Insurance Litigation 2024 Comparisons

As far as insurance is concerned, there are several regulations that are relevant. The main regulation is Law 50 of 1980 dated 8 October 1980 on insurance contracts, which regulates the content of the contract itself and the relationship between the insured party and the insurer. It contains a set of general provisions that all insurance contracts must comply with and also deals with the main lines of insurance that operate in the market.

In terms of regulations that affect insurance companies and insurance mediators there are also multiple rules. Two in particular are worth highlighting. The first is Law 20 of 2015, dated 14 July 2015, which covers the regulation, supervision and solvency of insurance and reinsurance companies. It also regulates the activity of national and foreign insurance companies. The second is Royal Decree Law 3 of 2020, dated 4 February 2020, which transposes EU Directive 2016/97 of the European Parliament and of the Council, dated 20 January 2016, on insurance distribution into Spanish law.

As in other jurisdictions, insurance contract disputes are often settled through judicial or arbitration proceedings. Judicial proceedings can be pursued in different jurisdictions: civil, criminal, social and contentious-administrative, depending, of course, on the nature of the dispute in question. Each of these jurisdictions has different procedural regimes. Law 1 of 2000, dated 7 January 2000, on civil procedure is relevant for matters not stipulated in other specific procedural laws.

There are also different types of courts. These are the first instance, instruction, courts of appeal (provincial courts, high courts of justice in some cases) and, as a last resort, the Supreme Court. The Supreme Court only handles cases of great technical complexity. To refer a case to the Supreme Court, the contentious matter must have cassation interest or involve the case deviating from the applicable case law.

Civil Proceedings

The litigation process depends on the relevant jurisdiction. In the civil jurisdiction, all litigation begins with a statement of claim in which the identification details and circumstances of the plaintiff and the defendant and the domicile or residence where they can be summoned must be stated, the facts and legal grounds must be numbered and set out separately, and the details of the request must be clearly and precisely stated.

Once this has been done, the court will admit the claim and transfer it to the defendant so that within 10 or 20 days (depending on the type of trial) he/she may proceed to reply to the claim. The court then sets a date for the pre-trial hearing (at which the evidence to be presented at the trial is proposed, as well as other formalities such as the possibility of making complementary allegations, providing new documentation, etc). Finally, a date is set for the trial at which the proposed evidence is presented and each party then has time to present their conclusion of the evidence and the law applicable to the case.

Once the trial has ended, the judge issues a judgment. The average duration of a civil procedure in the first instance is usually between 10 and 36 months from the filing of the claim until the judgment, depending on the location of the court and the workload pending. This judgment can be appealed before the court of appeal (audiencia provincial) and then potentially the Supreme Court if the requirements are met.

In insurance disputes with large financial claims (the so-called large risks) knowledge of procedural law and the strategy to be developed is essential, so the professional experience of a firm is logically a highly valued asset. It is simply a matter of professional solvency.

Criminal Proceedings

In terms of criminal proceedings, the procedure begins with a complaint or a criminal lawsuit in which the plaintiff sets out the facts that he or she considers to constitute criminal offences. The investigating court (juzgado de instrucción) is responsible for investigating the facts. Once the investigation phase has concluded (generally a maximum of 12 months, although it can be extended), the judge decides whether or not to prosecute the person under investigation.

At this stage, the opinion and allegations of the public prosecutor’s office are usually considered. If the judge considers that the facts constitute a crime and that the proceedings carried out prove that it was committed by the person under investigation, the judge issues what is known as an “accommodation order” and all the investigation proceedings are transferred to the criminal court (which is a different body from the previous one) in charge of holding the trial and issuing a judgment, or to the provincial court, which is a collegiate body, depending on the offence. The ruling issued can be appealed potentially all the way to the Supreme Court.

Judicial Proceedings in Labour Cases

Judicial proceedings before the labour jurisdiction require an initial attempt at conciliation between the parties and if there is no agreement, the judicial process can be initiated. Once the claim has been filed and prior to the trial, a new act of conciliation is attempted, this time in the court itself, and if there is no agreement, the trial proceeds. The trial is verbal, with evidence being taken in it and the conclusions being presented.

The ruling is issued in the following five days (normally it is issued sooner than this) and, as in the other jurisdictions, it can be appealed before the High Court of Justice and potentially all the way to the Supreme Court.

Contentious-administrative Proceedings

As far as the contentious-administrative jurisdiction is concerned, the judicial procedure is very similar to the civil procedure, although in this case the administrative file is of particular importance. It should be remembered that all proceedings before the contentious-administrative jurisdiction result from a previous process that has been followed by the injured parties against the corresponding administrative authorities (local councils, tax authorities, etc).

The procedure is initiated with a notice of the contentious-administrative appeal (this is the name given in this jurisdiction to the first document filed), at which point a file number is assigned and the corresponding public body is notified so that within 20 days it can deliver the entire administrative file. Subsequently, with all the documentation, the corresponding lawsuit is filed. The rest is similar to the procedure in the civil jurisdiction.

Limitation Periods

The limitation periods depend to a large extent on the action being brought. The general time limit for an insured party to bring an action against their insurer is two years from the date of the loss for non-life insurance and five years for personal insurance under Article 23 of the Insurance Contract Act.

For matters not expressly regulated, for example, when the insurer compensates the insured party and is subrogated in its position to exercise recovery actions against the third party that effectively caused the damage, the action will be time-barred depending on the action in question (five years for contractual actions and one year for non-contractual actions).

The limitation period in traffic accident actions is one year after the injured party has reached a stable condition (ie, the extent of any permanent injuries is known).

During the course of 2023, the Spanish courts issued more than 5,600 judicial decisions involving insurance policies.

There are legal mechanisms for the resolution of conflicts between insurers and insured parties and these are always aimed at complementing judicial proceedings. These mechanisms consist of submitting the parties to arbitration procedures or civil or commercial mediation procedures.

In addition, insurance companies are obliged to attend and resolve the complaints and claims that the policyholders, insured persons, beneficiaries, injured third parties or rightful claimants may file, but these must always be related to their legally recognised interests and rights within the policy contracted. For these purposes, the entities must have a customer service department or service in charge of attending to and resolving complaints and claims. Of course, this service has to be independent and external from the insurance company.

However, it should be noted that, particularly in the case of large claims, arbitration is a solution that is rarely used, with companies preferring to resort to judicial proceedings. This is because the leading insurance law specialists either work for insurance companies or for companies, which is understood to compromise their impartiality.

The Insurance Contract Law is mandatory and is the basic regulation of the contract. However, in the case of so-called large risk insurance, the voluntary regulation that the parties consider appropriate may be applied preferentially because for this type of contract the Insurance Contract Law is not mandatory.

In terms of jurisdiction, Article 22 of the Organic Law 6 of 1985, dated 1 July 1985, on the judiciary, states that in insurance matters, the Spanish courts will be competent when the insured party, policyholder or beneficiary of the insurance has their residence in Spain. The insurer may also be sued before the Spanish courts if the damaging event occurs in the Spanish territory and it is liability insurance or insurance relating to real estate. In civil liability insurance, the Spanish courts are also competent to hear the action brought by the injured party against the insured by virtue of the provisions on non-contractual obligations.

In addition, in other types of actions in which insurance policies may be affected, we must be aware of the type of action that is intended to be exercised. The Civil Procedure Law establishes in general terms that the judge competent to hear any matter will be from the defendant’s residence. Failing that, those who do not have a habitual residence or residence in Spain may be sued in the place where they are within the national territory or in the place of their last residence in it and, if jurisdiction cannot be determined in this way, in the place of the plaintiff’s residence.

Likewise, companies will be sued, in general, where they have their registered office. In the event that the insurer is domiciled outside of Spain, EU Regulation 1215/2012 of the European Parliament and of the Council dated 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters applies.

According to Article 36 et seq of EU Regulation 1215/2012 of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, judgments given in a member state that are enforceable in that member state will also be enforceable in the other member states without the need for a declaration of enforceability. Therefore, judgments of the member states are directly enforceable in Spain. This is directly applicable to all judgments affecting insurance companies.

Similarly, court decisions from Denmark, Iceland, Norway and Switzerland are also enforceable in Spain by application of the Council Decision of 15 October 2007 on the signing, on behalf of the Community, of the Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Lugano Convention).

In relation to third countries (non-EU members), the Hague Convention or, alternatively, the “exequatur” procedure regulated in Law 29 of 2015, of 30 July 2015, on international legal co-operation in civil matters, may be applicable.

One of the major problems we encounter when litigating in Spain on behalf of foreign entities relates to representation. In order to litigate cases involving EUR2,000 or more in Spain, insurers must have the representation of a representant (procurador) and a lawyer. This requirement must be met by both natural persons and legal entities.

The representant is the person who exercises the procedural representation of the litigants and they must have a power of representation issued by the person or persons who have, within the organisation, the authority to grant and guarantee the powers of representation.

In many cases, this task is complex, as insurers have internal structures with a different distribution of power and competences and, in many cases, finding the right person can be an arduous and laborious task. In any case, a law firm with procedural experience has sufficient power models in favour of the representant to appear in court on behalf of the party that appoints them.

Spanish courts and tribunals may enforce all awards rendered by arbitrators at the request of one of the interested parties. In this regard, commercial insurance and reinsurance contracts usually include dispute resolution clauses of various kinds, the most frequently used being submission to the competent courts and tribunals. The contracts also include the possibility of the parties submitting to arbitration proceedings for the resolution of disputes, although this option is usually less common and only applicable, in any case, to non-life insurance.

If the parties submit themselves to arbitration, the courts will refuse to hear these disputes. Once the arbitral award has been issued, courts will only hear the case where the rules of the arbitration procedure have been infringed, excluding the hearing of the substance of the matter resolved by the award, which is not appealable.

In 1977, Spain signed the Instrument of Adherence to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, signed in New York on 10 June 1958. The purpose of the Convention is to promote the extraterritorial enforcement of arbitral awards, and it has currently been endorsed by more than 159 countries.

In this sense, the jurisdiction to enforce arbitral awards belongs to the courts of first instance of the place where the award was issued, with the procedure being initiated by one of the parties through a claim for enforcement, attaching the enforceable title, the arbitration agreement and the documents proving that the award was duly notified to the parties. This procedure concludes with the corresponding judicial ruling on enforcement, as if it were a normal judgment. The enforcement of awards is usually admitted without objection by the courts.

Spain is a country where litigation is becoming the most common way to resolve disputes. Arbitration is becoming the second most common way to resolve disputes. However, these procedures tend to be more expensive (depending on the amount claimed) but also don’t last as long.

There are some insurance companies that frequently submit to arbitration procedures for the resolution of disputes. This includes those involved in credit insurance, where the contracting parties are exporters, distributors or companies.

While various arbitration institutions have attempted to promote its use in the field of insurance in recent years, the truth is that its use is limited. On the other hand, it must be assumed that the Spanish Arbitration Law regulates this procedure, based on the fact that natural or legal persons may submit the contentious issues, by prior agreement, to the decision of one or more arbitrators.

Arbitration is a form of single instance dispute resolution (some arbitration courts unusually established double instance procedures in which appeals were possible). The possibility of appealing an arbitration award in Spain is very limited, the only possible means being those indicated in Article 43 of the Arbitration Law on annulment action and review action.

In terms of the first option, this type of action can only be carried out if the arbitration procedure has breached procedural rules to resolve the disputed issue. The review action is limited to the options established by Article 510 of the Civil Procedure Law.

This covers when the award has been issued, decisive documents are recovered or obtained that could not have been available due to force majeure or due to the actions of the party in whose favour it had been issued, if the award was issued based on documents that one of the parties was unaware of at the time of its issuance that they had been declared false in a criminal proceeding, or whose falsehood was later declared criminal.

In short, the judicial review of awards is restricted and is usually difficult for the competent courts to accept.

Spanish case law states that in accordance with the rules of interpretation of contracts, the real or effectively intended will of the parties must be sought. To this end, the literal meaning, as a criteria for interpretation, is the initial assumption, insofar as it constitutes the starting point from which meaning is attributed to the statements made, the specific intention of the contracting parties is investigated and the business purpose projected in the contract is adjusted or delimited.

When the terms are clear and leave no doubt about the intention of the contracting parties, the literal interpretation prevents, under the pretext of the interpretative work, a declaration that is really clear and precise from being modified. This is the response of the rule contained in the first paragraph of Article 1281 of the Civil Code (“if the terms of a contract are clear and leave no doubt about the intention of the contracting parties, the literal meaning of its clauses will be followed”).

On the contrary, literal interpretation also helps to show that contracts, due to their lack of clarity, the existence of contradictions or gaps, or the conduct of the contracting parties themselves, contain interpretable provisions, so that the work of interpretation must follow its course, with the criteria for interpretation at its disposal (Articles 1282 to 1289 of the Civil Code), in order to provide those provisions with a meaning in accordance with the intention really desired by the parties and with what is imperatively provided for in the contractual order.

Notwithstanding the above, the Insurance Contract Law grants the parties the freedom to agree on the content of the insurance that they consider appropriate in everything that does not oppose what it determines as minimum content. For example, with regard to fire insurance, it states that “fire is considered to be the combustion and burning with flame, capable of spreading, of an object or objects that were not intended to be burned at the place and time in which it occurs”, which logically requires that damages due to explosion or others must be included in the coverage by the will of the parties, as they are outside the legal concept of fire.

The policyholder must, before the conclusion of the insurance contract, submit to a rigorous insurance questionnaire in which they must declare all the circumstances known to them that may influence the assessment of the risk. They will be exonerated from this obligation if the insurer does not submit a questionnaire to them or when, even if it is submitted, the circumstances are involved that may influence the assessment of the risk and are not included in it.

In this regard, the insurer may terminate the contract by means of a declaration addressed to the policyholder within a period of one month, counting from the time it becomes aware of the policyholder’s reservation or inaccuracy in the questionnaire. The insurer will be entitled, unless there is fraud or gross negligence on its part, to the premiums relating to the period in progress at the time of making this declaration.

It should be added that the application for insurance does not bind the applicant, but if the insurance is proposed by the insurer, the insured party is bound by this proposal for a period of 15 days. By agreement of the parties, the effects of the insurance may be retroactive to the time when the application was submitted or the proposal was made.

Since the COVID-19 crisis began in 2020, some lines of business such as healthcare, travel and event cancellation, or credit insurance, among others, have been seriously affected with a corresponding increase in claims.

Business interruption insurance has also been affected. This is not yet entirely evident, but we believe that in the coming months we are likely to see an increase in claims. However, given the time elapsed and the limitation periods for the exercise of actions, with the exception of some very high claims filed by large companies, it is not foreseeable that there will be a significant deviation in claims from the usual pre-COVID-19 parameters.

In contrast to the above, it is possible that in the coming months there will be an increase in claims against D&O insurance due to the possible worsening of the economy. The more deteriorated a company’s profit and loss accounts become, the greater the risks that corporate managers will have to take, and D&O insurance is famously the type of insurance where the effects of ill-considered corporate risk-taking are most keenly felt.

Disputes related to insurance contract coverage are usually settled by the courts of the insured’s residence. In the case of disputes concerning the interpretation of certain policy clauses, disputes are usually settled in the first instance by the civil courts. Disputes arising from reinsurance contracts are settled in the same way.

In Spain, policyholders, who are individuals, are usually considered consumers and the vulnerable party in the contract. For this reason, if at any time there is a dispute regarding the interpretation to be given to any clause of the policy, this should always favour the insured, considering the circumstances of the case.

Furthermore, the Insurance Contract Law is drafted precisely to protect the contracting consumers, with various provisions being more favourable to them than to the insurance companies. Article 3 of the Law is a clear example: “The general conditions of cover which in no case should be prejudicial to the insured, must be included by the insurer in the proposal form if there is one and in any event in the policy documents or in a supplement, which shall be signed by the insured to whom a copy shall be given. The general and particular conditions shall be drafted in clear and precise terms. Those clauses limiting the rights of the insured shall be plainly marked and specifically accepted in writing.

The general conditions of the contract are subject to supervision by the Public Administration in the terms set forth in this Act.

If the Supreme Court declares that a particular clause in the general conditions of a contract is null and void, the competent Public Administration shall take steps to oblige all insurers to modify identical clauses contained in their own policies.”

Circumstances of a third party enforcing an insurance contract or suing an insurer in connection with an insurance contract primarily arise in civil liability insurance. At this point it is important to highlight the importance of Article 76 of the Insurance Contract Law, which states: “The prejudiced party, or their heirs, shall have direct action against the insurer in order to demand compliance with the obligation to indemnify, without prejudice to the right of the insurer to re-claim against the insured in the event of the damages to the third party being due to the fraudulent conduct of the insured. The direct action is immune to the exceptions which the insurer may have against the insured. The insurer shall have the right, however, to oppose the action by alleging the exclusive blame of the prejudice party and the personal exceptions that the insurer has against the latter. In order to exercise the direct action, the insured shall be obliged to inform the prejudiced third party or their beneficiaries of the existence of the insurance contract and its contents.”

Any injured party can therefore claim directly from the insurer of the person or persons who caused the damage without it being necessary to sue them as well.

The situation in which a third party can sue an insurer is a frequent scenario in our jurisdiction. Let us think of any action or omission that causes bodily or property damage to a third party. That third party can, by virtue of the damage caused, file a claim for non-contractual civil liability against the person who caused the damage and his insurance company, or simply against the latter.

Article 7.1 of the Spanish Civil Code states that rights must be exercised in accordance with the requirements of good faith. Extrapolating this precept to Article 19 of the Insurance Contract Law, the legislator established that: “The insurer shall be obliged to pay the indemnity, except when the loss has been caused in bad faith by the insured.”

This concept of bad faith has been interpreted by the Supreme Court in the sense that bad faith is “the malicious intention to cause damage contrary to law,” so “what is relevant is that it must be a conscious and voluntary act of the insured. It must be an intentional and malicious act of the insured.”

There are no administrative sanctions specified in Spanish insurance legislation, although for unjustified delay in the payment of compensation, Article 20 of the Insurance Contract Law requires insurers to pay interest for each day of delay.

In this regard, it is understood that the insurer delays if it has not paid the compensation within three months from the date of the loss or if it has not paid the minimum sum that it knows is owed within 40 days following receipt of the notification of the loss.

Compensation for delay will be imposed at the request of the court and will consist of the payment of interest equal to the legal monetary interest in force at the time of accrual and will be increased by 50%. The interest is considered to be accrued daily without having to be claimed judicially. However, if two years pass from the date of the loss, the annual interest may not be less than 20%.

Judicial proceedings are usually long and, in many cases, from the time the loss occurred until the first instance court judgment is issued, could take between 15 and 24 months or more, so that, taking into account the amounts claimed, the interest payable under Article 20 could lead to significant amounts being owed.

The statements made in the insurance questionnaire by the broker or insurance company about the risk to be insured are not binding on the policyholder. In this sense, Article 10 of the Insurance Contract Law states that the insurer may rescind the contract by means of a declaration addressed to the policyholder within one month from the date on which the insurer becomes aware of the non-disclosure or inaccurate representation by the policyholder.

The statements are always from the policyholder themselves, so the broker cannot replace them unless they have a special power of representation, which is unusual.

Insurance companies usually manage claims internally for medium and large risks. In mass risks, there are usually delegated authorities for the management of the files, as occurs with the management of policy underwriting where insurance agents are involved.

In recent years we have seen an increase in the type of organisations that offer multidisciplinary services to insurance companies in claims management until they are brought to court, at which point they are normally managed by law firms that specialise in the matter.

Civil liability insurance includes coverage for legal costs, whether in the civil or criminal jurisdiction, although in the latter case compensation for damage is also claimed by the injured third party in the process. Financing includes payment of the costs of the process to the losing party, in which case the insurer also pays the legal costs incurred by the winning party in the procedure.

The problem with civil liability insurance is that the assumption of legal costs is required by law, so it is unclear if this will change in the coming years. In addition, due to the competition that exists in the market (especially in relation to some insurance lines such as D&O or professional civil liability), entities have been increasing coverage and limits with lower premiums for years, creating an intrinsic risk for this type of policy. However, this trend has ceased post COVID-19 and the attitude of companies is to increase premiums with less coverage.

In the coming years, the entry of litigation funds willing to acquire litigation and assume the costs of the most expensive processes allows us to foresee a significant increase in litigation.

Legal costs in Spain depend on the economic value of the dispute. Years ago, bar associations in Spain issued Guiding Fee Criteria that lawyers took into account when billing for their services in court. These Criteria are for guidance purposes only and may be modified by the competent judges who hear the matter.

In terms of the complexity of litigation in the insurance field, more and more types of coverage are available on the market due to the circumstances of a constantly changing market, which require greater specialisation that will possibly also extend to the judicial world, as the complexity of the policies and the most important claims is increasing.

The Spanish market offers legal defence insurance, where the insurer undertakes, within the limits established by law and in the contract, to cover the costs that the insured party may incur as a result of their intervention in an administrative, judicial or arbitration procedure and to provide them with the judicial and extrajudicial legal assistance services derived from the insurance coverage (Articles 76(a)-(g) of the Insurance Contract Law).

This type of insurance has some requirements that differentiate it from other insurance, such as:

• it must be the subject of an independent contract or may be included in a separate chapter within a single policy, in which case the content of the guaranteed legal defence and the corresponding premium must be specified;
• the insured party will have the right to freely choose the representant and the lawyer who will represent and defend him/her in any type of procedure; and
• the insurance excludes coverage for the payment of fines or sanctions.

Of course, there are also the agreements that can be adopted with litigation funds, which is already a reality that will foreseeably increase.

Article 43 of the Insurance Contract Law states that the insurer after paying the compensation will be entitled to exercise the rights and actions that by virtue of the loss belonged to the insured party against those persons liable for the loss, up to the compensation amount limit. The insurer will not be able to exercise those rights that have been subrogated in prejudice of the insured party. The insured party will be responsible for those prejudices that, by his acts or omissions, have been caused to the insurer in his subrogation rights.

The insurer will also not have the right of subrogation against any person whose acts or omissions give rise to liability on the part of the insured party, in accordance with the Law, nor against those who caused the loss and are, with regard to the insured party, a direct relative or a collateral relative within the third civil degree of consanguinity or adopted parent or adopted child that lives with the insured party. This rule will have no effect if the liability arises from bad faith or if the liability is covered by means of an insurance contract. In this case, the subrogation will be limited in its scope in accordance with the terms of the contract.

In the event of the insurer and the insured party concurring against the third party liable for the loss, the amounts recovered will be shared between them in proportion to their respective interests.

The regulation of the right of subrogation to claim the damage caused by a third party is regulated by Article 43 of the Insurance Contract Law. In this case, the insurer has to base its claim on having paid the compensation to the insured party, thereby providing all of the respective rights.

The case law has established a series of requirements for the insurer to be able to exercise the recovery action. These are:

• the existence of an insurance contract;
• the reality of a loss covered by the contract;
• the effective payment, sufficiently accredited, of the compensation that corresponds to the insured, in accordance with the contract; and
• the direct liability of a third party, against whom the repetition action is exercised, which in turn requires the causal relationship between the action of the third party and the loss (that is to say, based on the existence of a claim of the insured against the third party liable, as a consequence of the same damage that gave rise to the indemnity).

Following COVID-19, Spain was largely paralysed, like most EMEA territories. The Spanish government implemented a series of measures to totally or partially restrict the movement of people throughout the territory, both national and foreign. In addition, the government paralysed businesses of all kinds, affecting all sectors of economic activity in the country (industrial, services, etc).

Due to the drastic drop in economic activity, the loss rate fell in all lines of insurance, with the direct effect being a decrease in litigation at all levels. Over the course of 2022 and 2023, activity has been recovering and the number of litigation cases has increased proportionally.

In 2024, economic activity has fully recovered in some sectors, while others remain at pre COVID-19 levels. Some of the sectors that are still at pre COVID-19 levels are the construction, artistic and recreational activities or agriculture sectors, while the industrial, tourism or services sectors have rebounded compared to the years before the pandemic. This data confirms a possible trend to know where more claims may be generated and, therefore, an increase in litigation, although there is usually no direct correlation.

We expect an increase in litigation for 2025, although it will be contained and depending on the insurance line in question. We expect a slight increase in vehicle insurance or construction, while the forecasts in other sectors such as healthcare remain the same.

Litigation, and insurance litigation in particular, is very common in Spain. According to Ministry of Justice statistics, more than 5,600 judgments were issued in all jurisdictions on matters related to insurance contracts last year. For this reason, there is no specific factor that will significantly cause an increase in litigation as a result of coverage problems. The Spanish system normally protects consumers, so they submit coverage problems to the competent courts.

There are certain risks that are not usually insured in the local market (food industry, waste treatment, etc) so their outlook has not changed for some time. On the other hand, after COVID-19 there has been an increase in claims in certain sectors, so there has also been a considerable increase in premiums (D&O and cars in particular). At the same time, there are lines such as cyber-insurance where insurance coverage is increasingly reduced. Even so, premiums tend to remain high due to the risk associated with this type of cover.

ESG factors currently significantly influence the underwriting and litigation of insurance risks. Environmental risks, such as climate change and natural disasters, directly impact insurers when adjusting premiums or even denying coverage to companies with a substantial environmental impact, although the Spanish Insurance Compensation Consortium compensates for damages caused by natural disasters (earthquakes, tidal waves, extraordinary floods, volcanic eruptions etc) and other force majeure events (terrorism, rebellion, sedition).

Social factors, such as poor labour practices, are under constant and detailed scrutiny by insurers. Companies that do not demonstrate a solid commitment to these best practices may face serious issues in securing insurance.

How a company is managed and operated with criteria such as transparency and ethics is fundamental. Poor governance may indicate potential legal risks.

These factors also affect litigation trends, with an increase in claims related to natural disasters and social responsibility. Insurers are becoming increasingly cautious about underwriting companies exposed to such risks due to the potential legal issues and lawsuits that may arise.

Data protection laws are increasingly influencing the underwriting and litigation of insurance risks. Insurers, brokers and companies in general must comply with various regulations related to the collection, use, and maintenance of personal data, which directly affect their risk assessments and potential pricing adjustments. Compliance with these obligations involves investment costs that may be passed on to the insured party.

Non-compliance with these regulations is leading to significant legal actions and high fines. Non-compliance can affect the coverage provided by insurance companies as well as the management of claims.

Another relevant aspect is data security breaches or misuse of data, which is a fundamental issue that companies must address in their policies, implementing changes in insurance terms or premiums.

There have been no major regulatory changes in the insurance sector in recent years. The last legislative amendment affecting the sector was to Royal Decree-Law 3 of 2020, dated 4 February 2020, which amended the Insurance Distribution Law. The amendment came into force on 20 March 2024.

However, there has been a profound legislative amendment in relation to the Civil Procedure Law that affects all types of actions (summons, appeals, how to draft claims, etc) This directly affects any insurance litigation as the Civil Procedure Law affects all types of actions in the civil jurisdiction.