GERMANY Law and Practice Contributed by: Oliver Sieg, Helmut Katschthaler, Philipp Koch and Charlott Kujath, Noerr
9.2 Forthcoming Reforms and Market Impact The Corporate Sustainability Due Diligence Directive (CSDDD, Directive (EU) 2024/1760) and the ongoing adjustment of the German Supply Chain Due Diligence Act ( Lieferkettensorgfaltspflichtengesetz – LkSG) have the potential to materially affect casualty and envi- ronmental liability. As German policyholders continue to become more directly exposed to liability for envi- ronmental and human rights violations committed by suppliers in third countries, claims handlers will need to analyse complex, cross-border causation chains in major losses. Valid, granular risk data on supply chains will become critical for both underwriting and claims prevention, and will increasingly determine how coverage is assessed and priced. In addition, the ongoing implementation of the EU Product Liability Directive (PLD, Directive (EU) 2024/2853) could significantly broaden the product concept to cover software, AI systems and digital services that are essential to the functioning of physi- cal products (see 8.5 Social Media Risk ). For prod- uct liability and product recall covers, this blurs the boundaries between traditional bodily injury/property damage and pure cyber or software loss.
While it seems plausible that SMRs and AMRs may be a source for high-volume insurance disputes, whether these will also be frequent occurrences will depend on the reactors’ prevalence, as well as their techni- cal performance and stability. Due to the absence of historical data and experience, insurers will have to be the ones making the first move, being faced with the task of developing a contractual framework to be then tested against reality. As with any new line of insur- ance, it is to be expected that initial policy wordings will require adjustments and improvements over time, both in scope of coverage and precise wording. This “learning curve” can be expected to be particularly high in the beginning, easing with time and practical experience. 9. Legislative and Regulatory Key Trends 9.1 Regulatory Focus Areas and Supervisory Trends German regulatory authorities are currently focused on several key areas that directly shape insurer behav- iour and dispute risk. • Operational resilience and IT security are central. The EU’s Digital Operational Resilience Act (DORA, Regulation (EU) 2022/2554) imposes stringent requirements on insurers’ IT systems and cyber- risk management. In this context, BaFin has inten- sified its scrutiny of cyber-insurance, including the treatment of ransomware and ransom payments, which in turn drives closer review of wordings and increases the potential for coverage disputes. • According to BaFin’s publication “Focus points of insurance regulatory 2025”, regulators are also paying closer attention to solvency in an environ- ment of fragile supply chains and geopolitical risk. Insurers must reflect these stresses in their risk modelling and capital planning. • Finally, conduct supervision pursuant to Section 294 paragraph 2 of the VAG and consumer protec- tion remain. Elevated scrutiny and potential inter- ventions increase both reputational and litigation risk where products are perceived as missold or inadequately explained.
140 I NSURANCE L I T IGATI O N 2026
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