The Danish Insurance Contracts Act (Forsikringsaftaleloven) is the most important substantive law in the field of insurance. The Insurance Contracts Act regulates the relationship between insurers, policyholders and insured persons, including the rights and obligations of the parties to an insurance contract.

In Denmark, the resolution of insurance disputes is primarily governed by the general rules of civil procedure as set out in the Danish Administration of Justice Act (Retsplejeloven). This Act provides the statutory framework for how civil disputes, including those involving insurance matters, are brought before and handled by the Danish courts. It regulates all key aspects of the litigation process, such as the filing of claims, service of documents, conduct of hearings, evidence, and appeals.

Courts Structure

The Danish court system is comprised of the district courts, the High Courts, and the Danish Supreme Court. As a general rule, civil cases are heard by the district courts as the court of first instance. Exceptionally, cases involving fundamental legal questions may be referred directly from the district court to a High Court.

All court decisions can be appealed to a higher court, following the two-tier principle (to-instans princippet). Access to the Danish Supreme Court as a third instance requires approval from the Appeals Permission Board (Procesbevillingsnævnet), which is only granted for cases with potential significance for future rulings or those of particular public interest.

Pre-Trial Procedure

Proceedings are instituted by filing a writ of summons to the competent court. The content of a writ of summons must meet the requirements set out in Section 348(2) of the Danish Administration of Justice Act ‒ namely, the writ of summons must:

• state the name and address of the parties, including a postal address in the European Economic Area for the sending of procedural notices to the plaintiff and for service of documents;
• name the court in which the proceedings are instituted;
• state the plaintiff’s claim, the amount claimed, the case type, the plaintiff’s civil registration number or business registration (Det Centrale Virksomhedsregister, or CVR) number (if any), and a brief description of the case;
• include detailed submissions on points of fact and law made by the plaintiff in support of the plaintiff’s claim;
• set out the documents and other evidence on which the plaintiff intends to rely; and
• include the plaintiff’s proposal for the hearing of the case, including proposed subjects for discussion at the pre-trial hearing (see Section 353 of the Danish Administration of Justice Act).

The court serves the writ of summons on the defendant, who is then required to submit a statement of defence within a specified deadline.

The court will call the parties to a pre-trial hearing unless the court finds such hearing unnecessary. The purpose of the pre-trial hearing is to discuss questions, set deadlines, and encourage settlement.

There is no general discovery process as in common law jurisdictions, but parties must identify and submit the evidence they intend to rely on. The court may order the production of specific documents.

Trial Hearing

The trial hearing is, as a general rule, conducted orally and is open to the public. The counsel for the plaintiff opens and presents the case ‒ after which, both the plaintiff and the defendant give their statements, followed by witness testimonies. Finally, both parties present their closing arguments.

Judgment

As soon as possible after the trial hearing, the court deliberates and issues a judgment, which includes the reasoning and the decision on costs in accordance with Section 219 of the Danish Administration of Justice Act. In cases with one judge, the judgment is issued no later than four weeks after the trial hearing. In cases with several judges, the judgment is issued no later than two months after the trial hearing (Section 219(3) of the Danish Administration of Justice Act).

Appeal

Judgments from the district courts can be appealed to the High Courts within four weeks following the pronouncement of the judgment. Further appeal to the Danish Supreme Court is only possible with the permission of the Appeals Permission Board.

As described in “Courts Structure”, the Danish judicial system is based on a two-tier system, meaning that cases may – as a rule – be freely appealed once to a higher court. As such, judgments of the High Courts in the first instance may be freely appealed to the Danish Supreme Court.

In Denmark, ADR is generally prevalent and encouraged, and there are several different forms of ADR. The most common forms of ADR are arbitration, judicial mediation (Retsmægling), and private mediation. Additionally, in the insurance sector, a special board – the Danish Insurance Complaints Board (Ankenævnet for Forsikring) – handles insurance complaints from private consumers regarding insurance and pension matters.

Arbitration

Arbitration is a widely used alternative to the courts, especially for commercial disputes. In recent years, the Danish Institute of Arbitration has seen an increase in the number of cases, indicating the growing popularity of arbitration – particularly in disputes between businesses and in international cases. In 2024, 107 new arbitration cases were initiated at the Danish Institute of Arbitration. This represents an increase of 30% from 2023.

Special rules apply to consumer agreements. An arbitration agreement entered into before a dispute has arisen is not binding on the consumer (Section 7(2) of the Danish Arbitration Act (Voldgiftsloven). Therefore, arbitration is only used to a very limited extent in cases where a consumer is a party.

Judicial Mediation

Judicial mediation takes place within the courts and only after the case has been filed. Mediation conducted by the courts is governed by Chapter 27, Sections 271 to 279 of the Danish Administration of Justice Act and is exclusively applicable to civil matters.

Judicial mediation was introduced in the Danish Administration of Justice Act in 2008 as an initiative aimed at resolving disputes in a way that is cheaper, simpler and quicker than a full court case.

Private Mediation

Private mediation can be facilitated either ad hoc or through an institution such as the Danish Institute of Arbitration.

Traditionally, mediation has not been very prevalent in the insurance industry. However, in 2023, the Danish Mediation Institute entered into a co-operation agreement with the industry association F&P (Insurance and Pension). This partnership is aimed at promoting the use of mediation to resolve disputes in insurance cases.

Danish Insurance Complaints Board

The Insurance Complaints Board is a private complaints board authorised by the Danish Minister for Business and Growth. The board can only handle complaints from private policyholders (consumers).

The board is the primary complaints body for policyholders seeking out-of-court dispute resolution. Statistics from the board’s website show that, in 2024 alone, it handled 1,761 insurance cases.

Generally, the parties are free to agree both on jurisdiction and on choice of law. If the parties have not entered into a valid jurisdiction agreement or valid choice of law agreement, the dispute will be determined according to the following rules.

Jurisdictional Matters

Disputes over jurisdiction in international cases either within the EU or in connection with an EFTA (European Free Trade Association) country that is not a member of the EU are primarily determined according to the rules set out in the Regulation 1215/2012 (the “Brussels I Regulation”) and the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the “Lugano Convention”).

In the absence of any international factor and where the matter falls outside of the scope of both the Brussels I Regulation and the Lugano Convention, disputes over jurisdictional matters are determined in accordance with the rules on jurisdiction in the Danish Administration of Justice Act. According to the main rule of the Danish Administration of Justice Act in Section 235(1), legal proceedings must be instituted at the defendant’s home court, unless specific legal exceptions apply. With regard to companies, associations and private institutions, the home court is the court of the judicial district in which the main office is located or ‒ if such main office cannot be located – the court of the judicial district in which one of the members of the board of directors or the executive board is resident (Section 238 of the Danish Administration of Justice Act).

Legal proceedings involving a claim for non-contractual damages or penalty may be brought in the court of the judicial district in which the legal wrong was committed (Section 243(1) of the Danish Administration of Justice Act). Exceptional jurisdiction may also apply in accordance with Section 246 of the Danish Administration of Justice Act, where the defendant in an insurance dispute is not domiciled in an EU member state.

Jurisdictional matters are governed by Sections 235 to 248 of the Danish Administration of Justice Act.

Governing Law in Contractual Obligations

In Denmark, the choice of law in contractual obligations is governed by the Convention on the Law Applicable to Contractual Obligations 1980 (the “Rome Convention”). It is important to note, however, that the Rome Convention applies only to certain insurance contracts. Specifically, it only covers insurance contracts that cover risks situated outside the EU, as well as contracts of reinsurance, pursuant to Article 1(3) and (4) of the Rome Convention.

If a matter is not covered by the Rome Convention, its regulation is based on non-statutory principles of private international law.

If Danish law is applicable, there are specific mandatory provisions within the Danish Insurance Contracts Act. For instance, the provisions concerning the duty of disclosure and risk information – as set out in Sections 5, 7, 8 and 9 of the Danish Insurance Contracts Act ‒ are mandatory. Also, Section 20 of the Act stipulates that it is not permissible to agree that the insurance company will be exempt from liability if the insured event is caused by negligence that does not qualify as gross negligence.

Insurance Contracts and Choice of Law

In addition, questions regarding the choice of law in insurance contracts are regulated by Directive 2009/138/EC (the “Solvency II Directive”). The Solvency II Directive is applicable insofar as its substantive provisions and its scope of application so dictate. Where an insurance contract does not fall within the ambit of the Solvency II Directive, as stated in Article 178 of the Solvency II Directive, the choice of law is instead governed by the provisions of Regulation No 593/2008 (the “Rome I Regulation”) regarding insurance contracts falling within the scope of Article 7 of the Rome I Regulation. This applies even for those EU member states to which the Rome I Regulation does not apply.

The Rome I Regulation does not apply directly in Denmark, owing to the Danish opt-out from certain areas of EU justice and home affairs legislation.

The ability to enforce foreign judgments in Denmark depends on several factors, including the country of origin of the judgment and the existence of relevant international agreements or conventions.

Judgments From EU Member States

Denmark recognises and enforces judgments from EU member states under the rules set out in the Brussels I Regulation and the Lugano Convention.

Judgments From Non-EU Countries

For judgments from countries outside the EU and the Lugano Convention, enforcement in Denmark is more restricted. In the absence of an agreement on the recognition and enforcement of judgments between Denmark and the country in question, foreign judgments are not automatically recognised or enforceable in Denmark. If a foreign judgment is not recognised, the decision has neither res judicata nor prejudicial effect in Denmark. A new lawsuit must be brought before a Danish court, whereby the foreign judgment may be presented as evidence.

The Minister of Justice may lay down provisions allowing decisions made by foreign courts and authorities on civil claims to have legal effect in Denmark (Section 223(a) of the Danish Administration of Justice Act).

Foreign judgments are not recognised or enforced on a non-statutory basis in Denmark.

International insurers should be aware of the following unique features of the Danish litigation procedure.

• Denmark lacks the discovery procedure found in many common law countries. Instead, during exchange of pleadings, parties have the opportunity to request information or documents from the opposing party. If the opposing party fails to comply with such a request, the court may choose to draw adverse procedural inferences against them. It is also possible to request that the court order the opposing party or a third party to produce specific documents. The relevant provisions can be found in Sections 298 to 300 of the Danish Administration of Justice Act.
• As a general rule, the losing party in a litigation is required to compensate the opposing party for the costs incurred in conducting the case. In practice, however, it is rare for the prevailing party to recover all of their expenses, as the rates used by the courts to calculate legal costs are typically much lower than the actual fees charged by attorneys. The rules governing the legal costs are set out in Sections 314 to 316 of the Danish Administration of Justice Act.
• The Danish courts always offer the parties the opportunity to participate in court-facilitated mediation (judicial mediation). Participation in mediation is entirely voluntary and both parties must agree to take part in order for the process to proceed.
• According to section 3(4) of the Danish Interest Act (Renteloven), interest must be paid no later than from the date legal proceedings are initiated, which in practice is the date the claim is filed with the court. The applicable interest rate is the official reference rate set by the Danish National Bank as of January 1st or July 1st of the relevant year, plus an additional 8% per annum.
• In Danish litigation, there is a principle of orality, which means – among other things – that witnesses are generally required to appear in person and give their testimony in court, rather than providing written witness statements.
• When expert opinions are obtained, it is done by the court appointing an expert to conduct an assessment. An independent expert is selected and both parties have the opportunity to ask questions. This means that, as a general rule, unilateral expert opinions are not used to the same extent as in many other jurisdictions.

Danish courts recognise and enforce arbitration agreements, including those contained in commercial contracts of insurance and reinsurance. A lawsuit concerning disputes that – per agreement between the parties – are to be settled by arbitration will be dismissed upon request by the courts, unless the arbitration agreement is invalid or the arbitration proceedings cannot be conducted for other reasons (Article 8(1) of the Danish Arbitration Act).

Denmark is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention”), having ratified it in 1972.

Foreign arbitral awards are generally recognised and enforced in Denmark. The enforcement process is governed by Section 38 of the Danish Arbitration Act, which is substantively aligned with Article 35 of the UNCITRAL Model Law on International Commercial Arbitration 1985 (the “UNCITRAL Model Law”). As a rule, foreign arbitral awards can be enforced in Denmark under Article 478 of the Danish Administration of Justice Act.

Arbitration in Insurance Disputes

According to Section 7(2) of the Danish Arbitration Act, an arbitration agreement entered into before a dispute arises is not binding on the consumer. Instead, disputes regarding consumer insurance are typically resolved either though the Danish Insurance Complaints Board or through the ordinary courts.

When it comes to commercial insurance, it is also not customary to agree on arbitration clauses in many standard business insurance policies. Consequently, disputes originating from insurance contracts are generally adjudicated by the ordinary judicial courts. However, there is a greater tendency to include arbitration agreements in larger insurance programmes, particularly those involving significant liability insurance.

Applicable Rules

The main rules are set out in the Danish Arbitration Act, which is based on the UNICITRAL Model Law.

The Danish Institute of Arbitration operates under its own set of rules in terms of the arbitration procedure (the Rules of Arbitration Procedure of the Danish Institute of Arbitration, as adopted by its board) in addition to the Danish Arbitration Act.

Confidentiality in Arbitration

Arbitration proceedings are typically not open to the public. Although parties can agree to make them public, this is uncommon. Parties can also include confidentiality clauses in the arbitration agreement for future disputes.

The Danish Arbitration Act does not address confidentiality, but there is an assumed unwritten obligation for confidentiality in arbitration. If there is no agreement, the arbitral tribunal can decide on confidentiality after hearing the parties, according to Section 19(2) of the Danish Arbitration Act.

Appeals Against Arbitration Awards

In Denmark, arbitration awards cannot be challenged through ordinary legal remedies. Awards of the arbitral tribunal are not subject to appeal or general review by the Danish courts. Upon request by a party or assessment by the court of the arbitral award, the court may set aside an arbitral award on grounds of invalidity in accordance with Section 37 of the Danish Arbitration Act. Any legal action to set aside an arbitral award must be brought within three months of the date on which the party requesting the setting aside received the award.

According to Section 37(2) of the Danish Arbitration Act, an arbitral award may only be set aside if either:

• the party requesting the setting aside proves that:
1. one of the parties to the arbitration agreement lacked legal capacity under the law of the country in which that party was domiciled at the time the agreement was made, or that the arbitration agreement is invalid under the law chosen by the parties (or – in the absence of such a choice – under Danish law);
2. the party requesting the setting aside was not given proper notice of the arbitral proceedings or of the appointment of an arbitrator, or was otherwise unable to present their case;
3. the arbitral award deals with a dispute not contemplated by or not falling within the terms of the arbitration agreement, or decides on matters beyond the scope of the arbitration agreement; or
4. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or with the Danish Arbitration Act; or
• the court finds that:
1. the subject matter of the dispute is not capable of settlement by arbitration under Danish law; or
2. the arbitral award is manifestly incompatible with the public policy of Denmark.

The principle of freedom of contract applies to insurance contracts. This autonomy is both supplemented and constrained by the Danish Insurance Contracts Act, which provides the general legal framework for insurance contracts. Although most provisions of the Danish Insurance Contracts Act are non-mandatory and may be contractually derogated from, certain provisions are mandatory and binding on the parties unless any deviation is more favourable to the policyholder.

In the absence of specific provisions in the Danish Insurance Contracts Act, the general rules of Danish contract law ‒ as set out in the Danish Contracts Act (Aftaleloven) – apply.

Interpretation and Ambiguity

As insurance contracts are generally concluded on standard-form terms, the contra proferentem principle applies. Consequently, ambiguities in the policy wording are typically construed against the drafter – most often, the insurer. This interpretative approach may also apply where deviations from the non-mandatory provisions of the Danish Insurance Contracts Act are not expressed with adequate clarity.

In addition, principles of good insurance practice (God forsikringsskik) – as well as established industry customs and general practice – may be taken into consideration when interpreting the terms and scope of an insurance contract.

Under Danish insurance law, insurers may be entitled to limit or disclaim coverage where the policyholder has provided incorrect or incomplete information relating to the insured risk prior to the conclusion of the contract. These matters are governed by Sections 4 to 10 of the Danish Insurance Contracts Act. The central duties imposed on policyholders are the duty to answer and the duty to disclose.

Duty to Answer

If a policyholder provides false information or conceals circumstances that must be presumed to be material for the insurer’s risk assessment, the insurer is not bound by the contract (Section 4 of the Danish Insurance Contracts Act). In cases where the incorrect information is due to negligence, and it is probable that the insurer would have refused to enter the contract on the same terms, the insurer cannot be held liable (Section 6 of the Danish Insurance Contracts Act).

However, if the policyholder acted in good faith – meaning without actual knowledge or constructive knowledge of the inaccuracy of the information – the insurer remains liable as if the information had been correct (Section 5 of the Danish Insurance Contracts Act).

Duty to Disclose

Separately from the duty to answer, the policyholder has a general obligation to disclose material facts not specifically requested but that are relevant to the insurer’s assessment of the risk. If the policyholder – through gross negligence ‒ fails to disclose such material information, the insurer cannot be held liable (Section 7 of the Danish Insurance Contracts Act).

It should be noted that the insurer must invoke the incorrect or omitted information without undue delay after becoming aware of it.

Local Versus Master Policy

In a recent case from 2024 (Case No BS-40247/2022-SHR), the Danish Maritime and Commercial High Court found that where a local policy (issued in the USA) provided broader coverage than the Danish master policy – due to local legal requirements – the insured was entitled to retain the higher local payout. The Danish Maritime and Commercial High Court emphasised that unless the master policy contains clear, explicit reimbursement or limitation clauses, the insurer cannot demand repayment of excess amounts paid under the local policy. The judgment has been appealed to the Danish Eastern High Court.

Coverage of Injuries related to Pregnancy and Childbirth

In January 2022, 14 Danish insurance companies were fined for violating gender equality regulations by including terms in their personal accident insurance policies that excluded coverage for injuries related to pregnancy or childbirth. As a result, injuries related to pregnancy and childbirth can no longer be directly excluded in insurance terms.

In recent years, there has therefore been significant focus on the scope of coverage for birth-related injuries. It is now recognised that injuries sustained during childbirth may be considered as accidents. However, in each individual case, it must generally be assessed whether the injury occurred as a result of a sudden event or impact, as required by the standard definition of an accident in personal accident insurance policies.

This area is expected to continue developing, with clearer guidelines regarding the extent of coverage likely to emerge.

Coverage of Injury During Work at Home

In the aftermath of the COVID-19 pandemic, an increasing number of people in Denmark have begun working from home, which has given rise to certain coverage issues concerning workers’ compensation insurance.

On 2 May 2025, the Danish Supreme Court issued a landmark ruling addressing this matter (published in UfR 2025.2875 H). An employee who suffered an accident at home (tripping over a private box while working) was granted coverage under the Danish Workers’ Compensation Act. The court confirmed that injuries sustained during the performance of work tasks at home – and in the employer’s interest – are covered, even if the accident involves private household items. The judgment is described in more detail in 7.3 Coverage Issues and Test Cases.

Insurance disputes in Denmark may be resolved through various forums, as follows.

• Judicial proceedings – policyholders generally retain the right to initiate legal action before ordinary courts regarding disputes related to coverage, including questions of the insurer’s liability or the calculation of compensation.
• Arbitration – certain types of insurance contracts contain arbitration clauses requiring specific disputes to be resolved through arbitration. With regard to the use of arbitration for insurance dispute resolution, please see 3.3 The Use of Arbitration for Insurance Dispute Resolution.
• Internal complaints procedure – in accordance with the Executive Order on Complaints Officers in Financial Undertakings, insurance companies must designate an internal complaints officer. Policyholders disputing the insurer’s claims management or decision may refer their case to this officer for internal review.

Disputes arising under reinsurance agreements are generally resolved using the same procedural mechanisms applicable to primary insurance contracts.

In addition to the dispute resolution forums described in 4.4 Resolution of Insurance Coverage Disputes, consumers may file complaints with the Danish Insurance Complaints Board (see 1.3 Alternative Dispute Resolution (ADR)). Although the Danish Insurance Complaints Board’s decisions are non-binding for policyholders, they are binding for insurers unless the insurer – within 30 days of notification – submits a written notice declining to be bound by the decision.

In general, only the policyholder is entitled to invoke rights under the insurance contract. Thus, third parties who are not parties to the contract are – as a rule – precluded from bringing claims directly against the insurer.

However, there are exceptions to this rule. The most notable are as follows.

• Property insurance is not solely limited to the policyholder. The insurance also extends to third parties (eg, mortgagees) who would sustain losses because of damage to or destruction of the insured object (Section 54 of the Danish Insurance Contracts Act).
• An injured party is entitled to bring a direct claim against the tortfeasor’s insurance company, provided that both the tortfeasor’s liability and the amount of compensation have been established (Section 95 of the Danish Insurance Contracts Act).
• The injured party in a motor vehicle accident is entitled to bring a direct claim against the tortfeasor’s insurance company (Section 108 of the Danish Road Traffic Act (Færdselsloven)).
• Third parties may be entitled to invoke certain right if they are expressly named or included as an “insured person” in the policy (Section 57 of the Danish Insurance Contracts Act).

The Danish Insurance Contracts Act contains a limited number of provisions concerning bad faith. Under Danish law, bad faith is defined as knowledge or constructive knowledge. In relation to insurance, a key provision is Section 4, which exempts the insurer from liability for incorrect information provided by the policyholder if the latter acted in bad faith.

Moreover, the Danish Contracts Act serves a supplementary legal framework for insurance contracts in cases where the Danish Insurance Contracts Act does not provide specific regulation. Within this scope, the concept of bad faith plays a significant role in several contexts, including the formation of contracts, their invalidity, and agency relationships.

If the insurer is paying a claim late, the insurer must pay interest on the amount. According to Section 24(1) and (2) of the Danish Insurance Contracts Act, the insurer must pay interest when 14 days have passed since the day the insurer was able to obtain the information necessary to assess the validity and amount of the claim. The interest is set at an annual rate corresponding to the rate set by the Danish National Bank plus an additional 8%.

In Denmark, insurance brokerage is a distinct and regulated profession, subject to specific legal obligations. The profession is governed by the Danish Insurance Mediation Act (Lov om forsikringsformidling) and the Executive Order on Good Practice for Insurance Distributors (Bekendtgørelse om god skik for forsikringsdistributører). According to these regulations, insurance brokers are required to act in the best interests of their clients by consulting multiple insurance providers to obtain the most appropriate coverage at the most competitive price.

Under the Executive Order on Good Practice for Insurance Distributors, the power of attorney should specify the extent to which the intermediary is authorised to act on behalf of the client, as well as whether information provided by the broker is to be considered as if it had been given directly by the client. In the absence of such specifications, the policyholder may, in many cases, be held liable for statements made by the broker.

Furthermore, the question of whether the policyholder is bound by the broker’s actions is determined by the general rules on agency under Danish law.

In Denmark, both delegated underwriting agreements and claims handling authority arrangements are common.

A few years ago, several insurance companies in Denmark went bankrupt (including Gefion Insurance, Qudos Insurance, and Alpha Insurance), which has led to disputes regarding the calculation of insurance agents’ commissions. Most of these cases have been settled out of court – although some are still pending.

The main areas of claims in which insurers fund the defence of the insured is under liability insurances, such as:

• professional indemnity insurance;
• commercial general liability insurance; and
• D&O insurance.

In such cases, the insurer provides funding for the defence when the insured faces a liability claim brought by a third party. This is usually stated directly in the policy; however, even if there is no clause to this effect, the default position is that the insurer covers defence costs under liability insurance, pursuant to Section 92(1) of the Danish Insurance Contracts Act.

According to section 92(3) of the Danish Insurance Contracts Act, the insurer must pay the legal costs and interest (at the rate set by the Danish National Bank plus an additional 8%), even if the sum insured is exceeded. It is possible to agree otherwise but, in the vast majority of Danish liability insurances (namely, professional indemnity insurance and commercial general liability insurance), this principle is generally not deviated from. As a result, the insurer will sometimes cover an amount exceeding the sum insured.

Although the complexity of liability cases brought against insurers is expected to continue increasing, as outlined in 5.3 Trends in the Cost or Complexity of Litigation, no significant changes are anticipated regarding the funding of the defence for insured parties.

In recent years, there has been a clear trend towards more complex and high-value liability claims being brought against insured parties, particularly under professional indemnity insurances, warranty and indemnity (W&I) insurances, and D&O insurances. This development is evident in both the scale and the intricacy of the cases, which often involve substantial damages and extensive documentation.

Litigation Funding

In recent years, so-called litigation funding has become increasingly common. This refers to situations where a third party finances a lawsuit on behalf of one or more parties in exchange for a share of any amount recovered. As a result, there has been a rise in the number of compensation claims involving very large sums, and these claims are typically brought against parties who are covered by insurance (and therefore have the ability to pay a potential award). Most often, these are professional advisers, such as lawyers and accountants, as well as members of management.

D&O Disputes

As litigating funding has become more common, there has been a noticeable rise in large group actions against major Danish companies – many of which trigger coverage under D&O insurance policies. These cases frequently involve very large claims for damages, and the volume of case material can be considerable, resulting in substantial legal costs for insurers in defending these claims.

By way of example, a number of Danish and international investors filed class actions against Danske Bank and several individuals, seeking damages for share price declines and violation of disclosure requirements following the money laundering case relating to Danske Bank’s Estonian branch. In November 2022, the District Court of Lyngby considered one of the investors’ claims for approximately DKK2.4 billion against the former CEO of Danske Bank. The district court dismissed the claim in its entirety – finding that the CEO had not received information that could result in the stock price decline – and ordered the plaintiffs to pay DKK10 million in legal costs. The case has been appealed by some of the investors to the Danish Eastern High Court.

Professional Indemnity Disputes

A similar pattern can be observed in liability cases against professional advisers, such as attorneys and auditors. There is a growing tendency to hold professional advisers liable. By way of example, the Danish tax authorities recently brought a claim exceeding DKK700 million against a law firm that had issued a legal opinion regarding the possibility of reclaiming withholding tax. This opinion was subsequently used by a foreign bank to unjustifiably request refunds from the Danish tax authorities, leading to a historic loss for the Danish state. In the autumn of 2023, the Danish Supreme Court found the law firm liable for DKK400 million in damages (judgment published in UfR 2024.764 H).

As a consequence of the increasing amount of claims against auditors, several insurers in Denmark have withdrawn from offering professional indemnity coverage for auditors and premiums have increased significantly.

W&I Disputes

W&I insurance is increasingly common in M&A transactions, reflecting a market trend towards managing risks related to warranty breaches. As a result, M&A disputes are often very large and complex, involving high-value claims.

In a recent case, a buyer brought a claim against the seller – and subsequently against the seller’s former management – after uncovering accounting irregularities in the target company following completion of the transaction. The dispute was initially pursued as an arbitration against the seller, which resulted in a finding of liability for breach of warranties. A payout of EUR50 million was made under the W&I insurance policy; however, this amount did not fully cover the buyer’s losses. The seller was unable to pay the remaining amount, even with the W&I coverage, and consequently went bankrupt.

The buyer has since initiated litigation before the Danish civil courts, seeking recovery from – among others – the former management of the seller. The case was first heard by the Danish Maritime and Commercial Court, which acquitted the defendants. The decision has been appealed and the case is currently pending before the Danish Western High Court.

Forecast

It is expected that the trend towards large and complex liability cases against both management and professional advisers will continue. This is particularly likely because these parties typically – and, in the case of attorneys and auditors, always – have insurance coverage in place. The availability of insurance makes such claims more attractive to claimants and litigations funders, which in turn is likely to sustain or even increase the current level of complexity and cost in this area of litigation.

Legal expenses insurance serves as a mechanism for reducing the financial exposure associated with litigation. Rather than functioning as an independent policy, legal expenses insurance is instead incorporated into primary insurance policies such as liability, home, building, or motor vehicle insurance.

The terms and conditions governing legal expenses insurance are standardised across the market, with the exception of the deductible and the coverage limit.

This type of insurance covers the policyholder’s costs in connection with legal disputes, including court fees, legal representation, and witness fees. It also includes costs awarded to the counterparty for which the policyholder is liable.

In the past few years, it has also become more common for claimants to agree with a third party to provide funds to cover the costs of a legal dispute in exchange for a share of any proceeds recovered (litigation funding).

Similarly, a new trend has emerged whereby claimants can obtain cover for known risks (typically, prospective or ongoing legal or administrative proceedings), securing a financial investment on behalf of the insured (litigation risk insurance). Litigation risk insurance has commonly taken two forms – either as adverse judgment insurance or as judgment preservation insurance.

Under Danish law, insurers have a statutory right of recourse against third parties who are liable for losses covered by a non-life insurance (Section 22 of the Danish Liability and Compensation Act (Erstatningsansvarsloven)). This right, however, is subject to the following exceptions and limitations.

• The right of recourse does not apply in cases covered by property insurance or business interruption insurance, unless the damage is caused intentionally or through gross negligence or in the course of public or professional activities (Section 19 of the Danish Liability and Compensation Act).
• The right of recourse does not apply in cases where damage is caused by an employee and is covered either by property or business interruption insurance or by the employer’s liability insurance (Section 19 of the Danish Liability and Compensation Act).
• The two above-mentioned exceptions do not apply if the liability is regulated in the Danish Road Traffic Act, the Danish Aviation Act, or the Danish Maritime Act (Section 21 of the Danish Liability and Compensation Act)

The right of recourse does not apply – with no exceptions – if the loss is covered by a life, accident, health or other personal insurance (Section 22 of the Danish Liability and Compensation Act).

The general framework for insurers’ recourse rights against third parties is set out in Sections 19 to 22 of the Danish Liability and Compensation Act. Supplementary provisions may also be found in specific statutes, such as the Danish Road Traffic Act.

There are currently no official statistics indicating that the overall amount of litigation in Denmark has been directly affected by global events such as the war in Ukraine. However, it is clear that these events have given rise to specific legal challenges, particularly for companies with business operations in either Ukraine or Russia. These challenges often relate to contractual obligations and supply chain disruptions.

In addition, following the COVID-19 pandemic, several new legal issues have emerged. By way of example, there have been questions about whether contracting COVID-19 at the workplace constitutes an occupational injury, and it is generally accepted that it can be considered as such. The pandemic has also led to other litigations, such as whether an accident occurring at home during while working remotely can be classified as a work-related injury (see 4.3 Significant Trends in Policy Coverage Disputes (Coverage of Injury During Work at Home) and 7.3 Coverage Issues and Test Cases for further details). This issue has become particularly relevant as remote work has become more common since the pandemic.

It is expected that new issues will continue to arise in connection with the war in Ukraine during the next 12 months. As the situation develops, it is likely that these emerging challenges will lead to an increase in litigation.

The ongoing geopolitical instability, including the war in Ukraine, is likely to heighten the risk of cyber-incidents. It is anticipated that the frequency and sophistication of cyber-attacks will continue to rise, causing more disputes in cyber-insurance coverage.

In addition, it is anticipated that the new tariffs introduced by the USA will also result in the emergence of further issues for commercial policyholders. These changes are expected to create additional challenges for businesses and may, in turn, lead to more disputes.

The COVID-19 pandemic has given rise to specific coverage issues. A notable example ‒ as mentioned in 4.3 Significant Trends in Policy Coverage Disputes (Coverage of Injury During Work at Home) – is the recent Danish Supreme Court decision of 2 May 2025 (published in UfR 2025.2875 H), which addressed whether an injury sustained by an employee working from home during the COVID-19 pandemic constituted a compensable work accident under the Danish Workers’ Compensation Act.

The central issue in the case was whether an employee, who was required to work from home owing to COVID-19 restrictions, was covered by workers’ compensation insurance when she suffered an injury after tripping over a private object (a box) in her home while performing a work-related activity (making coffee during working hours). The Supreme Court ultimately recognised the incident as a work accident, setting a precedent that injuries sustained during home-based-work – if connected to work activities – are generally covered, even if private home conditions contribute to the accident.

The outcome of the Danish Supreme Court decision described in 7.3 Coverage Issues and Test Cases is expected to have significant and far-reaching implications for insurers and policyholders alike. The ruling broadens the interpretation of what constitutes a work-related injury, particularly in the context of remote work.

War in Ukraine

With regard to the war in Ukraine, it is important to note that most Danish insurance policies include war exclusions. This means that losses arising directly or indirectly from acts of war are generally not covered by standard insurance policies. As a result, a number of businesses may find themselves without insurance coverage for losses related to the war in Ukraine.

Cyber-Risks

The focus on cyber-insurance has increased significantly in Denmark, with most insurance companies offering such solutions. In addition to covering financial losses, these products often include notification services, employee training, and similar services.

Increased Risk of D&O Liability

In addition, the volume of civil claims seeking damages from directors, officers, and other members of upper management has increased significantly throughout the past decade. This has prompted a corresponding escalation in D&O liability insurance premiums, as well as a decrease in the scope of cover, particularly with regard to allegations implicating money-laundering offences.

This has led companies listed on the OMX Copenhagen 25 to adopt indemnity clauses, designed to safeguard their directors and board members against residual liabilities that fall outside ‒ or are insufficiently covered by – the relevant D&O policy. This practice was confirmed as compatible with Danish company law by the Danish Business Authority in an opinion published in 2023.

Weather Conditions

One of the most significant ESG factors affecting the underwriting and litigation of insurance risks is the increased frequency of extreme weather events. In Denmark, recent years have seen particularly storm damage and extreme rainfall, leading to floods, which have significantly influenced the underwriting risks. Specifically, storm damage and extreme rainfall have led to floods in Denmark in recent years, significantly influencing the underwriting of insurance risks.

Natural Disasters

In addition to extreme weather conditions, natural disasters are also affecting the underwriting of insurance risks.

A pertinent example of the impact of natural disasters in Denmark in this regard is the “Nordic Waste” case. In December 2023, a major landslide at Nordic Waste’s site was caused by heavy rainfall. The landslide involved large amounts of contaminated soil (approximately six million tonnes), creating a risk of pollution to local streams. It has been estimated that the clean-up following the landslide could cost as much as DKK500 million. Despite having environmental insurance coverage, the company faced costs far exceeding the policy limits.

ESG as a Risk Factor

If the insured performs poorly in the ESG areas, it can lead to reputational damage, regulatory scrutiny, and legal challenges – all of which may result in insurance claims. Therefore, some Danish insurance companies have started to incorporate ESG factors as a risk on a par with other traditional risks in the underwriting of new customers.

Data protection is primarily governed by the EU General Data Protection Regulation (GDPR), which is implemented and supplemented by the Danish Data Protection Act (Databeskyttelsesloven). Additionally, insurance companies are subject to specific confidentiality obligations under Section 82 of the Danish Insurance Business Act (Lov om finansiel virksomhed), which prohibits insurers and their employees from unlawfully disclosing or misusing confidential information. Violations of this obligation may result in fines or imprisonment.

There have not been any specific legislative or regulatory developments recently that would significantly affect insurance coverage and insurance litigation. However, there is a general trend towards increased specification and tightening of regulatory requirements, both for financial institutions such as banks and for product safety standards.

For financial institutions, this increased regulation may impact the exposure of management members to liability claims and potential fines, triggering payouts of D&O insurance.

Similarly, in the area of product safety, new regulations can expose manufacturers and distributors to potential liability claims. An example of this is the General Product Safety Regulation (EU 2023/988) (GPSR), which came into force on 13 December 2024. This regulation introduces stricter requirements regarding the safety of products sold to consumers, which could have an impact on product liability insurers.