Insurance Litigation 2024 Comparisons

In Cyprus, insurance disputes are governed by a wide range of legislation and procedural rules, as well as common law principles.

Statutory Regime

Insurance contracts

As insurance contracts are essentially private contracts, the Contract Law (Cap 149) governs disputes relating to the interpretation of insurance contracts, breach of contract, etc. Common law rules are also applicable in insurance contract disputes, as insurance policies have been widely interpreted and regulated by practice. EU Directives and related laws on consumer contracts and protection may also apply on insurance contract disputes, such as Law 93(Ι)/1996, which implements Directive 93/13/EEC on unfair contract terms in Cyprus.

Disputes relating to negligence

Cap 148 governs the regulation of general negligence disputes, including personal injury claims and medical negligence, while common law principles govern the resolution of tort law cases relating to insurance.

Specific legislation

The Cypriot Law on Motor Vehicles (Third Party Liability Insurance) (Law 96 (I)/2000) governs cases relating to motor accidents, and deals with insurance disputes at a contract level as well as personal injuries. It generally regulates the enforcement of insurance contracts’ terms by third parties.

EU Directive 2009/103/EC on motor insurance has also been implemented in Law 96(I)/2000. Furthermore, Law 96(I)/2000 contains provisions regarding the Motor Insurers’ Fund, which is a compensatory body for victims of uninsured and unknown drivers. It also deals with insolvent insurance companies that have been involved in car accidents and accidents that took place outside the jurisdiction.

The Law on Compulsory Insurance of Employers Liability (Law 174/1989)requires employers to conclude insurance contracts regarding liability concerning accidents and/or diseases caused in the professional environment.

Procedural Regime

Although parties to an insurance contract are free to choose the way in which their disputes are resolved, in Cyprus such disputes are usually resolved in civil courts, and general civil procedure rules are applicable.

Civil Procedure Rules

In the new Civil Procedures Rules (CPR) that were implemented on 1 September 2023 in Cyprus, specific provisions deal with the resolution and initiation of insurance claims in District Courts, including specific pre-action protocols that must be followed. The old Civil Procedure Rules continue to govern cases filed before 1 September 2023, but no specific procedural rules on insurance claims can be found in the old rules.

Insurance disputes are heard by District Courts and on a second level by the Appeal Court. A third level of review was established in Cyprus in 2023, whereby an appeal from the Appeal Court is heard by the Supreme Court.

Arbitration

The Arbitration Act (Cap 4) governs domestic arbitration proceedings that can take place in Cyprus. Parties to an insurance dispute may incorporate an arbitration clause in their contract or agree to such dispute resolution method after the dispute has arisen. Arbitration is not very popular as a dispute resolution method for insurance claims in Cyprus and is not widely employed to resolve insurance claims.

Financial Ombudsman

Any individual can submit a complaint to the Financial Ombudsman against financial businesses, regarding a dispute of up to EUR170,000 in value, provided that the following conditions are cumulatively met.

• The complaint must be submitted by a consumer.
• Before it is submitted to the Financial Ombudsman, the complaint is submitted to the insurer in writing within 15 months from the date the consumer became, or ought to have reasonably become, aware of the harmful action/omission of the insurer. The latter must acknowledge receipt of the complaint (whether it responds to it is only relevant in terms of timing).
• The insurer must have been operating on the basis of a lawfully issued licence (or by virtue of the freedom of establishment) at the time the complaint refers to.

The Financial Ombudsman does not undertake the examination of complaints in the following circumstances:

• if the complaint relates to a transaction that does not fall under the competences of the competent supervisory authorities;
• if, on the day of their submission, a court of the Republic has already issued a decision on the same complaint or litigation procedures are in progress regarding those complaints;
• if the complaint is submitted to the Financial Ombudsman more than 22 months after the consumer became aware, or ought to have reasonably become aware, of the harmful action/omission; or
• if the transaction did not result in significant loss in the opinion of the Financial Ombudsman.

The CPR regulate, inter alia, the procedural stages of an insurance dispute in Cyprus, which is heard by Civil Courts of first instance. The new CPR have introduced the pre-action protocols that must be followed before the submission of a claim in court. Specific protocols apply to personal injury claims arising out of an accident. The purpose of this pre-action requirement is to ensure that only necessary and genuine claims follow the judicial route through the courts.

The importance of the pre-action procedure is that a party may have to pay costs imposed by the courts in the following litigation proceedings if it fails to comply with the established steps. As a result, parties are strongly encouraged to pursue settlement discussions before the commencement of an action.

Initiation of a Claim

If the pre-action proceedings are not successful, the claimant may proceed with the filing of a claim form exposing the particulars of the claim. After the claim form is served on the defendant, the defendant may proceed with the filing of a defence and/or a counterclaim against the claimant. The claim form must contain all the significant facts upon which the claimant relies, together with the relevant documentation. Rules on proper pleading drafting can be found in the CPR.

Stages of Litigation

The CPR govern and determine specifically all stages of litigation, as well as any interim procedure that parties may choose to follow, pending litigation. Steps such as the disclosure of documents, witnesses and a timetable of the trial process are mandatory steps that parties have to follow. A pre-trial hearing must also be held before a Judge by the parties, before the actual trial.

The court remains the regulator of the proceedings and actively encourages parties to resolve their dispute through negotiation and settlement processes, before the commencement of the trial.

Rules on Limitation

In Cyprus, insurance disputes have a limitation period according to the type of claim that is pursued. In contract claims the limitation period is six years, while the limitation period for personal injury claims and general negligence disputes is three years. The relevant legislation for limitation periods is the Law on Limitation of Legal Rights of 2012 (Law 66(I)/2012).

Although ADR is increasingly encouraged in Cyprus, it is not a popular method of resolving insurance disputes and courts remain the main resolving authority. However, parties are encouraged by the courts and now the CPR to conduct negotiations, which take place on a “without prejudice” basis.

Arbitration

Rules on arbitration are established in Cyprus through the specific legislation on domestic arbitration (Cap 4). However, parties do not often incorporate such clauses into insurance contracts and do not usually agree to such dispute resolution method after a dispute has arisen.

The new CPR also provide specific procedural rules on the conduct of both domestic and international arbitration, as well as rules regarding the support and supervision of Civil Courts.

Mediation

Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on Certain Aspects of Mediation in Civil and Commercial Matters has introduced mediation in Cyprus as a dispute resolution method that can provide a cost-effective and quick extrajudicial resolution of disputes in civil and commercial matters through processes tailored to the needs of the parties. The Directive has been implemented in Cyprus through the Law Regarding Mediation in Civil Disputes 2012 (Law 159(I)/2012), but mediation is not widely used in insurance disputes.

Jurisdiction

Insurance contracts contain jurisdictional clauses that are widely upheld by Cypriot courts as a representation of parties’ contractual autonomy in cases with foreign elements.

Applicable rules on jurisdiction

The applicable rules are:

• the Brussels Regulation Recast (1215/2012), which applies where both parties are domiciled in an EU member state;
• the Lugano Convention, which is applicable where only one party is domiciled in an EU member state and the other is domiciled in an EEA member state; and
• common law, which is applicable where the defendant is not domiciled in any EU member State or EEA member State. (CPR Rules in Part 6 contain provisions on Jurisdiction of Cypriot Courts).

Both Brussels Recast and the Lugano Convention contain detailed rules on insurance contracts regarding jurisdiction, in an attempt to safeguard the insured as the weaker party.

Cyprus is also a contracting party to the Hague Convention on Choice of Court Agreements 2005, which applies in extraterritorial cases with an exclusive jurisdiction agreement between the parties. It should be noted that the EU (of which Cyprus is a member state) has imposed limitations on the applicability of the Hague Convention regarding insurance contracts.

Choice of Law

Cypriot courts typically uphold choice of law clauses once incorporated into parties’ contracts.

Applicable rules on choice of law

The following rules apply:

• Regulation (EC) No 593/2008 on the law applicable to contractual obligations (Rome I), Article 7 of which provides specific rules on insurance contracts in an attempt to safeguard the insured as the weaker party; and
• Regulation (EC) No 864/2007 on the law applicable to non-contractual obligations (Rome II), which may also cover personal injury claims and motor claims.

Foreign judgments by or against insurers may be enforced under the European and international rules or under common law rules.

Under European law, foreign judgments of other EU member states or EEA states are easily enforceable in Cyprus through Brussels Recast, the Lugano Convention and the European Enforcement Order Regulation (805/2004). Common law rules apply for the recognition and enforcement of judgments given in a state outside the EU or EEA, but the enforcement of such cases is not as easy as within the European regime.

In addition, the Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters entered into force on 1 September 2023 and facilitates the recognition and enforcement of judgments between contracting parties.

Insurance disputes in Cyprus are litigated in an adversarial manner, with the courts having an active role, both before and after the introduction of the CPR.

In particular, the new CPR oblige parties to follow pre-action procedures in an attempt to try and reach an out-of-court settlement before a claim is filed in court. Parties are also required to engage in ADR at any stage of the proceedings. Failure to pursue either pre-action procedures or ADR may result in sanctions in the form of costs, which the defaulting party may have to pay instantly.

In Cyprus, arbitration clauses found in commercial insurance and reinsurance contracts are enforceable. Having ratified the New York Convention, Cyprus is deemed a pro-enforcement jurisdiction, for both for arbitration agreements and awards.

The relevant legislation in Cyprus regarding arbitration procedures and enforcement (of both agreements and awards) is as follows:

• the relevant Law for domestic arbitrations is Cap 4 (the Arbitration Act), which governs arbitrations without a foreign element; and
• the relevant laws for international arbitrations are the International Arbitration Act (Law 101/1987) and the Law ratifying the New York Convention (Law 84/1979).

Both laws give Cypriot courts the power to stay court proceedings upon the application of one party if the other party is in breach of an arbitration clause or agreement, unless the arbitration agreement is null and void, inoperative or incapable of being performed.

Both laws also set the necessary requirements for the type and form of the arbitration agreements or clauses. Arbitration clauses in Cyprus are viewed as separate contracts, as the courts follow the separability presumption of an arbitration clause, so that such clauses can be autonomous from the whole contract and, as a result, can generally be enforced.

Cyprus has ratified the New York Convention with Law 84/1979, so courts in Cyprus operate with a pro-enforcement bias, following the provisions of the Convention in the enforcement of foreign arbitral awards (and agreements).

Foreign arbitral awards are enforceable in Cyprus under the provisions of the Law on International Arbitration in Commercial Matters (Law 101/1987), which is essentially based on the UNCITRAL Model Law on International Commercial Arbitration. It should be noted that the 2006 amendments to the UNCITRAL Model Law have not yet been adopted in Cyprus, although procedures to adopt them are currently underway.

Article 35 of Law 101/1987, which governs arbitration disputes of an international and commercial nature, provides that “a foreign arbitral award shall be recognised as binding” unless there are valid grounds for refusing its recognition and enforcement.

Basically, and in combination with the New York Convention (and Law 84/1979), an application filed before the Cyprus courts needs to be accompanied by:

• a duly authenticated original award or a duly certified copy thereof;
• the original arbitration agreement or a duly certified copy thereof; and
• a translation of the above documents into Greek by an official or sworn translator, or by a diplomatic or consular agent.

Moreover, Section 5 of Law 121(I)/2000 sets out that, for recognition, the applicant (which may be either the relevant authority or the person in favour of which the judgment was issued) files an originating summons application on a by summons basis, which must be accompanied by an affidavit stating all relevant facts.

Under the new CPR, any application for the recognition and enforcement of arbitral awards is submitted in accordance with Form 92. Once the form is served, the respondent has to proceed with the filing of appearance.

Article 36 of Law 101/1987 sets out the limited grounds on which an application for recognition and enforcement of an arbitral award may be rejected, as follows:

• the contractual incapacity of the parties or the invalidity of the arbitration agreement;
• the lack of proper notice as to the appointment of the tribunal or of the arbitral proceedings;
• the fact that the award deals with a dispute that does not fall within the terms of the submission to arbitration or goes beyond the scope of the submission;
• the fact that the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties;
• the fact that the award has not yet become binding on the parties or has been set aside or suspended by the competent court of the country in which, or under the law of which, the arbitration took place;
• the fact that the subject matter of the dispute is not capable of settlement by arbitration under the laws of Cyprus; and
• the fact that the recognition and enforcement of the award would contradict the public policy of Cyprus.

Moreover, the respondent may object to the summons on the grounds that the Cyprus courts lack jurisdiction, or if the award or judgment has been satisfied.

Arbitration is not a common form of resolving insurance disputes in Cyprus, although certain insurance disputes are resolved by arbitration, such as disputes relating to reinsurance matters.

As mentioned in 3.1 Enforcement of Arbitration Provisions in Commercial Contracts, the relevant law for domestic arbitrations is the Arbitration Act (Cap 4), which governs arbitrations without a foreign element. For international arbitrations, the relevant laws are the International Arbitration Act (Law 101/1987) and the Law ratifying the New York Convention (Law 84/1979).

Arbitration is a private method of resolving disputes, as confidentiality is one of the privileges of this dispute resolution method. It should also be noted that neither of the above laws contain provisions regarding the possible appeal of awards regarding their substance. Awards can be set aside on the application of one of the parties only for the exclusive reasons stipulated in the above-mentioned laws.

Insurance contracts are private commercial contracts that are not individually negotiated. As such, implied terms regarding consumer protection and unfair contract terms apply regarding insurance contracts as well, by operation of the Law on Unfair Contract Terms (Law 93 (I)/1996).

Law 93(I)/1996 implements Directive 93/13 on unfair terms in consumer contracts, which sets out the context in which a contract term can be deemed unfair and all the necessary steps that member states should take to ensure effective protection of consumers regarding the conclusion of, inter alia, insurance contracts.

The terms of insurance contracts must comply with the requirement of good faith. Article 3 of the Directive specifies that “A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer”.

In order to safeguard the risks deriving from a certain insurance policy, insurers have the right to request the following non-exhaustive list of documentation and/or proof from proposed insureds prior to the inception of an insurance policy.

• Regarding property insurance, they may request a property inspection and a valuation of both the property and the equipment.
• Regarding life insurance, they may request thorough medical documentation as well as medical history, examination results and possibly medical reports.
• Generally, the completion of a specific questionnaire in which the insured should disclose all the correct and true facts and every material circumstance, in line with the principle of utmost good faith, without omitting any significant fact that is directly relevant to the insurance contract.
• In addition, insureds are required to disclaim that all the provided information in their application and/or proposal form are the true and correct facts, which will form the basis of the insurance contract/policy. If any of the information provided by the insured is not factually correct and/or true, the insurer reserves the right to dismiss any potential claim made by the insured even while the insurance contract is still in force, as well as the right to render the insurance contract void ab initio.

In the past 12 months, the significant trend in policy coverage disputes in Cyprus has been the rise of inflation, due to the economic implications of the COVID-19 pandemic and the war in Ukraine, causing the underinsurance of insureds. As a result, the compensation amounts have decreased significantly, causing a vast number of disputes in Cyprus.

In addition, the possibility of COVID-19 was not covered in any insurance contract before it actually happened. As a result, insurance companies were faced with an unexpected number of claims relating to business interruption, as well as the inability to cover employees’ salaries.

In Cyprus, insurance coverage disputes are usually resolved through court processes and litigation. The vast majority of disputes are resolved in an out-of-court settlement, now following the assisting procedure of the new CPR and the pre-action protocols that must be followed by the parties.

Arbitration and ADR in general are not popular methods for resolving insurance disputes, although reinsurance contracts frequently involve arbitration clauses, which are enforceable.

The position for the resolution of a dispute involving consumers is no different from any other insurance coverage dispute, and litigation through court is the main method of resolving such disputes.

However, disputes involving consumers may be resolved by submitting a complaint to the Financial Ombudsman against financial businesses, regarding a dispute of up to EUR170,000 in value; see 1.1 Statutory and Procedural Regime (Financial Ombudsman) for more detail.

The specific circumstances in which a third party can enforce an insurance contract or sue an insurer in connection with an insurance contract are as follows:

• in cases of motor accidents on the basis of Law 96(I)/2000, a third party can initiate an action against the insurer;
• in cases of accidents caused on a construction site, the injured may sue the insurer of both the main contractor and the subcontractor; and
• in cases where the insured is insolvent, Law 174/1989 gives third parties the right to initiate proceedings against the insurer.

The concept of bad faith is not found in any legislation in Cyprus.

However, Law 93(I)/1996 on unfair terms in consumer contracts implements Directive 93/13 on unfair terms in consumer contracts, which introduces the concept of good faith that has essentially been interpreted by the European and Cypriot courts.

No penalties for late claims payment are imposed by legislation in Cyprus, although insurers must meet a reasonable timeframe in paying a justifiable claim.

According to Contract Law, Cap 149, Article 186, an insured is bound by representations made by its broker, unless the broker has acted ultra vires. The relevant provisions of contract law regarding agency can be found in Section XIII of Cap 149.

In Cyprus it is not common to delegate claims to an external company handling authority arrangements, nor is it common to outsource underwriting matters. Usually, insurance companies have internal departments dealing with underwriting issues. If an insurance company has to outsource matters, strict criteria are imposed by the Insurance Regulator and there are specific guidelines for such exercise.

In rare cases in which claims are handled externally, it is not common for such arrangements to give rise to litigation.

Insurers usually fund many areas of liability claims for the defence of insureds, including:

• motor accidents and personal injury claims;
• professional indemnity claims;
• public liability claims;
• claims brought by third parties; and
• employers’ liability claims.

Insurers’ defence funding for their insureds regarding liability claims is unlikely to change in the future, since defence costs form part of insurance policies.

The new CPR have introduced new, more comprehensive procedures regarding insurance claims in the form of specific pre-action protocols that must be followed. These procedures are accompanied by possible sanctions in the form of costs, which may be imposed if one of the parties to the litigation fails to comply with them once the action has been commenced. The reason for this new function of the CPR is to reduce litigation and to encourage parties to reach an out-of-court settlement.

This new development has had a huge impact on the reduction of litigation costs. However, insurance companies tend to request the involvement of external lawyers in handling insurance claims at an earlier stage, before the commencement of an action.

Protection against costs risks is not a standard insurance policy in Cyprus. It is an independent field of insurance that usually applies to professionals, in order for them to be covered in case an action is commenced against them. Such product usually forms an extension in the policy cover, and a separate sum is used to cover such claims and actions.

Notably, this product is requested to be bought by claimants in professional indemnity policies (medical, legal, architectural, and directors’ and officers’ liability).

Insurers can recover sums from third parties in the form of subrogation. This principle has its foundation in common law and it constitutes a standard clause in insurance contracts.

On the basis of the right of subrogation, in case of a loss caused by a third party to their insured, insurers satisfy the claim of their insured and can subsequently pursue an action in the name of the insured to recover some or all of the sum of money they have already paid.

Subrogation applies to all insurance contracts that are contracts of indemnity, such as fire insurance, vehicle insurance, loss of profits insurance, property insurance and liability insurance. However, it does not apply to life insurance nor prima facie to personal accident insurance.

Subrogation is a principle arising out of common law and forms part of the insurance contract as a standard clause. Such claims are pursued in the name of the insured and concern the recovery of the whole and/or part of the sums already paid to the insured as a result of the loss incurred.

However, in Cyprus the right of subrogation concerning the Motor Insurance Fund is set out in detail in the Law on Motor Vehicles (Third Party Liability Insurance) (Law 96 (I)/2000), Article 30 of which states that the Motor Insurers’ Fund has the right to pursue an action in the name of the person who has provided compensation.

The COVID-19 pandemic has been an unprecedented experience, raising multiple challenges in the insurance sector. Insurance companies were faced with an unexpected number of claims relating to business interruption as well as an inability to cover employees’ salaries as a result of the pandemic. Insurance-related claims and lawsuits are and will, therefore, increase due to the consequences of the pandemic.

The COVID-19 crisis has also resulted in a significant increase in cyber risks but also in an opportunity for the insurance sector, due to cyber underwriting policies with the appropriate risk management.

It is possible that the consequences of COVID-19 will continue to affect the insurance sector in the ways noted in 7.1 Type and Amount of Litigation, although the implementation of new clauses in insurance contracts covering business interruption and pandemic loss clauses in general is likely to lead to a decline in insurance claims.

The factors mentioned in 7.1 Type and Amount of Litigation have rendered necessary the inclusion of business interruption clauses in insurance contracts, which in turn will result in the need to interpret those clauses in line with the new realities and effects of the COVID-19 pandemic.

The factors mentioned in 7.1 Type and Amount of Litigation have affected the scope of insurance cover and influenced the appetite for risk, as it has become imperative for new clauses to be included in insurance contracts related to the effects of the pandemic, alongside evolving new factors such as cybersecurity and ESG.

ESG factors affect insurance companies in their non-financial risks and opportunities.

In reference to the effects of insurance risks on underwriting, underwriters have had to implement ESG aspects into their risk assessment analysis, resulting in the creation of a more thorough risk assessment. These factors have impacted the underwriting sector regarding not only motor insurance but also property insurance, from an early stage of the conclusion of the insurance contract.

Regarding the effect of ESG factors in litigating insurance risks, it appears that the result of lower coverage and/or discounts on insurance policies will have an impact on the number of claims ending in court. In addition, due to climate change, insurance policies covering property damage for certain areas that are rendered to be more dangerous than others will result, most probably, in an increase in litigation, since premiums will need to differentiate to a higher level. In implementing ESG factors, directors’ and officers’ liability claims could also increase in cases of poor governance.

On the other hand, improvements in the health and safety of workplaces could reduce the number of accidents and related claims.

The Data Protection Law (Law 125(I)/2018) was adopted for the effective implementation of certain provisions of Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and has impacted the underwriting and litigating of insurance risks.

Underwriting risks have been affected in the sense of thorough assessment procedures, as the implementation of the EU Directive has resulted in more restricted data processing within insurance companies and between them. In addition, many insurance companies need to employ external reinsurers and certain personnel for underwriting purposes. Investigations concerning insurance disputes have also been impacted, since Data Protection Laws permit only strictly necessary data to be collected and requested. As a consequence, litigation on insurance claims has become more difficult and unpredictable regarding the evidence that parties can provide throughout the trial.

Insurance Coverage

One of the most significant legislative developments regarding insurance coverage has been the compulsory insurance of medical professionals and medical service providers who have entered the General Health System in Cyprus. As a consequence, the number of policies as well as possible litigation claims will increase in the coming years.

Interestingly, this will also affect the claims that insurers will fund the defence of, as litigation claims will rise.

Insurance Litigation

The new CPR set out specific provisions that govern the resolution and initiation of insurance claims in District Courts, including specific pre-action procedures that must be followed.

If these pre-action protocols are not followed by parties, the court reserves the right – once an action has been commenced – to impose sanctions on the defaulting party, in the form of costs that will have to be paid as soon as they are imposed.

Another form of sanction that courts may impose is the reduction of interest in the awarded sum of damages or to order that no interest will be awarded at all. The court may also order the stay of the proceedings if it rules there is a “lack of compliance with both the letter and the spirit of the pre-action Protocol”.

Another major development introduced by the new CPR is the parties’ obligation to disclose all the relevant documentation to their claim at a very early stage, and to provide the other side with the proof upon which they will base their claim if an action is commenced later on.

Proposed Legislation on Artificial Intelligence

The proposal for a Directive on adapting non-contractual civil liability rules to artificial intelligence (AI) is under discussion. Cyprus will eventually have to implement the Directive into national law.

The Directive’s main goal is to improve the functioning of the internal market by laying down uniform requirements for certain aspects of non-contractual civil liability for damage caused with the involvement of AI systems. The Directive recognises that the choice of suitable legal tools is limited, given the nature of the burden of proof and the specific characteristics of AI that pose a problem for existing liability rules. In this respect, this Directive eases the burden of proof in a very targeted and proportionate manner through the use of disclosure and rebuttable presumptions. For those seeking compensation for damage, it establishes a possibility to obtain information on high-risk AI systems to be recorded/documented pursuant to the AI Act. In addition to this, the rebuttable presumptions will give those seeking compensation for damage caused by AI systems a more reasonable burden of proof and a chance to succeed with justified liability claims.

As it concerns non-contractual civil liability cases, the Directive will have a possible impact on insurance claims and litigation involving an element of AI. For example, the Directive may apply to cases where a suit is commenced against the manufacturer for a defective AI feature, based on Directive 85/374/ECC regarding liability for defective products.

An additional consequence of the AI Directive would be that insurance companies may consider the coverage of disputes relating to AI in insurance contracts in the future.