FRANCE Trends and Developments Contributed by: Emmanuèle Lutfalla and Louis Fer, Signature Litigation AARPI
Introduction Between EUR330 billion and EUR1.7 trillion. That is the estimated cost of remediating per- and polyfluoro- alkyl substances (PFAS) contamination across Europe by 2050, according to recent industry assessments. Meanwhile, a joint report published in 2025 by the Artificial Intelligence Underwriting Company (AIUC), Anthropic and OpenAI warns that a single major AI disaster could generate approximately USD100 billion in direct damage, with cascading economic conse- quences running into the trillions. These are not spec- ulative projections drawn from worst-case modelling exercises. They reflect exposures that are already materialising in courtrooms, regulatory proceedings and boardrooms across multiple jurisdictions. What links these three developments is not merely their novelty but their shared capacity to destabilise the foundational assumptions on which insurability rests: the ability to price risk, the requirement of for- tuity, and the possibility of drafting exclusions with the precision that French law demands. This article examines each of these frontiers in turn, tracing the specific challenges they pose for French practitioners and the adaptations that are already under way. The Environmental Front The architecture of French environmental insurance The recognition of ecological damage by the law of 8 August 2016, now codified at Articles 1246 et seq of the Civil Code, marked a turning point. This reform introduced a distinct right of action for harm to ecosystems, open to the State, local authorities, the French Biodiversity Agency and approved envi- ronmental associations. Restoration of the damaged ecosystem takes priority over monetary compensa- tion. The limitation period runs for ten years from the date the ecological damage manifests itself. For insurers, this development transformed environmental liability from a peripheral concern into a core under- writing challenge, because the range of claimants, the preference for restoration and the long tail of potential claims all complicate reserving and pricing.
Environmental policies have responded by evolving into genuine multi-risk contracts. They combine a conventional third-party liability guarantee, indemni- fying the injured party, with a first-party component covering the remediation costs incurred by the opera- tor. Two heterogeneous logics coexist within the same contract, which explains why practitioners increasing- ly describe these products as multi-risk policies rather than simple liability covers. Environmental insurance broadly falls into three fami- lies: operating-risk policies for pollution arising from ongoing industrial activity, construction policies for pollution discovered during or after building works, and transactional policies for historical contamination identified after a change of ownership. The distinctions matter in litigation because they affect the trigger of cover, the relevant policy period and the allocation of responsibility among insurers. Alongside civil liability, a parallel administrative regime, introduced into French law following a 2004 EU direc- tive, allows the authorities to order operators to pre- vent or remediate qualifying environmental damage. It is rarely used in practice and remains largely in the background to the civil liability disputes that usually determine insurance coverage. The PFAS Crisis and the Limits of Insurability The scale of PFAS exposure is already visible. In the United States alone, manufacturers have settled for more than USD18 billion. For insurers, however, the real difficulty is not the size of the numbers but the impossibility of knowing what the final bill will look like, because the science is still catching up with the contamination. PFAS encompass several thousand individual sub- stances whose health effects and causal pathways remain only partially understood. How does an insurer price a risk whose frequency and severity cannot be modelled with any confidence? And how does an insurer draft an exclusion clause that will withstand judicial scrutiny under French law, which requires exclusions to be formal and limited, when the scien- tific boundaries of the risk are still shifting? The para- dox is acute. An exclusion that is too broad risks being
119 I NSURANCE L I T IGATI O N 2026
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