GERMANY Law and Practice Contributed by: Oliver Sieg, Helmut Katschthaler, Philipp Koch and Charlott Kujath, Noerr
funds available to designated persons and entities, insurers have to carefully consider whether payment for a claim may violate existing sanctions. Such an assessment may not only be necessary if the insured itself is a designated entity or may be connected to one, but also if the compensation could relate to sanc- tioned activities. In insurance programmes comprised of insurers from different jurisdictions, whether specific domestic sanctions may apply to individual insurers needs to be considered. In the event of discrepances between jurisdictions, sanctions thus have the potential to also lead to internal disputes between co-insurers. 7.3 War, Political Risk and Exclusions Exclusions for war, terrorism and political risk are included without fail in almost all lines of German insurance – except for dedicated political risk insur- ance. Despite regional conflicts, EU territory is considered to be enjoying a period of relative global stability – “the Long Peace” – following World War II. As such, war exclusions have played a fairly minor role in insur- ance disputes in the past. This has changed with the increasingly global fallout from conflicts and tensions rising in immediate geographical proximity. With the boundaries blurring between individual actions, such as state-linked cyber or drone attacks and the notion of “war”, insurance disputes may now start to lean more towards debates over the scope of this coverage exclusion and causal links. Notably, the war exclusion has never been specifically tested before higher courts in Germany. Generally, exclusions represent general terms and conditions to which the general principles of interpretation apply. Most importantly, exclusions are to be interpreted narrowly, not beyond what their meaning requires by reference to their economic purpose and chosen wording (see 4.2 Policy Wordings and Interpretation Developments ). This suggests that German courts are unlikely to interpret war exclusion clauses broadly. 7.4 Supply Chain and Systemic Loss Events Geopolitical disruptions are challenging the insurance sector but, rather than creating a new subcategory of
insured losses, they emerge in the form of traditional risks. Geopolitical events follow a “transmission path”, morphing into losses under classic categories of busi- ness insurance. Political conflicts, for example, lead to trade embargos or impediments of global shipping routes, which turn into supply chain disruptions and then into material shortages and business interrup- tion. Claims under marine, transportation and busi- ness interruption insurance follow suit. Military con- flicts have also been shown to increase cyber-attacks – even outside the states directly involved. In German insurance contracts, aggregation or “series- loss” clauses ( Serienschadenklauseln ) are common market practice, included in almost every line of insur- ance. Such clauses group multiple individual losses into one insured event if there is a common cause. This may lead to a combination of claims drawing from only one total policy limit or, to the benefit of the policyholder, reaching a self-insured retention thresh- old more easily (see 4.4 Aggregation and Limits of Liability ). Obviously, there is room for debate around where such aggregation starts and where it ends. The answer will be heavily dependent on the underlying facts and, most importantly, the specific policy word- ing in question. Series-loss clauses are regularly under scrutiny by German courts, which assess whether the wording used complies with the German legal statutes governing general terms and conditions, mainly with regard to clarity and transparency (see 7.3 War, Politi- cal Risk and Exclusions ). 7.5 Forward Outlook and Market Response Both BaFin and EIOPA acknowledge that geopolitical risks have “shifted from a tail risk” and now present a central concern for insurers. Military conflicts, trade tensions and subsequent supply chain disruptions are considered defining risks going forward. A visible response by insurers is the tightening of exclusion clauses in the policy language. With regard to transport and marine insurance, for example, insur- ers increasingly refuse to cover war-related losses. Both primary insurers and reinsurers are further improving their underwriting screening risks more closely as well as strengthening disclosure and coop- eration obligations.
137 I NSURANCE L I T IGATI O N 2026
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