FRANCE Law and Practice Contributed by: Emmanuèle Lutfalla and Louis Fer, Signature Litigation AARPI
8.2 Impact of ESG on Underwriting and Insurance Litigation ESG factors are reshaping French insurance across underwriting, claims, and regulatory enforcement. On the underwriting side, insurers increasingly inte- grate ESG criteria into risk selection and some decline exposure to high-carbon industries, creating coverage gaps that generate disputes over exclusion clauses. This trend is contentious where renewable energy projects paradoxically struggle to obtain coverage, exposing inconsistencies that have been criticised by industry bodies such as the French professional association for risk management and corporate insur- ance (AMRAE). On the claims front, the most significant developments concern D&O liability. Directors face growing expo- sure to greenwashing allegations, regulatory investi- gations into ESG disclosures, and shareholder actions based on alleged failure to manage climate-related transition risks. The CSRD framework will intensify this exposure by mandating detailed sustainability report- ing that may form the basis for future claims if state- ments prove inaccurate. Misrepresentation and non-disclosure are becom- ing more relevant as insurers ask granular questions about environmental practices and supply chain gov- ernance. If a loss occurs and ESG representations prove inaccurate, the risk of coverage denial increases materially. Regulatory scrutiny from the ACPR is also increas- ing, with climate stress tests becoming more severe and consumer associations actively monitoring green- washing in ESG-labelled products, making litigation a credible threat. The Duty of Vigilance Law further increases insurers’ exposure to claims for ESG-related failures, completing a framework where governance, compliance, and litigation risk converge to recalibrate risk assessment. 8.3 Data Protection Laws Data protection and privacy laws are having a direct impact on insurance practice in France. The GDPR, enforced domestically by the CNIL, imposes stringent obligations on companies that process personal data, and breaches can result in fines of up to 4% of global
More detailed sanctions compliance information is also likely to be required at placement and renewal. On the dispute side, recent developments in the Mid- dle East are likely to generate further scrutiny of war and political violence exclusions, particularly where geopolitical events result in property damage, busi- ness interruption or supply chain disruption. Sanc- tions arising from ongoing conflicts may also create disputes over the insurer’s ability to make payments where the insured, the loss or the transaction has a connection with a sanctioned entity or jurisdiction. 8. Emerging Risks 8.1 Market Overview of Emerging Risks The most significant emerging risks currently shaping the French insurance market are cyber and new tech- nologies, environmental liability, and climate transition risk. Each raises different questions for underwriting, coverage and disputes. Cyber and new technologies are increasingly intercon- nected. Cyber-attacks, ransomware and widespread software vulnerabilities are now generating a steady flow of claims, while AI, connected devices and auton- omous systems are adding new layers of exposure. A single incident can combine cyber, business inter- ruption, technology failure and liability issues, with responsibility potentially shared between the user, developer, manufacturer and technology provider. This is making causation and the application of tradi- tional policy wordings increasingly difficult, particular- ly where a cyber-attack has systemic consequences or involves a state-linked actor. Environmental liability, particularly PFAS contamina- tion, presents a different challenge. The recognition of ecological damage as a distinct head of loss in French law, together with specialised environmental policies covering third-party liability and remediation costs, has expanded the potential scope of environmental coverage. PFAS may put significant pressure on this model because scientific uncertainty and potentially very large remediation costs make the risk difficult to quantify.
114 I NSURANCE L I T IGATI O N 2026
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