GERMANY Law and Practice Contributed by: Oliver Sieg, Helmut Katschthaler, Philipp Koch and Charlott Kujath, Noerr
Noerr PartG mbB Speditionstrasse 1 D-40221 Duesseldorf Germany Brienner Straße 28 D-08333 Munich Germany Tel: (+49) 211 49986220 Fax: (+49) 211 49986100 Email: Oliver.sieg@noerr.com Web: www.noerr.com
1. Key Drivers and Resolution of Insurance Disputes
importance, especially in conjunction with the rela- tively recent introduction of collective redress into German civil procedure pursuant to the Consumer Rights Enforcement Act of 2023. 1.2 Role of Policy Wording and Drafting Procedural Framework As insurance disputes in Germany are typically resolved in public proceedings before state courts, a rapid adaptation of market standards to legal devel- opments tends to be observed. Under German law, the courts have comparatively far-reaching powers to review insurance terms and conditions. Notably, insurance terms, even in B2B and financial lines busi- ness, are subject to the law governing general terms and conditions (Sections 305 et seq of the BGB), which authorises courts to examine and overrule policy clauses for the unreasonable disadvantage of the insured. Additionally, the case authorities of the German Federal Supreme Court ( Bundesgerichtshof ) interpret coverage exclusions restrictively in favour of insured parties. Recent Developments Against this backdrop, insurance lines that have recently emerged in the market and for which no underwriting standard has yet been established in Germany are particularly prone to disputes. This cur- rently concerns cyber- and W&I (Warranty & Indemni- ty) insurance. In the D&O market, on the other hand, a settled body of case law has now developed, making decisions more predictable, although certain issues persist that have repeatedly led to litigation, such as
1.1 Common Triggers of Insurance Disputes The main drivers of coverage disputes in Germany are large-scale and mass loss events resulting from human error, technical failures and natural catastro- phes. External factors act as catalysts, and include the following: • climate change in the NatCat insurance and rein- surance market, particularly against the current backdrop of increasingly frequent wildfires and floods in Germany; • the deteriorating climate fuels financial lines, D&O disputes and post-M&A/W&I disputes as the economic crisis ushers in a particularly error-prone phase for directors and officers, and the emergen- cy sell-off of parts of businesses repeatedly result in irregularities; • digitalisation and the AI revolution, which have led to cyber-insurance policies becoming more widespread in the German market; this increase in underwriting has also resulted in a greater number of coverage disputes under these still-evolving wordings; the technological development is also expected to have far-reaching implications for the liability insurance segment; and • the German courts’ far-reaching authority to declare insurance terms invalid under the law on general terms and conditions (Sections 305 et seq of the German Civil Code (BGB)), particularly in the mass/consumer business segment – this is of key
126 I NSURANCE L I T IGATI O N 2026
CHAMBERS.COM
Powered by FlippingBook