GERMANY Law and Practice Contributed by: Oliver Sieg, Helmut Katschthaler, Philipp Koch and Charlott Kujath, Noerr
the freezing of guarantees in export credit and surety insurance or prevent indemnity payments being made in liability insurance. In addition, German insurers are at least factually affected by the extraterritorial application of US sanc- tions. 4.6 Late Payment and Claims Handling Practices The statutory provisions of German insurance contract law require insurers to pay out the insurance without undue delay once the claims assessment has been completed (Section 14 of the VVG). If the insurer’s investigations are not completed within one month after the loss notification, the insured may demand interim payments in the amount for which insurance coverage is expected to exist at a minimum. If the insurer is in default on the payment of benefits due, the default interest per annum is 5% above the base interest rate (Section 288 of the BGB). Regulatory Focus on the Claims Handling Process In 2025, after particular insurers had attracted atten- tion for extensive claims assessment, BaFin addressed the acceleration of claims handling by insurers as a priority in its ongoing supervision practice (Section 294 paragraph 2 of the VAG), as set out in BaFin’s supervisory notice dated 11 April 2025. Substantive and Procedural Law This focus by German regulatory authorities has not yet been reflected in developments at the level of insurance contract law. However, the legislature has taken action to accelerate litigation of major losses at the level of procedural law by introducing Com- mercial Courts with special jurisdiction for insurance disputes (see 1.3 Dispute Resolution Strategy and Outcomes ). 4.7 ESG and Climate-Related Coverage Climate Change According to the German Insurance Association ( Ges- amtverband der Deutschen Versicherungswirtschaft – GDV), climate change has led to a significant increase in the annual costs of natural hazard losses such as floods and wildfires, from EUR1.4 billion in 2009 to EUR2.4 billion in 2025. This has resulted in more
restrictive claims handling and an expansion of the catalogue of duties and obligations in insurance con- ditions, which, in turn, has increased the number of coverage disputes. PFAS Comparably, insurers operating in the German mar- ket have increasingly moved to exclude potential loss drivers such as PFAS from the scope of covered risks altogether, as illustrated, for example, by the GDV’s clause recommendations for general liability, product liability and environmental impairment liability insur- ance. Disruptive Liability Cases As regards liability insurance, the trend observable in other jurisdictions, namely that claimants argue for an extensive interpretation of liability law in ESG relat- ed matters (for instance in the UK Supreme Court’s decision in Okpabi v Shell and the judgment of the Gerechtshof Den Haag of 12 November 2024, Milieu- defensie v Royal Dutch Shell ), is still in its early stages in Germany. However, the first comparable cases can already be seen in German courts – eg, a case before the Appeal Court of Hamm, in which a Peruvian farmer brought a claim for damages against a German energy supplier for environmental harm in Peru based on the latter’s contribution to global CO₂ emissions; and an action brought by German environmental associations against a German OEM seeking to prohibit the sale of vehicles with combustion engines. The latter claim was dismissed by the Federal Supreme Court ( Bun- desgerichtshof ) in 2023. 4.8 Delegated Authority and Claims Responsibility Widespread Delegation in Mass Risk Insurance Against the backdrop of a continuing skilled labour shortage and increasing costs, German insurers are commonly delegating underwriting and claims han- dling in mass risk insurance to third parties. Still, the BaFin received more than 14,000 consumer com- plaints about insurers in 2025 – an increase of about 60 % compared to the previous year. Complaints were mostly due to the processing times of claims. Consid- ering increasing customer dissatisfaction and regu- latory requirements, German insurers are examining hybrid approaches that combine external channelling
132 I NSURANCE L I T IGATI O N 2026
CHAMBERS.COM
Powered by FlippingBook