changes mainly for large businesses and investors, with broader obliga- Although Act No 30/2024 Coll. on motor vehicle liabil- ity insurance entered into force on 1 April 2024, its practical implications became more visible in 2025. The Act implements EU Directive 2021/2118 (the sev- enth Motor Insurance Directive) and introduced only minor changes compared to the previous regime. However, interpretative ambiguities, such as the revised definition of a vehicle and related insurance obligations, led to disputes surfacing mainly in 2025. Transitional provisions delayed litigation, and further clarifications (eg, motorsport insurance) are expected tions coming in 2026 and beyond. Motor vehicle liability insurance Additionally, Act No 333/2025 Coll. amended the Civil Code to require insurers to actively inform beneficiar- ies about the existence of a policy and their entitle- ment to benefits, effective 1 January 2026. This aims to prevent unclaimed payouts due to lack of aware- ness. Administrative simplification Regulatory efforts also focused on reducing admin- istrative complexity. The CNB announced a plan to eliminate unnecessary bureaucracy in the financial sector by abolishing 36 redundant rules and reporting requirements. This initiative was implemented through Decree No 197/2025 Coll., effective 1 July 2025, which significantly simplifies reporting obligations for insur- ers and reinsurers by removing or revising numerous quarterly and ad hoc reports. The goal is to enhance operational efficiency and reduce compliance costs. This deregulatory trend supports competitiveness and operational efficiency. in future amendments. Civil Code amendment
Market representatives also responded to this initiative by presenting several additional proposals through the industry association, aimed at further simplifying regu- lation and eliminating various instances of so-called gold plating. With a new government taking office in the Czech Republic at the end of 2025, discussions on potential legislative adjustments in this area are expected to continue, signalling an ongoing push toward a more balanced and proportionate regula- tory framework. Litigation developments in unit-linked insurance In 2025, insurance-related litigation continued to focus on unit-linked life insurance policies, driven largely by a small group of specialised lawyers and third-party investors acquiring problematic policies. Most lawsuits targeted older policies issued by local insurers, though foreign insurers were also affected. Claims typically alleged incorrectly incorporated fees, lack of transparency regarding the economic impact, and provisions deemed unfair (eg, unilateral changes and arbitration clauses). The main defence remains time limitation, with courts applying subjective and objective periods (two to three years for older policies, up to ten years for newer ones). However, EU case law challenges the Czech approach, as the CJEU tends to disallow time limits where unfair terms are present. The settlement of mutual payments remains unpredictable, though the trend favours settling only non-time-barred payments, often leading to dismissal of claims. Outlook These developments highlight the market’s trajec- tory: transparent distribution, product modernisation, digital resilience, robust compliance, and regulatory efficiency will remain strategic priorities for insurers and reinsurers in the years ahead. Key Trends in Insurance and Reinsurance and Future Outlook The Czech insurance market is entering a period in which structural climate risks, rapid digitalisation and stricter regulation are intersecting to reshape under- writing, product design and legal risk. Below are the key developments expected to dominate in the com- ing years.
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