DENMARK Law and Practice Contributed by: Josefine Movin Østergaard and Johannes Hedegaard, Bruun & Hjejle
standard of care, causation, and allocation of respon- sibility. Established Danish case law on AI-specific lia- bility remains limited, though AI is increasingly embed- ded in insurers’ own underwriting and claims handling. Adoption is accelerating – according to Ernst & Young, 84% of surveyed Danish insurers planned to imple- ment generative AI in the near future. Claims are likely to focus on data quality, model bias, transparency and human oversight. Regulatory change reinforces these trends. The EU’s AI framework emphasises governance, transparency and accountability. A related development concerns liability allocation between insurers and third-party service providers. In If Skadeforsikring v G4S Security Services A / S , the insurer sought recourse from an alarm security pro- vider for compensation paid following a burglary at a policyholder’s premises. The Danish Industry Asso- ciation for Security and Safety ( Sikkerhedsbranchen ) intervened, warning that liability would effectively make alarm companies “reinsurers” of burglary risk. The City Court of Glostrup ruled in favour of G4S on 4 July 2025, finding no basis for liability. The insurer has appealed, and the case is now pending before the Eastern High Court ( Østre Landsret ). The outcome may have broader implications for liability allocation between insurers and security or technology service providers. 5.3 Defence Costs and Litigation Complexity Under Danish law, insurers principally fund the defence of claims against insureds under liability insurance policies, particularly PI, CGL and D&O policies. In the absence of an express contractual provision, Section 92 (1) of the Danish Insurance Contracts Act ( forsikringsaftaleloven ) provides the statutory default under liability insurance, obliging the insurer to fund the defence of covered claims. Under Section 92 (3) of the Act, legal costs and interest may be payable by the insurer even where the sum insured is exceeded, subject to any contrary agreement in the policy. In practice, Danish PI and CGL policies generally do not depart from this principle, meaning that insureds benefit from defence cost coverage that may extend beyond the indemnity limit.
Claims against insureds are becoming more complex and higher in value, with particular concentration in the PI, D&O, and W&I segments. Contributing factors include: • extensive documentation requirements, including disclosure of voluminous electronic records; • multi-party and group proceedings, particularly in D&O claims involving listed companies; • cross-border elements, including disputes involv- ing foreign counterparties, parallel proceedings, and the interaction of different legal systems; and • the availability of litigation funding, which enables claimants to pursue larger and more resource- intensive claims against insured professional advis- ers and management. 5.4 Cost Risk Management and Funding Solutions In Denmark, litigation cost risk is managed principally through legal expenses insurance ( Retshjælpsfor- sikring ) and third-party litigation funding. Insurance for legal expenses is the most established mechanism. It is generally included within home, building, motor or liability insurance policies. Market terms are broadly standardised, although deductibles and indemnity limits vary. This cover provides a base- line layer of funding for certain disputes involving indi- vidual policyholders and smaller commercial insureds. Third-party litigation funding is increasingly used, par- ticularly for large or complex claims. 5.5 AI-Driven Claims Volumes and Complaints There is no current evidence that AI-generated or AI- assisted claims are driving a quantified increase in claims volumes against Danish insureds. However, one of the concerns is that AI tools may lower the cost of generating claims, which soon may lead to a higher volume of submissions, including repetitive or poorly particularised claims.
97 I NSURANCE L I T IGATI O N 2026
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