GERMANY Trends and Developments Contributed by: Oliver Sieg, Helmut Katschthaler, Philipp Koch and Charlott Kujath, Noerr
duties” – such as monitoring the company’s sol- vency and filing for insolvency if needed – neces- sarily inferred knowledge. If insurers had prevailed with this argument, they would have benefited from a reversal of the burden of proof. In a devia- tion from the general principle that insurers need to prove the prerequisites of an exclusion, directors and managers would have needed to show the opposite. The Federal Supreme Court rejected this notion, finding that the significance of a duty does not automatically infer knowledge. When a man- ager is held liable for prohibited payments pursuant to Section 15b of the Insolvency Act, the insurer needs to show and prove for each payment that the manager effected the payment despite being aware: (i) of the company’s insolvency; and (ii) that no exception allowing for payment applied (Federal Supreme Court, decision dated 19 November 2025 – IV ZR 66/25). Recourse for Fines Another highly impactful question within the context of manager liability and, therefore, D&O insurance is pending before the Court of Justice of the European Union (CJEU). In May 2025, the Federal Supreme Court deliberated on the question of whether manag- ing directors and management board members may be held liable by a company for damages resulting from the imposition of fines. In the case in question, the company sought compensation from a managing director and a board member for damages equivalent to an antitrust fine of EUR4.1 million imposed due to a price-fixing steel industry cartel, as well as for con- nected legal costs and any future follow-up damages. Unlike the lower courts’ decision, the Federal Supreme Court provided an initial indication of its legal stance and preliminarily stated that the German legal system is not, in principle, opposed to recourse against direc- tors and officers in respect of fines imposed on the company. However, the court questioned whether the principle of effectiveness under EU law ( effet utile ) and the enforcement goals under Article 101 of the Treaty on the Functioning of the European Union (TFEU) would require the financial burden of a fine to remain with the company – and thus prohibit a national regu- lation which would ultimately shift it to a managing director.
Rather than deciding on the matter itself, the Federal Supreme Court stayed the proceedings in February 2025 and submitted a request for a preliminary ruling to the CJEU (Federal Supreme Court, decision dated 11 February 2025 – KZR 74/23). The matter is pend- ing, but a decision could be delivered within the year (Zapp Precision Metals GmbH, Zapp AG v KU , Case C-347/25, Zapp). Contract Recission Due to Fraudulent Misrepresentation Other recent decisions of practical relevance have focused on whether an insurer may rescind a policy for fraudulent misrepresentation if the directors or officers affected by the specific loss did not partici- pate in the relevant misrepresentation. Under policy wordings drafted to German market standards, the effects of rescission in such cases are usually exclud- ed for directors and officers who did not participate in the underlying misrepresentation, and German courts of first instance have upheld such clauses (see Düs- seldorf Regional Court, decision of 18 December 2025 – 9 O 339/23). However, in February 2026, the Cologne Appeal Court, contrary to the concrete poli- cy’s language, allowed the insurer to refuse cover on the grounds of fraudulent misrepresentation even for board members who acted in good faith. The matter is currently on appeal to the Federal Supreme Court. W&I Insurance and Cyber-Insurance W&I (Warranty & Indemnity) insurance and cyber- insurance do not have much in common except that they are both among the youngest insurance lines and have by now almost become standard in their respec- tive markets. While M&A transactions have always been risk-prone which, unsurprisingly, resulted in the conception of W&I insurance – this has not changed for the bet- ter over recent years with the detrimental economic effects of geopolitical change and instability. As acqui- sitions of financially distressed businesses steadily increase, so do liability exposure and the desire for risk-transfer. Against this backdrop, W&I insurance has gained considerable traction in Germany, with the number of claims rising steeply.
143 I NSURANCE L I T IGATI O N 2026
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