New article ‘High risks for German insurers in the event of direct action by France'

New article ‘High risks for German insurers in the event of direct action by France'

Published on : 23/05/2024 23 May May 05 2024

We are very pleased to present the new article ‘High risks for German insurers in the event of direct action by France' ('Erhöhte Risiken für deutsche Versicherungen bei Direktklagen aus Frankreich’), written by Dr Florian Endrös and published in the German publication PHi - Haftpflicht International Recht & Versicherung 2024, Nr. 2 (Gen Re) - here with a summary in English:

The French Court of Cassation's decision on June 15, 2023 (No. 21-20.538) introduces new and unpredictable risks for German and European liability insurers. The court stated that French courts not only should but must review the validity of exclusion clauses in policies governed by foreign law based on French “ordre public”.
The “action directe” principle allows an injured party to sue the insurer directly, applicable even to foreign liability insurers if the incident occurred on French territory. This principle comes from a 1926 ruling and was codified in 2007 with Article L. 124-3 of the French Insurance Code (code de l’assurance).
French law generally permits direct action against insurers if the liability claims fall under its scope. The validity of exclusion clauses and the insurance policy is judged by French law, which views certain insurance regulations as public order norms.
The decision emphasizes that exclusion clauses must be “clearly visible” and “formally limited” to be valid. This requirement stems from the French “all risks except” (tous risques sauf) insurance model. The 2023 ruling further clarifies that exclusion clauses governed by foreign law might be deemed invalid in French courts if they do not meet these visibility and formal limitation standards.
To mitigate risks, German insurers should consider including an explanatory introduction to their policies, highlighting the German coverage principles and exclusions in bold, to ensure clarity and prevent French courts from awarding compensation contrary to German exclusions.


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