FRANCE Law and Practice Contributed by: Emmanuèle Lutfalla and Louis Fer, Signature Litigation AARPI
The emerging per- and polyfluoroalkyl substances (PFAS) crisis illustrates the challenge well. The scien- tific uncertainty surrounding these substances makes it difficult for insurers to assess future claims frequen- cy and severity, and equally difficult to draft exclusion clauses precise enough to withstand judicial scrutiny under French law. Industry bodies have described the risk as systemic, and the tension between the obliga- tion to provide coverage and the difficulty of pricing an uncertain exposure is palpable across the mar- ket. More broadly, in D&O, the risk of greenwashing claims is growing, and the French Duty of Vigilance Law creates additional exposure for companies and potentially their insurers in relation to environmental Delegated authority arrangements are common in the French market, particularly in specialty lines where managing general agents or cover holders underwrite and sometimes handle claims on behalf of insurers. These arrangements can create disputes around the scope of the delegated authority, the binding nature of decisions taken by the delegate, and the allocation of responsibility for claims handling failures. and human rights harm in supply chains. 4.8 Delegated Authority and Claims Responsibility The main legal issue is whether the delegate acted within the scope of its mandate and whether the insur- er is bound by its actions towards the insured. Under French law, the insurer will generally be bound by acts falling within the scope of the delegation, even where the delegate may have exceeded its internal instruc- tions. Claims handling by delegates can also give rise to disputes, particularly where delays or errors have caused prejudice to the insurer or the insured. Clear delegation agreements and well-defined author- ity limits are therefore important, particularly where underwriting and claims handling are both delegated. 4.9 Financial Lines Coverage Trends Financial lines disputes in France are increasingly driven by the changing nature of the risks faced by companies and their directors. Regulatory investiga- tions, shareholder actions and insolvencies are no longer exceptional events and can generate signifi- cant defence costs before any liability is established.
This creates a particular tension in D&O insurance: the policy may need to respond at a very early stage, while the insurer may not yet know whether the allega- tions will ultimately give rise to an insured loss. This issue is changing the way insurers approach cov- erage. They are paying greater attention to notifica- tion, prior knowledge and insured-versus-insured pro- visions, as well as to the allocation of defence costs where a claim involves both covered and uncovered conduct. Fraud is another example: insurers seek to exclude dishonest conduct, while insureds may argue that the exclusion should only affect the individual responsible and not the other directors. The broader trend is therefore towards greater scru- tiny of how claims develop over time. Insurers are seeking more information at placement and greater control over defence costs, while policyholders are increasingly focused on preserving access to the policy from the earliest stages of a dispute. In prac- tice, this makes the financial lines policy less a simple indemnity mechanism than a framework for managing the financial consequences of a developing corporate crisis. 4.10 Casualty Coverage Trends Casualty coverage disputes in France are shaped by the coexistence of several liability regimes and by the difficulty of determining which of them should ulti- mately drive the insurance response. Manufacturers and distributors may face both contractual and tor- tious liability, while specific statutory regimes apply in areas such as product liability, environmental liabil- ity and construction. The interaction between these regimes and the corresponding insurance policies is therefore a recurring source of disputes. Product liability illustrates the issue particularly well. A single defect may affect thousands of products and generate claims from different parties, sometimes years after the products were placed on the market. The dispute is then not limited to whether there is liability: it may also concern causation, the date on which the loss occurred, aggregation and which policy should respond.
109 I NSURANCE L I T IGATI O N 2026
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