Insurance Litigation 2021

Last Updated October 01, 2021

Denmark

Law and Practice

Author



KLAR Advokater is a medium-sized law firm in Copenhagen, Denmark, with approximately 25 fee earners (nine partners). The dispute resolution practice is led by Lotte Noer and Peter Christian Kierkegaard, and consists of three partners backed by a team of five attorneys and associate attorneys. KLAR Advokater strives to provide solution-oriented and straightforward legal advice. A cornerstone of the practice is the high degree of partner attention to clients’ matters. Clients include both domestic and multinational corporations, financial institutions, organisations and associations. The firm emphasises efficiency: when hired, it establishes a strategy for handling the case, including risk analysis, as well as an analysis of alternatives to court proceedings; ie, possibilities of settlement, mediation, and other options.

Insurance disputes are resolved according to the general regime for civil procedure in Denmark, ie, no special procedural regime applies regarding insurance disputes.

The courts of Denmark are vested with judicial powers with administrative functions attached thereto, including probate matters, bankruptcy, bailiffs court, land registration and general administration. The Danish courts are comprised of the Supreme Court, Eastern and Western High Court, the Maritime and Commercial Court and the Land Registration Court.

The Danish legal system is based on civil law. The primary sources of law in the Danish legal system are statutes, which prevail over executive orders. These sources of law are complemented by preparatory work, case law as well as legal doctrines and principles which are used to interpret the law.

Administration of Justice Act

Civil proceedings at the Danish courts are conducted according to the Administration of Justice Act (AJA). The AJA contains detailed provisions on the functioning of the courts, including all steps in a civil case. There are detailed provisions for the content of the writ of summons and defence, provisions for the preparation of the case, for the presentation of evidence, for witnesses and their duty to participate, for expert evidence and for the course of the oral hearing in court, and the court's decision of the case.

Denmark is a member of the EU but has reservation in relation to the supranational co-operation pertaining to the areas of justice and internal affairs. In addition, Denmark has adopted the Brussels I Regulation by separate agreement.

Danish Arbitration Act

Arbitration has been governed by Danish legislation for more than 300 years. The current Danish Arbitration Act was adopted in 2005 and the act is drafted in accordance with the UNCITRAL Model Law on International Commercial Arbitration from 1985. An English version of the Danish Arbitration Act is available on the website of The Danish Institute of Arbitration.

Mediation

Denmark has no mediation act. The Danish Institute of Arbitration stressed in 2018 that a law on mediation in commercial, dispositive disputes would benefit the Danish business community and it presented a draft act. So far, Denmark has not adopted an act on mediation and is not about to do so. This means that mediation takes place on a fully private and unregulated basis.

Insurance Complaints Board

In regard to consumer insurance, the Insurance Complaints Board is part of the procedural system. The Insurance Complaints Board is a private complaints board authorised by the Danish Minister for Business and Growth. It is optional for a consumer if they want to bring a matter before the Insurance Complaints Board, however, it is a cheap measure and thus often used. Complaints may concern any legal issues of a financial nature arising from the relationship between the customer and the insurance company. 

As a rule, all cases can be appealed once and the process starts in the district court, irrespective of the size and nature of the matter. Cases which concern matters of principle that have general significance for the application of the law and the development of law, or significant social reach in general, may be referred to the high courts in the first instance with direct possibility of appeal to the Supreme Court. By application to the Appeals Permission Board, such cases might also be granted a right to have the case heard in a third instance, ie, the Supreme Court.

Civil Cases

Civil cases in Denmark generally have two phases, a preparatory phase and the oral hearing itself, where the parties present their written evidence and arguments before the court and witnesses appear in person in court and give their testimony, which is recorded by the court in its journal. Written witness statements can be used according to the AJA with acceptance from the court, but are not common. In recent years, the use of telecommunications and video-meetings has been introduced successfully as an alternative to witnesses travelling from abroad.

The legal system follows an adversarial model. The decisions of the Danish courts are based on the claims made by the parties and the evidence presented to the court by the parties. Consequently, it is the responsibility of the parties to evaluate their case, obtain the evidence deemed necessary and present the relevant and necessary legal arguments.

Civil cases are processed almost without exception using a digital portal and case preparation is in writing. One or more preparatory telephone meetings are usually held. In large and complex cases, in-person preparatory meetings are held.

Evidence

During the preparatory phase, the parties exchange two or more rounds of pleading and exhibit their evidence. A party may request the other party to present certain evidence, eg, specific documents. If a party refuses to present a document requested by the other party, this is not infrequently attributed to a negative procedural effect by the courts, and the burden of proof is reversed.

According to Section 298 of the AJA, a party can ask the court to order its opponent to exhibit specific documents which are in the possession of the opponent and are relevant to the case. Documents that a party cannot be ordered to give witness testimony about are excluded from such discovery. The Danish courts administer the provision restrictively, and there must be detailed justification of the need to obtain the document before discovery is granted. There is a parallel provision in Section 299 governing discovery of documents which are in a third party’s possession.

Expert evidence is mainly given by a court-appointed expert, rather than by means of expert opinions from experts appointed by the parties. Opinions from experts appointed by the parties can only be exhibited and taken into account by the court if the parties and the court agree (AJA Section 209 a). One exception is that a party is entitled to submit an opinion from the party's own expert, which has been obtained prior to the commencement of proceedings. If such an opinion is submitted, the other party is entitled to obtain and present a counter-opinion from their own expert, obtained following the commencement of proceedings (AJA Section 341 a).

The courts rely heavily on the opinions expressed by any court-appointed expert and the process around the appointment of the expert, wording of the questions, etc, is thus crucial.

As a rule of thumb, the party making a claim or an allegation carries the burden of proof. Evidence can be presented both orally and in writing.

There are no binding rules regarding the court's assessment of different types of evidence.

Security

The courts can require claimants to post security if they are foreign nationals from outside the EU (and a few other jurisdictions) and if the defendant has demanded it in their defence statement. In all other situations, it is not possible to demand that a party posts a security deposit. 

Costs

The court determines the costs as part of its ruling. The party which is considered the winner is awarded costs based primarily on the value of the dispute, the complexity of the matter, the length of the oral hearing, etc. The costs awarded in civil disputes seldom cover the actual costs incurred by the party that is awarded costs. Consequently, even a successful party should expect to pay additional costs.

Statute Limitations for Insurance Claims

Statute limitations for insurance claims are basically the same as other monetary claims with some additions regulated in Section 29 of the Danish Insurance Contracts Act.

According to the Danish Limitation Act, the relevant main rule is that a monetary claim which is not founded on an agreement, a verdict or other written foundation is statute-barred three years after the point in time at which the creditor could demand fulfilment of the claim. In regard to a tort claim, this is calculated from the date of injury. Some exceptions and modifications apply; however, this is the general rule. The three-year period is suspended if the creditor did not have (and should not have had) knowledge about the claim or the identity of the debtor. Simultaneously with the three-year period, an absolute limit of 10 years applies which is calculated from the point in time when the creditor could demand fulfilment of the claim. Longer limitation periods apply in special cases (eg, personal injury cases). Statute limitation can be avoided if the debtor acknowledges their obligations, or by commencing legal proceedings against the debtor before the end of the limitation period.

As mentioned, some additions apply, according to Section 29 of the Danish Insurance Agreements Act. These additions are mandatory regarding consumer insureds but can be negotiated regarding non-consumers. Section 29 sets out the following modifications.

  • For insurance claims regarding personal injury, the limitation period is extended to ten years from the day when payment of the sum insured could be demanded.
  • If, before the expiry of the limitation period for a claim against an insured, an injured party subrogates into the insured's right against the insurance company pursuant to Section 95 of the Danish Insurance Agreements Act (see4.6 Third-Party Enforcement of Insurance Contracts), the injured party's claim against the insurer is statute-barred no earlier than one year after the subrogation, according to Section 95. 
  • If a claim is reported to the insurer prior to the expiry of the limitation period, the claim will be statute-barred no earlier than one year after the company's notification that it completely or partially rejects the claim. If the company acknowledges coverage, but requests additional information for the purpose of calculating the amount of the covered claim, the limitation period is extended to three years after the company's notification thereof.

Arbitration, mediation and court-based mediation are optional measures.

Arbitration

Arbitration is widespread in business disputes and as such also in insurance disputes if the insurer and insured have agreed on arbitration as their dispute resolution measure.

Arbitration is widespread within the area of construction (including cases regarding technical advisers’ liability). This applies to all types of works, ranging from commercial office buildings to large-scale civil structures such as bridges and roads, and from school buildings to co-operative housing estates and single-family homes. The parties typically use standard documents for the building and construction industry, eg, AB92 or AB18, which provide for arbitration at the Danish Building and Construction Arbitration Board.

Mediation

Mediation is not very common. Voluntary court-based mediation is offered by the courts during the initial phase of a dispute. From experience, it is very rare that court-based mediation can resolve a dispute between an insured and an insurer, which the parties have not been able to resolve before commencement of proceedings.

In construction cases, mediation is provided as a first mandatory step in the dispute resolution model (“the dispute resolution stairway”), provided for in typically used standard documents. This was implemented in 2018 (AB18). However, according to experience, the parties tend to negotiate this part of the dispute resolution model out of the standard agreement. 

Unless the parties to the insurance contract have made agreements regarding jurisdiction and choice of law (which is very common), this will be governed by facultative rules in the AJA, the Brussels I Regulation and the Lugano Convention of 16 September 1988.

As the primary rule, the defendant’s home court will have territorial jurisdiction (Section 235 of the AJA). For legal persons, the home court is the court presiding over the judicial district in which the main office is located (Section 238 of the AJA). 

The jurisdictional rules of the Brussels I Regulation and the Lugano Convention of 16 September 1988 are applicable in Denmark; these rules can govern where a defendant can be subject to suit in relation to, inter alia, residential property or the place of contractual performance.

Whether a foreign judgment will be enforced in Denmark depends on what country the foreign judgment was issued in.

Denmark is party to various agreements and treaties which provide for enforcement of foreign judgments in Denmark. The most significant are mentioned below. If a foreign judgment is enforceable, the bailiff court will assist the creditor with recovery on an equal footing with the assistance provided in the recovery of Danish judgments.

According to the Brussels I Regulation and the Lugano Convention; judgments from other courts in the EU/EEA area are recognised and enforced in Denmark.

On 30 May 2017, the Danish parliament passed a bill which implemented the Hague Convention of 30 June 2005 on Choice of Court Agreements (the “Hague Convention”) in Danish law with effect from 1 July 2017. The Hague Convention regulates that judgments handed down in convention states will be recognised and enforced in Denmark (and vice versa).

International insurers need only be aware of the model used in Denmark to obtain expert evidence (the court-appointed expert).

Denmark is generally perceived as a country where a fair trial can be expected, and its procedural rules are supportive in this regard.

Arbitration provisions in commercial contracts, including contracts of insurance and reinsurance, are enforced. 

The Danish Arbitration Act (DAA) incorporates the concept of competence-competence, and as such, the arbitral tribunal can decide on its own competence. This is also the case if the validity of the agreement containing the arbitration clause is challenged.

If a dispute which according to agreement has been referred to arbitration is brought before the ordinary courts, the ordinary courts are required to dismiss the matter, unless the court finds that the arbitration agreement is not valid or does not include the issue at hand.

If one of the parties to an arbitration agreement is a consumer, an arbitration agreement concluded before an insurance dispute has arisen is not binding on the consumer. This applies to many lines of insurance business (health insurance, bodily injury, home insurance, vehicle insurance, etc).

Denmark is a party to the New York Convention (UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958).

Arbitral awards are generally recognised and enforced by Danish courts. There are very few cases in which a party has successfully challenged an arbitral award.

Section 39 of the Danish Arbitration Act, which cannot be deviated from by agreement, regulates refusal of recognition or enforcement of arbitral awards. It corresponds in content to the UNCITRAL Model Law on International Commercial Arbitration from 1985, Article 36. The provision covers both arbitral awards rendered in Denmark and arbitral awards rendered abroad. The provision covers all arbitral awards, whether commercial or not, and whether the award was rendered in a country that has acceded to the New York Convention or not. It contains an exhaustive list of reasons that may justify refusal to recognise or enforce an arbitral award. The enumeration is identical to the corresponding enumeration of grounds for refusal in the UNCITRAL Model Law on International Commercial Arbitration from 1985, which in turn is based on the nature of the New York Convention, Article V.

According to Section 38 of the Danish Arbitration Act, the main rule is that an arbitral award rendered in Denmark or abroad has binding effect in Denmark and may be enforced in accordance with the rules of the Administration of Justice Act on the enforcement of judgments. The party that requests the enforcement of the arbitral award must submit a certified copy of the arbitral award and of the arbitration agreement if this is in writing. If necessary, the documents must be accompanied by a certified translation into Danish.

On the (rare) occasion that the parties have agreed that an arbitral award is appealable to another arbitral tribunal, the arbitral award cannot be recognised or enforced in Denmark.

There are no published statistics on the prevalence of arbitration in insurance dispute resolution in Denmark. Arbitral rulings are also not published in a systematic way. Therefore, there is no exact picture of its prevalence. One exception is construction cases. As mentioned in 1.3 Alternative Dispute Resolution (ADR), arbitration is the main dispute resolution method in construction cases.

In recent years, the Danish courts have had long casework times, which speaks very strongly in favour of choosing arbitration. Regarding insurance contracts with Danish parties, there is still a strong tendency to choose the Danish courts, where in cases with an international element there is a greater tendency to choose arbitration. 

There are two major permanent arbitration institutions in Denmark, the Danish Institute of Arbitration and the Arbitration Board for Construction. A smaller, permanent arbitration institution is the Arbitration of the Danish Chamber of Commerce. The three arbitration institutions are private.

Awards can only be appealed to another arbitral tribunal if the parties have agreed that an award should be appealable. This is not used in practical life. There is no possibility of appeal to the regular courts. 

The Insurance Contracts Act does not contain provisions which dictate the content of insurance contracts, but it does contain declaratory provisions on what must apply in relation to, for example, risk increase, non-payment of premiums, deadlines, etc, if the insurance contract does not contain regulations pertaining to this. Some of these provisions may not be derogated from to the detriment of consumers and the same goes for professional insureds with regard to a few provisions. As such, the law creates a de minimis standard. 

According to Sections 4–10 of the Danish Insurance Contracts Act, the following applies to insurers' rights with regard to presentation of risk prior to the inception of the policy: 

“Section 4. 

If the policy holder on the effecting of the insurance has fraudulently given untrue statements about, or concealed a circumstance which must be presumed to be material to the company, the contract shall not be binding on the company. The same shall apply, if otherwise his conduct has been such that it would be inconsistent with general principles of good faith to rely on the contract. 

Section 5. 

(1) If it must be presumed that on the effecting of the insurance the policy holder neither knew nor ought to know that information given by him was false, the company shall be liable, just as if the misstatement did not exist.

(2) Provided that in respect of indemnity insurance the company shall be allowed to terminate the insurance by a week's notice. 

Section 6. 

(1) Where the policy holder has made a false statement, and the case does not come under Sections 4 or 5, the company shall be exempt from liability, if it can be presumed that it would have refused the insurance if the true facts had been disclosed. 

(2) If it must be presumed that the company would have accepted the insurance, although on other terms, it shall be liable to the extent to which it would have assumed liability at the premium agreed upon. If the company through reinsurance would have limited its net retention to a wider extent, the compensation shall be reduced proportionally. 

(3) Notwithstanding paragraphs 1 and 2, in case of a consumer insurance contract and in case of life, accident or sickness assurance or other personal insurance contracts, it may be determined that the Company shall be fully or partly liable, when special circumstances support such liability. In the determination thereof special merit shall be attached to whether or not the matter that was misstated could be considered to have influenced the happening of the insurance event or the extent of the loss, as well as the degree of negligence and the period elapsed from the time when the incorrect information was given until the insured event occurred. 

(4) In Marine and other Transport Insurance, and Guarantee Insurance, the provision mentioned in the 2nd paragraph shall be substituted by a rule to the effect that the company shall be liable only to the extent established that the circumstance as to which a misstatement has been made, has not affected the happening of the insured event, or the extent of the loss.

Section 7. 

The omission of the policy holder to give information shall not affect the company's liability, unless he ought to be aware that the undisclosed circumstance was material to the company, and that his conduct may be put down to gross negligence. In this case, he shall be deemed to be guilty of misrepresentation, cf Section 6. 

Section 8. 

If the company wants to rely on the existence of one of the circumstances mentioned in Sections 5–7, it shall, after having become aware that the information was incorrect, without undue delay inform the policy holder to what extent it intends to rely on any of its rights under the said sections. 

Section 9. 

The company cannot plead a misrepresentation, if on the granting of the insurance it was, or ought to have been, aware of the true facts, or the circumstance of which the company has remained ignorant, was immaterial to it, or has subsequently ceased to be material. 

Section 10. 

(1) An agreement in conflict with the provisions of Sections 5, 6, paragraph 3 and Sections 7–9, cannot be relied upon by the company. 

(2) If the company stipulates exemption from liability, where a statement submitted by a person other than the policy holder proves incorrect, such reservation shall not involve more rigorous effects than if the information had been given by the policy holder. The company cannot make a reservation to be exempt from liability where health information provided by medical doctors and other specialists in connection with the provision of insurance, regulated by Section 120, proves to be incorrect or incomplete.

(3) The same shall apply, if the company has described a matter of fact in the policy without having obtained information about the matter from the policy holder or others and has stipulated a discharge in whole or in part from responsibility, should the said description prove incorrect.”

The last 12 months have been dominated by the COVID-19 pandemic and the trends that have followed it, cf 7 Impact of COVID-19.

In May 2021 the Insurance Appeals Board reported that it had received more complaints from consumer insureds in 2020 compared with earlier years, which had shown a falling trend. However, fewer complaints were upheld by the Insurance Appeals Board compared to in 2019. Most of the complaints were related to accident insurance and change of ownership insurance, as well as life, labour market and pension insurance. 

In general, the coverage disputes occur more often with regard to newer products than with regard to well-known products, where the same wording may have been tried by the courts in the past and therefore does not give rise to any doubt as to interpretation.

Both crime insurance and cybercrime insurance are getting a lot of publicity, and cases of cybercrime, CEO fraud and similar economic crime are on the rise. This trend was amplified during the COVID-19 pandemic, when many worked from home and tested IT security. More insurance has been written, and many more claims have been reported. Premiums are reported to be on the rise. In relation to coverage disputes, it appears that the interpretation of a policy's definition of "crime" or "cybercrime" gives rise to doubts as to whether a specific incident is covered.

Continuing Trends

A number of well-known trends have continued during the COVID-19 pandemic. 

Compensation claims against directors and officers (D&O) and professional advisers continue to increase in size and the insurance companies (slowly) appear to be following with larger insurance sums. This has been a steady trend for several years.

M&A insurance is a growing new business line with regard to the number of insurance policies and the number of claims. Post-M&A disputes seem to be a growing trend, although how extensive these are is difficult to measure, since almost all disputes are resolved through arbitration without the existence of the dispute or the result becoming known to the public. In recent years, a couple of very prominent cases have been solved by arbitral tribunals in Denmark and have been made known to the public. This has showcased that it is possible to win a post-M&A dispute and might have whet the appetite of other claimants.

In disputes over coverage relating to the interpretation of a policy, the court applies the same principles of interpretation as in other agreements. The court seeks to find out what the parties' common intention was with regard to a particular clause in an insurance contract. The wording and how the provision in question relates to other clauses in the contract is of course pivotal to this judgment, however, correspondence about the purpose of the insurance, etc, can also be included. Case law is relevant if it deals with similar insurance terms or principles regarding burden of proof, etc, in a similar situation.

If there is ambiguity in the wording, this will most often be to the detriment of the party that formulated the terms (the "drafter rule"). This is typically the insurance company, but on some occasions it is a broker.

If it is a dispute regarding facts, ie, what knowledge an insured had, whether the insured acted with intent, etc, this will be judged in accordance with the general principles of law in Denmark. Case law from other cases which defines “good faith” or “intent” will be of relevance.

Reinsurance disputes are rare. The choice of law and jurisdiction of many reinsurance contracts is outside Denmark and proceedings do not take place in Denmark or according to Danish law. In general, the same rules will govern a reinsurance dispute, although the Insurance Contracts Law does not apply to reinsurance, so the parties have more freedom in the agreement.

Overall, the same interpretive principles are used. 

The courts may use these principles to protect consumers in some situations. This may, for instance, be done by considering the leap in power relations between a consumer and an insurance company when interpreting unclear provisions in an insurance contract. In that situation there is a tendency to interpret against the insurance company, which has worded the provision in question and had the opportunity to make it clearer.

If the parties agree on the content of the insurance contract, and the case is about judging whether a distinct course of events constitute a covered event, the courts will rely on strict interpretation. The court is not inclined to “feel pity” for the consumer and grant them more coverage than they could expect based on the insurance bought. The same is the case if the dispute concerns issues such as bad faith, withholding of information or the like.

As mentioned above, the Danish Insurance Contracts Act contains a number of provisions which cannot be deviated from to the detriment of the consumer. If the insurance company has acted in contradiction of these terms when formulating the terms and conditions, the court will not uphold such provisions.

As a general rule, a third party cannot enforce an insurance contract or sue an insurer in connection with an insurance contract, unless the party is a secured party according to the policy and thus derives this right directly from the contract itself.

There is an exception to this general rule in Section 95 of the Insurance Contracts Act, which reads as follows:

“Section 95.

(1) When the assured's liability towards the third party has been proved and the amount of the damages assessed, the third party shall be subrogated to the assured's rights against the company, if he has not obtained satisfaction for his claim.

(2) The injured party also subrogates into the assured’s claim against the company if the assured’s claim for compensation is subject to bankruptcy or reconstruction proceedings against the assured’s estate. To the extent that the injured party’s claim remains unsatisfied, the full demand for compensation may be directed against the company. In the situations described in the 1st sentence the company must inform the assured that it has been notified of a claim for compensation. 

(3) If two or more third parties have a right to compensation in respect of the occurrence of an event insured against, and their aggregate claims notified to the company exceed the amount which the company is liable to pay, then, unless the agreement provides otherwise, they are to be satisfied proportionally.”

This is an exception rarely used. 

Recent years have given rise to questions regarding the interpretation of Section 95(3), however, claims against the insurance company according to Section 95(1) and 95(2) are infrequent and normally do not give rise to questions.

In a recent ruling from (U.2018.461H) the Supreme Court found that an agreement regarding the venue in an insurance contract was not binding on an injured party who was entitled to direct action against the insurance company pursuant to Section 95 of the Insurance Contracts Act.

As mentioned in 4.2 Rights of Insurers, bad faith in connection with information provided during underwriting is regulated in Section 4 of the Danish Insurance Contracts Act.

Section 18 of the Danish Insurance Contracts Act regulates the insured's wilful or negligent causing of the insured event. According to Section 18, the insured has no claim against the insurance company if they wilfully cause the insured event. A couple of exceptions apply, ie, underage, lunacy, imbecility, or transient mental derangement.

If the insured causes the insured event by gross negligence (measured according to circumstances), it is to be decided, with due regard to the degree of guilt and all other relevant circumstances, whether the insurance company is to pay, and, if so, what amount. Regarding life insurance and liability insurance (of a third-party’s interests) the insurance company shall, however, bear full liability. 

According to Section 25 of the Insurance Contracts Act, payment under the policy can be demanded 14 days after the company has been able to obtain the information necessary for the assessment of the payable amount. If a final assessment cannot be made, but it is certain that the insurance company has to pay a certain de minimis amount, an account payment of the de minimis amount can be demanded. Payments under the policy carry interest from the point in time when they could be demanded according to Section 25, with an annual interest corresponding to the interest rate according to Section 5 of the Interest Act. Currently, this interest rate is 7.65% pa.

Generally speaking, the insured is bound by representations made by its broker. The broker is an adviser to the insured and acts according to the power of attorney. The basis for the broker's work is an agreement that regulates the broker's mandate, power of attorney, liability, etc.

Cases regarding broker's liability are rare. Brokers tend to be very careful when passing on information, in order to make sure that they do not give away any information or make any representations which have not already been made to the broker himself by the insured. 

Both delegated underwriting and claims handling authority arrangements are common. There are no public rulings regarding such arrangements. This could be because any disputes are solved by arbitration or simply because these arrangements do not give rise to conflict which cannot be solved by agreement.

Defence costs are an integrated part of liability insurance, such as professional liability insurance, D&O insurance, product liability insurance, etc. However, coverage of costs is often built into all products where claims – and proceedings – from third parties (including public authorities) can be expected. This includes crime insurance, environmental insurance, etc. Generally, funding of litigation tends to be packaged alongside other coverage to sell a full-service product.

Some lines of business are designated defence-cost insurance which covers costs if a claim is brought against the insured. These are provided to both consumers and professionals alongside other products such as home insurance.

It is probable that the tendency to include coverage of costs in the package will continue.

Secondary market claims have been a driver to introduce third-party funding in Denmark, including cost insurance for a specific pending matter, as a concept. So far, cost insurance for a specific pending matter is not underwritten in Denmark, however, this could be expected to change.

Within the last few years, claims regarding professional liability and D&O liability have increased in volume and complexity. 

Following the financial crisis, several banks were compulsorily taken over and unwound by the Financial Stability Company. In all cases, a huge claim was brought against the former management. These cases were extremely large and took the legal system up to ten years to deal with. In the same period, several large cases regarding professional liability were brought. This has fuelled a tendency for ever-larger claims to be brought, which generally involve more facts and thus, more complexity. 

Refer to 5.2 Likely Changes in the Future.

According to experience, insurance contracts almost always include a regulation of subrogation, whereby the insured's claim against a third party is transported to the insurer for the insurer to claim for recourse. Even if such agreement has not been made, the same applies according to general principles of law. 

The right to pursue third parties follows from general principles. The recourse claim is most often brought in the name of the insured, but from time to time, a more formal transfer of the claim is made.

It is still very early to say anything about this. The Danish courts have a couple of years of case processing time and have been partially shut down during the pandemic. There is as yet no relevant case law.

A much-discussed Norwegian case between Codan and Noreell Ski and Spa owned by Petter Stordalen, about coverage under epidemic insurance, has received a great deal of attention and may conceivably be relevant in the interpretation of similar policies in Denmark.

The periodic shutdown of businesses during the pandemic is giving rise to discussions between insurers and insureds regarding calculation of loss of income on insurances which cover events other than the COVID-19 pandemic (eg, business stoppage following water damage). Whereas the insurers argue that there would have been no or very little income anyway, the insureds tend to view this differently.

As mentioned in 4.3 Significant Trends in Policy Coverage Disputes, widespread working from home has in some situations weakened IT security which has led to more claims in crime insurance and cybercrime insurance. Issues regarding coverage and the calculation of the claim on these insurances tend to give rise to discussion. It appears that the description of the scope of coverage is difficult to measure against events created by a creative criminal mind.

Claims volumes for personal lines (eg, motor vehicles) have reportedly decreased due to the lockdown.

A larger volume of claims in certain areas, such as business interruption cover, specialised coverage in transport and trade credit insurance, has been experienced. 

It is probable that there will be some rulings regarding the issues described in 7.1 Type and Amount of Litigation

There is as yet no case law on issues that have arisen during the COVID-19 pandemic.

At present (September 2021) it is too early to conclude anything on this. The Danish business community has generally done well through the crisis and public support programmes have secured wage compensation to prevent mass lay-offs. It must be said that the COVID-19 crisis has created renewed and increased focus on a number of problems of importance to the insurance industry, eg, cybercrime, and individual assessments of a specific insured's risk profile may well differ in the light of recent experiences. However, it is difficult to say anything in general about trends in a broader sense.

Climate scientists expect that there will be more and more violent rain in Denmark, increasing groundwater and creating extra pressure from the oceans due to climate change. Insurance & Pension Denmark, the Danish trade association for insurance companies and pension funds, is working to facilitate changes in society to mend the effects of climate change.

No information has as yet been made publicly available that climate change is affecting the underwriting and litigating of insurance risks.

Publicly available topological maps show which properties are low-lying and can expect to be affected by climate change. It appears that house prices have been affected by information on the risk of flooding as a result of climate change, but it has not yet been reported that this affects the possibility of taking out insurance. This must be seen in connection with the Danish Storm Council, which is an independent council established by law that handles cases concerning three types of natural catastrophes: storm surge, flooding from waterways and lakes, and windfall. The Danish Storm Council is financed by storm damage tax payable by both Danish and non-Danish insurance companies. In return, damages following from storm surge, flooding from waterways and lakes, and windfall are handled and financed by the Danish Storm Council. 

There have been no recent significant legislative or regulatory developments affecting insurance coverage, litigation or claims in Denmark.

KLAR Advokater

Indiakaj 12
2100 Copenhagen O
Denmark

+45 51531309

ln@klaradvokater.dk www.klaradvokater.dk
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Law and Practice

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KLAR Advokater is a medium-sized law firm in Copenhagen, Denmark, with approximately 25 fee earners (nine partners). The dispute resolution practice is led by Lotte Noer and Peter Christian Kierkegaard, and consists of three partners backed by a team of five attorneys and associate attorneys. KLAR Advokater strives to provide solution-oriented and straightforward legal advice. A cornerstone of the practice is the high degree of partner attention to clients’ matters. Clients include both domestic and multinational corporations, financial institutions, organisations and associations. The firm emphasises efficiency: when hired, it establishes a strategy for handling the case, including risk analysis, as well as an analysis of alternatives to court proceedings; ie, possibilities of settlement, mediation, and other options.

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