FRANCE Law and Practice Contributed by: Emmanuèle Lutfalla and Louis Fer, Signature Litigation AARPI
4.4 Aggregation and Limits of Liability Large-scale losses involving multiple insureds, prod- ucts or locations inevitably raise the question of aggregation. The central question is often whether several losses should be treated as one occurrence, triggering a single policy limit, or as separate occur- rences, potentially allowing the insured to recover under several limits. This issue is particularly challenging in product liabil- ity, cyber- and systemic events. A common defect affecting thousands of products, a single software vul- nerability or a widespread cyber-attack may generate numerous claims, but the policy may not clearly indi- cate whether they should be aggregated. The wording of the occurrence clause, and the connection between the individual losses and the underlying cause, there- fore becomes critical. These disputes can have a major financial impact. For insurers, broad aggregation can significantly limit their exposure and provide greater certainty when pricing systemic risks. Courts therefore tend to focus closely on the wording of the policy and the factual connec- tion between the losses. 4.5 Sanctions and Illegality Issues Sanctions regimes, particularly those imposed by the EU and, indirectly, the USA through the Office of Finan- cial Assets Control (OFAC), have a tangible impact on coverage disputes in France. Insurers therefore have to consider both sides of the issue. Payment of a claim involving a sanctioned entity may create regulatory exposure, while refusing payment may give rise to a coverage dispute. French insurance contracts increasingly contain sanc- tions limitation clauses, under which the insurer may suspend or refuse payment where doing so would breach applicable sanctions. The enforceability and precise scope of these clauses remain relatively untested by French courts, but they are becoming common market practice. Illegality and public policy can raise similar issues. French courts generally distinguish between the legal- ity of the insured’s conduct and the insurer’s contrac- tual obligation to provide cover. Any exclusion based
on illegality must comply with the strict requirements applicable to exclusions under French insurance law. Sanctions issues are typically dealt with on a case-by- case basis, involving the insurer’s legal and compli- ance teams and, where necessary, discussions with regulators. This can result in payment being delayed even where the underlying coverage position is not itself disputed. 4.6 Late Payment and Claims Handling Practices Claims handling practices have come under increas- ing scrutiny in France, both from the French Pruden- tial Supervision and Resolution Authority (ACPR) and from the courts. Late payment is a particular focus: under the Insurance Code, the insurer is required to pay the indemnity within the contractual timeframe, and unjustified delay can give rise to statutory interest and, in some cases, damages for abusive resistance. The ACPR has also paid close attention to claims handling, including the time taken to process claims and the quality of insurers’ communication with poli- cyholders. This became particularly visible during the COVID-19 pandemic, when delays in business inter- ruption claims attracted significant attention, espe- cially given the cash flow difficulties faced by many businesses. That said, delays are not necessarily problematic where the claim is complex and requires further inves- tigation or expert assessment. The key issue is wheth- er the insurer has legitimate reasons for the delay and has handled the claim properly in the meantime. 4.7 ESG and Climate-Related Coverage ESG and climate-related risks are giving rise to new types of coverage disputes in France, though the area is still developing. On the environmental side, the recognition of ecological damage in the French Civil Code has broadened the scope of insurable environ- mental liability. Environmental policies have evolved into genuine multi-risks contracts, combining third- party liability cover with first-party remediation cost cover, and now span operating risks, construction and transactional exposures linked to M&A.
108 I NSURANCE L I T IGATI O N 2026
CHAMBERS.COM
Powered by FlippingBook