In the Netherlands, no specialised insurance courts exist. Disputes are in principle challenged before the governmental judicial bodies. The (district) civil courts are first in line. Within three months upon receipt of the court’s judgment, appeal proceedings can be commenced before the court of appeal. After that instance, the Dutch Supreme Court is the final resort. The Dutch Supreme Court, however, only rules on matters and points of law. Unlike the district courts and the court of appeal, the Dutch Supreme Court will consequently not assess and/or establish the factual merits of the case and will base its exclusively legal judgment on the facts and circumstances presented before the lower courts.

For urgent matters, Dutch law provides for the possibility of initiating summary proceedings enabling swift provisional relief, including payment orders. It is not possible to obtain declaratory relief in summary proceedings: that is against the nature (temporariness and swiftness, also when assessing the merits of the case) of such proceedings.

Dutch is the official language for all types of proceedings before the governmental judicial bodies. It is possible to instruct translators and have them render translation services during the hearing.

Proceedings in the English Language Possible

For international commercial insurance disputes, parties may opt for the Netherlands Commercial Court (NCC) in Amsterdam. The NCC is a special chamber within the Amsterdam district court and the Amsterdam court of appeal. The NCC is the only governmental judicial body in the Netherlands that operates in the English language.

The NCC will have jurisdiction in cases that are international, civil or commercial, that are not subject to exclusive jurisdiction elsewhere, and in which the parties agreed in writing to NCC jurisdiction.

Alternative Dispute Resolution

Disputes can also be resolved via alternative dispute resolution. These will be addressed at 1.3 Alternative Dispute Resolution (ADR).

Litigation Process

First round of written submissions

Proceedings before the state courts are initiated by claimant(s) by a writ of summons. The writ of summons must be served on the defendants by a bailiff. Defendants then get the opportunity to file their statement of defence.

In this context, it is noted that Dutch procedures are primarily written, with limited scope for oral evidence. It is therefore of great importance to put forward as much written evidence as possible in the written submissions.

Hearing

After the first round of written submissions, the court may permit further briefs but will typically steer the matter towards a hearing. The purpose of the hearing is often for the court to question the parties and their positions, to explore reaching a settlement and/or to address evidentiary issues.

Following the hearing

During the hearing, the court could order witness testimony or expert opinions. This could result in post-hearing briefs in which parties will have to address (evidentiary and/or expert-related) topics raised by the court.

It is also possible that parties, often steered in that direction by the court, decide to explore an out-of-court settlement (with or without a mediator). In such event, after the hearing, the legal proceedings will be put on hold, awaiting the outcome of the settlement negotiations.

However, if the case is ripe for the court to render its judgment, the court will do so. Generally speaking, courts render their judgment in a timeframe ranging from three to six months, but this term could be extended in complex or large cases.

Rules on Limitation

Under Dutch law, legal claims are generally subject to a maximum 20-year limitation period (ultimate “long-stop”), unless otherwise provided (Article 3:306, Dutch Civil Code (DCC). Claims for performance of contractual obligations prescribe five years after the day following the date on which the claim became due and payable (Article 3:307(1), DCC). In the Netherlands, the limitation period can be interrupted by a written notice to the counterparty (the defendant) in which the claimant reserves its rights to claim and explicitly indicates that the notice letter interrupts the limitation period. Such notice restarts the limitation period.

Insurance claims, however, are subject to a specific regime (Article 7:942, DCC). A claim against the insurer for payment under the policy prescribes three years after the day following that on which the insured became aware that the claim had become due. The limitation period may be interrupted by a written notice asserting the claim, in which case a new three-year period commences on the day after the insurer either acknowledges the claim or expressly rejects it. For liability insurance, the prescription period will be interrupted by any negotiation between the insurer and the insured or the injured party, in which case a new three-year period commences on the day after the insurer either acknowledges the claim or explicitly terminates the negotiations. Contractual derogation from these provisions to the detriment of the policyholder or beneficiary is not permitted (Article 7:943(2), DCC).

In the Netherlands, there are three commonly used ADR mechanisms: mediation, arbitration and binding advice.

Arbitration

Arbitration is very common in the Netherlands, including to some extent in the insurance industry (specifically in the maritime, securities and construction sectors). The Dutch Arbitration Act, which is partly based on the UNCITRAL Model Law, provides statutory rules on arbitration but also emphasises party autonomy. See also 3.3 The Use of Arbitration for Insurance Dispute Resolution.

Mediation

Mediation is increasingly used in the insurance industry as a form of dispute resolution, both in respect of the underlying claim for which the insured seeks cover under the policy and in respect of coverage disputes. It is noted that the importance of mediation was recently (in 2024) confirmed by the Dutch Supreme Court. The Supreme Court held that, under certain circumstances, if parties agreed to first attempt to solve their disputes through mediation, the Dutch court may stay court proceedings if the party that initiated the proceedings did not comply with its obligation to attempt mediation first. Nevertheless, the use of mediation in the Netherlands seems still less common than, for example, in the United Kingdom and the United States.

Binding Opinion

Parties may also opt to submit their dispute to the binding opinion of one or more binding advisers. Under Dutch law, parties opting for such binding opinion proceedings will be bound by the decision rendered via such proceedings (which decision will be laid down in a settlement agreement between the parties). The upside of these proceedings is that there are limited statutory rules, providing great flexibility to the parties involved. The Netherlands Arbitration Institute also offers the possibility of administrating binding opinion proceedings and has its own set of “Binding Opinion Rules”.

Financial Services Complaints Tribunal

Consumers and small businesses may also opt to bring disputes with financial service providers, including banks and insurers, before the Financial Services Complaints Institute. This independent body offers an accessible alternative to the civil courts, handling complaints concerning insurance, credit and investment services. Proceedings before the Financial Services Complaints Institute are conducted in writing, are relatively swift, and are in principle free of charge for consumers; binding decisions can be issued if the financial institution is a member of the Financial Services Complaints Institute and the consumer opts for that route. Although the Financial Services Complaints Institute is not a judicial body, its decisions carry significant weight in practice: affiliated institutions are generally required to comply with its rulings, and Dutch courts frequently take case law of the Financial Services Complaints Institute into account in civil proceedings. As such, the Financial Services Complaints Institute plays an important role in the Dutch financial legal landscape as a specialised and accessible forum for dispute resolution.

Internal Procedures/Processes

Finally, it is noted that many insurers provide the option for internal complaint proceedings, allowing parties to resolve their dispute by the intervention of an internal committee of the insurer. This is particularly significant in low-value disputes, including consumer-related insurance disputes.

European Law

If European Council Regulation EU No 1215/2012 of 12 December 2012 (Brussels I Recast) applies to the dispute, special (mandatory) jurisdiction rules apply in insurance cases that offer (additional) protection to the policyholder, insured and beneficiary (Articles 10–16, Brussels I Recast). Most notably, based on this regulation, the policyholder, insured and beneficiary may sue an insurer before the competent court of their own domicile (Article 11, Brussels I-bis).

National Law

If no EU regulation or treaty applies, the jurisdiction of the Dutch court in international cases must be based on Articles 1–14 of the Dutch Code of Civil Proceedings (DCCP). These provide, as a starting point, that the Dutch court has jurisdiction if the defendant is domiciled or habitually resident in the Netherlands. The international jurisdiction of the Dutch court may also be based on a relevant clause in the parties’ contract, ie a choice of law and/or forum provision.

Judgments of foreign courts are (immediately) enforceable in the Netherlands if they are based on a treaty or an EU Regulation and if, where necessary, leave for enforcement in the Netherlands has been obtained from the Dutch court on the judgment in accordance with the provisions of the treaty or Regulation in question (Article 431(1), DCCP).

If no treaty or EU Regulation is applicable, the (same) dispute (already challenged before a foreign court) will have to be challenged before the competent Dutch court. There are, however, exceptional cases in which the Dutch Supreme Court held that “re-doing” the case (substantively) before a Dutch court is not required and that it would suffice to request the court to render a judgment similarly to/in accordance with the (outcome of the) foreign judgment.

Court Cases are Public

In principle, hearings are open to the public, but in certain cases the court may decide that the hearing should take place (partly) behind closed doors (often in criminal proceedings). However, such exceptions are rarely made by the court, certainly not for insurance law disputes.

No Common-Style Discovery

Legal proceedings in the Netherlands do not recognise common law-style discovery. However, specific, targeted disclosure of documents may be ordered on the basis of Article 843a, DCCP if the party has a legitimate interest in the specific documents being requested.

(Pre-Judgment) Seizure of Insured Sums

In the Netherlands, creditors can obtain conservatory attachment (pre-judgment seizure) relatively easily, often on an ex parte basis. Such attachment may be levied directly on insured sums under an insurance policy by way of third-party garnishment, directed at the insurer. This enables a creditor to secure potential recovery even before judgment, making insurance proceeds a common and effective target for enforcement.

Truth-Seeking is Key

Article 21, DCCP stipulates that parties are obliged to present the facts relevant to the decision completely and truthfully in civil legal proceedings. That also means that if a party is in the possession of documents that go against its position/arguments, it is not allowed to withhold that information. Parties must refrain from presenting their cases in a manner that could mislead the court.

No Rule of Precedent

The Netherlands does not have a rule of precedent in the sense applied in England or the United States. Judicial decisions are not formally binding on other courts; each judge is, in principle, free to decide a case independently. In practice, however, considerable weight is given to rulings of the Dutch Supreme Court, which strongly influence lower courts and play a central role in shaping the development of the law.

Modest Style of Cost Awards for Legal Costs/Fees

Costs follow the “loser pays” rule, though recoverable lawyers’ fees are based on modest court-fixed tariffs based on a points system rather than actual costs.

Mass Claims

The Netherlands is also well advanced with the possibility of claiming damages collectively since the Act on the Settlement of Mass Damages Claims in Collective Actions, introduced in 2020. This makes it possible for an association or foundation to stand up for the interests of thousands of individuals and claim damages on their behalf.

Digitisation

The Dutch courts embarked on a digitisation journey. It is now possible to file documents with the courts electronically and to exchange emails with the courts.

There are courts in the Netherlands that are on a pilot scheme for digital litigation in specific matters. It remains to be seen what the results/outcomes of the pilots will report. If the pilots turn out to be successful, the changes will result in all Dutch courts moving onto digital proceedings in more cases.

Dutch courts will deny jurisdiction if the parties involved concluded a written arbitration agreement and one of the parties invokes the existence of such arbitration agreement. Only in very exceptional circumstances, the court could disregard the reliance on an arbitration agreement if such reliance conflicts with the principle of reasonableness and fairness.

However, such an exception will usually not apply in insurance disputes as insurance disputes are usually simply between the insurer on one hand and the insured on the other hand. They will both have agreed to the applicability of policy conditions that contain a written arbitration agreement. Consequently, both parties will have agreed to arbitration in case of a dispute.

Exception for Parties Who Have Not Signed the Insurance Contract

In specific types of insurance matters, involving third parties or a co-insured party, this could be different as the discussion could arise if all parties involved in the dispute intentionally agreed with the arbitration agreement. It could be argued that the third party/co-insured party were not familiar with the (content of the) policy conditions and therefore neither with the arbitration agreement. In such event, it could be questioned whether agreement on the arbitration clause was reached. Hence, the court could disregard the arbitration agreement and deem itself competent to handle the case.

Exception for Insureds Qualifying as Consumers

Furthermore, although consumer agreements could provide for arbitration agreements, arbitration agreements cannot deprive a consumer of the right to initiate court proceedings via the state court system. Dutch courts will not hold consumers to arbitration agreements.

The Netherlands has been a party to the New York Convention since 1964. The Netherlands made the reciprocity reservation, meaning that the Netherlands will only apply the New York Convention to arbitral awards made in other contracting states.

Dutch procedural law provides for the recognition and enforcement of international arbitral awards both under a treaty (such as the New York Convention) and outside a treaty (under Dutch national procedural law). Dutch procedural law contains no national requirements for the enforcement of awards under the New York Convention. Therefore, the Dutch court will directly apply the provisions of the New York Convention, including its grounds for the refusal of recognition and enforcement.

The party requesting the enforcement of an award must file a petition to the court of appeal as the only factual instance handling such requests. The counterparty could then file a statement of defence. After the submission of the statement of defence, the court of appeal generally orders a hearing, followed by its judgment. A final judgment by the court of appeal is subject to cassation appeal before the Dutch Supreme Court.

Arbitration is relatively common in the insurance industry in the Netherlands. Arbitration agreements are most commonly included in policies in relation to CAR/construction-related insurance, D&O insurance, W&I insurance and reinsurance. Confidentiality is an important incentive to opt for arbitration proceedings instead of court proceedings. As third parties not involved in the arbitral proceedings cannot become familiar with the content of arbitral proceedings and (final) awards rendered, the risk of setting an informal precedent is limited (see 2.3 Unique Features of Litigation Procedure under the heading “No Rule of Precedent”).

Dutch Arbitration Act

The statutory rules for arbitration in the Netherlands are laid down in the Dutch Arbitration Act (part of the DCCP). In addition, there are several common Dutch arbitration institutes, each with their own set of additional procedural rules. For example, the Netherlands Arbitration Institute has its own set of arbitration rules (the “NAI Rules”) with various provisions such as relating to the procedure, the award, the costs and confidentiality.

Appeal Against an Arbitral Award

Dutch arbitration law provides that an arbitral appeal is available only if the parties have provided for it by agreement. In practice, arbitral appeal is often agreed pursuant to an arbitration agreement to which the parties refer in their arbitration agreement. An arbitral award may be appealed to an arbitral tribunal adjudicating on appeal.

In addition, Dutch arbitration law provides as a mandatory rule that the remedies of annulment and revocation are available against a final or partial arbitral award. These remedies can be used in the ordinary courts. The remedies of annulment and revocation do not suspend enforcement of an arbitral award.

Dutch law (Book 7, Title 17, DCC) provides for numerous terms that are considered to be part of insurance contracts by operation of law. The DCC explicitly states which provisions cannot be derogated from, and many consumer protection provisions cannot be waived to the detriment of policyholders, beneficiaries or third parties, particularly when the policyholder is a natural person not acting in a professional capacity.

As these terms form an integral part of every policy, they ensure standardised protection and fair dealing in insurance relationships, regardless of what the parties might otherwise agree in their contract. This section will touch upon some examples. It is noted upfront that Book 7, Title 17, DCC applies to insurance agreements but not to reinsurance agreements. Reinsurance agreements are subject to the general principles of Dutch contract law.

Policy Issuance and Communication

Regarding policy issuance, Article 7:932, DCC stipulates that the insurer must issue a policy document as soon as possible, containing the agreed terms of the contract. All communications required by law or contract must be made in writing, with the insurer able to rely on the last known address of the addressee.

Premium Payment

Regarding premium payment and termination, Article 7:934, DCC provides that non-payment of renewal premiums can only lead to termination or suspension after the debtor has been given notice of the consequences and a 14-day grace period following demand.

Termination of Policy

Furthermore, specific termination procedures are mandated in Article 7:940, DCC, including two-month notice periods for termination at the end of insurance periods, and rights to terminate long-term contracts after five years.

Mitigation Costs

Mitigation costs and reasonable costs to assess the loss are for the account of the insurer pursuant to Article 7:959, DCC.

Interpretation of Insurance Agreements

When interpreting contractual provisions governed by Dutch law, the Haviltex decision of the Dutch Supreme Court is the standard: “The interpretation of a contract does not depend solely on the literal wording, but also on what the parties could reasonably expect from each other in the circumstances and the meaning they could reasonably attribute to the terms.”

This means that, unlike common law jurisdictions where a more literal approach often prevails, Dutch courts will also take into account the context of the agreement, including:

• pre-contractual negotiations;
• the relationship between the parties;
• the practical execution of the agreement; and
• conduct before and after the contract was entered into.

This Haviltex standard also applies to insurance contracts. However, the Supreme Court also emphasised that a more objective approach is in place in respect of insurance contracts that were not individually negotiated. Interpretation should then focus primarily on the wording of the clause, read in the context of the policy as a whole and any explanatory documents, rather than on the subjective intentions of the parties.

Under Dutch insurance law, insurers have significant rights regarding the presentation of risk before a policy comes into effect.

Right to Full Disclosure

Pursuant to Article 7:928, DCC, the policyholder is obligated before concluding an insurance agreement to disclose to the insurer all facts that he knows or ought to know, and of which, as he knows or ought to understand, the insurer’s decision whether, and, if so, on what conditions, it will want to conclude the insurance depends or may depend. This disclosure obligation extends beyond the policyholder in certain circumstances if the interests of a known third party are also covered when entering into the insurance. In such event, the obligation includes facts concerning this third party that he knows or ought to know, and of which, as he knows or ought to understand, the insurer’s decision depends or may depend.

If the insurance agreement is concluded on the basis of a questionnaire drawn up by the insurer, the insurer cannot invoke that questions were not answered, or that facts not asked about were not disclosed, nor that a question phrased in general terms was incompletely answered, unless there was intent to mislead the insurer.

Limitations on the disclosure obligation

However, certain limitations to protect policyholders apply. The disclosure obligation does not concern facts that the insurer already knows or ought to know, nor facts that would not have led to a decision more unfavourable to the policyholder. The policyholder or the third party cannot invoke that the insurer already knows or ought to know certain facts if an incorrect or incomplete answer has been given to a question directed at this.

Also, the policyholder is only obligated to disclose facts about his criminal past or that of third parties, insofar as they occurred within the eight years preceding the conclusion of the insurance and insofar as the insurer has expressly asked a question about that past in unambiguous terms.

The disclosure obligation furthermore does not concern facts about which, pursuant to Articles 3 to 6 of the Medical Examinations Act, no medical examination may be conducted.

Insurer’s Rights Upon Discovery of Non-Disclosure

When an insurer discovers that the disclosure obligation has not been met, it has specific rights and procedures to follow.

Time limits for action

First, the insurer who discovers that the disclosure obligation has not been fulfilled can only invoke the consequences thereof if it points out the non-compliance to the policyholder within two months after discovery, mentioning the possible consequences (Article 7:929, DCC).

Subsequently, the insurer can further conduct its investigations to establish what it would have done if it were privy to the withheld information prior to the inception of the policy. Remedies that the insurers could invoke are, for instance (Article 7:930, DCC):

• termination of the policy with immediate effect, but only if the policyholder acted with intent to mislead the insurer or if the insurer would not have concluded insurance if the insurer had known the true state of affairs;
• demand a higher premium if the insurer would have done so knowing the true state of affairs before the inception of the policy; and
• refuse to cover the claim of insurance if the insurer would have included a policy exclusion for that matter had it known the true state of affairs.

Coverage Dispute Resolution

The Dutch insurance litigation landscape has experienced substantial evolution in coverage dispute resolution throughout 2024, with particular emphasis on liability, cybersecurity, and directors’ and officers’ (D&O) insurance matters. Judicial authorities and regulatory bodies have demonstrated an increased commitment to the principles of reasonableness and fairness, policy transparency and procedural diligence in their adjudicative processes.

Supreme Court Ruling on Policy Interpretation

In a precedential decision rendered in February 2024, the Dutch Supreme Court established that insurance providers may no longer invoke rigid categorisation of policy provisions (including warranties and coverage definitions) as grounds for claim denial. The Court determined that all policy conditions are subject to review under the overarching principle of reasonableness and fairness, as codified in Article 6:248(2), DCC. Where a breach of policy terms has not materially contributed to the occurrence or magnitude of the insured loss, the denial of coverage may constitute an unreasonable exercise of contractual rights – except in circumstances involving intentional breach. This judicial pronouncement significantly constrains insurers’ capacity to rely upon technical non-compliance in situations where the underlying insured risk has not materially increased.

Within the Netherlands, insurance coverage disputes are primarily adjudicated through the civil court system (reference is made to 1. Rules Governing Insurer Disputes).

State Court System is Predominant

Litigation is the predominant mechanism for dispute resolution concerning coverage, including the scope/applicability of policy exclusions, notification delays and breaches of disclosure obligations. The judiciary applies the general principles of Dutch contract law, with particular adherence to the doctrines of good faith and the principle of reasonableness and fairness as enshrined in Article 6:248, DCC.

Increase in ADR

Alternative dispute resolution methodologies, particularly arbitration and mediation, are experiencing increased adoption, especially in matters involving continuing commercial relationships or circumstances requiring reputational sensitivity.

Enhanced Legal Protections for Consumer Policyholders

Where the insured party qualifies as a consumer under Dutch law and in case law, the legal framework differs substantially in several material respects. Dutch judicial authorities apply enhanced standards of protection to consumers in insurance coverage disputes, founded upon both domestic legislation and European Union consumer protection directives.

Statutory Framework for Consumer Contract Terms

The Dutch Civil Code stipulates that provisions within standard-form consumer contracts may be declared void if deemed unreasonably burdensome (Article 6:233(a), DCC). Within insurance contexts, such judicial scrutiny is typically applied to exclusions, coverage limitations and procedural requirements (including notification periods) that have not been subject to individual negotiation. In circumstances where contractual language is ambiguous, the contra proferentem principle applies, mandating that any interpretative uncertainty must be resolved in favour of the consumer.

Pre-Contractual Information Obligations

Furthermore, insurance providers are subject to statutory obligations to furnish clear, comprehensible and timely pre-contractual information. Failure to discharge these duties may result in judicial findings of consumer deception or inadequate disclosure, with consequential implications for the enforceability of contractual provisions. Courts may additionally reduce or eliminate the consequences of alleged non-disclosure where the insurer has failed to conduct adequate investigation or provide appropriate guidance during the policy inception phase.

Treatment of Small Commercial Entities

Within commercial contexts, the distinction between consumer and non-consumer classifications has become increasingly nuanced, particularly regarding small entrepreneurs or sole proprietors who acquire standard insurance products. Dutch courts have acknowledged that such parties may lack specialised insurance expertise and may warrant analogous protective measures. This judicial approach has been endorsed by the Dutch Authority for the Financial Markets, which has encouraged insurers to extend similar transparency and fairness obligations to micro-enterprises as those afforded to consumers.

Commercial Policyholder Treatment

Conversely, where the policyholder constitutes a professional entity or commercial insured with individually negotiated contractual terms, courts demonstrate greater inclination to enforce agreements as drafted, particularly in reinsurance arrangements or bespoke commercial policies.

Under Dutch insurance law, third parties can only enforce an insurance contract on specific – limited – statutory grounds.

Liability Insurances

The most significant third-party enforcement right exists in liability insurance in case of death or personal injury. When a liability insurance claim has been reported to the insurer under Article 7:941, DCC, an injured party can demand that if the insurer owes a benefit, the amount that the insured would be entitled to claim from the insurer regarding the injured party’s damage from death or personal injury be paid directly to them. The injured party can demand this direct payment without prior notification if the insured was a legal entity that has ceased to exist and the obligation to compensate the injured party’s damage has not transferred to another party.

Fixed-Sum Insurances

Furthermore, in fixed-sum insurance (particularly life insurance), third parties can acquire direct rights as beneficiaries. A beneficiary third party acquires their right to benefits by accepting their designation, which can only be done through a declaration directed to the insurer. Once accepted, the designation of a third party as beneficiary cannot be revoked if that third party has accepted it.

These third-party rights are strongly protected by law. The provisions regarding direct action rights in liability insurance cannot be derogated from to the detriment of the injured party, and the provisions regarding beneficiary designations cannot be derogated from to the detriment of the third party.

Absence of Standalone Bad Faith Doctrine

Dutch jurisprudence does not recognise bad faith as an autonomous legal doctrine in the manner characteristic of common law jurisdictions, notably the United States and the United Kingdom. Nevertheless, a comparable and, in certain respects, more expansive concept exists within the civil law framework through the principle of reasonableness and fairness, as codified in Articles 6:2 and 6:248, DCC. These provisions establish mandatory obligations upon contracting parties – including insurance providers and policyholders – to conduct themselves reasonably and equitably towards one another throughout both the formation and performance phases of contractual relationships.

The principle of reasonableness and fairness can also dictate remedies outside the specifications contained in the contract and the court may elect to fashion remedies in order to satisfy an overriding need for fairness (Article 6:248, DCC). Within the insurance context, this principle may be invoked to mitigate the application of stringent contractual provisions or to preclude a party from exercising contractual rights in a manner deemed socially unacceptable under prevailing normative standards. It is stressed, however, that Dutch courts exercise great prudence in this regard.

Remedial Framework and Regulatory Oversight

Dutch law does not provide for punitive damages or tort-based claims for bad faith denial as recognised in certain other jurisdictions. However, regulatory authorities, including the Dutch Authority for the Financial Markets and the Dutch Central Bank, maintain expectations that insurers treat policyholders – particularly consumers and small enterprises – with fairness, transparency and expedition, and may intervene where systematic unfair treatment is identified.

Statutory Framework for Late Payment Liability

Under Dutch case law, insurers are not subject to punitive penalties for delayed claim payment in the common law sense; however, they face statutory exposure to interest obligations and compensatory damages where they fail to discharge payment obligations when due (Article 6:74, DCC).

Interest Liability Upon Default

Where an insurer fails to perform its payment obligation following default, it incurs liability for statutory interest. The interest rate prescribed under Article 6:119, DCC applies to consumer claims, whilst Article 6:119a, DCC prescribes an enhanced commercial rate applicable to business claims. Default typically commences upon the claim becoming due and payable, which may necessitate formal notice of default, unless the insurer’s non-performance is otherwise manifestly unjustified.

Additional Damages for Consequential Loss

Beyond interest obligations, Article 6:74, DCC provides that insurers may incur liability for additional damages resulting from payment delay, provided such damage is foreseeable and attributable to the insurer’s conduct. For instance, financial losses sustained by the insured party due to inability to discharge obligations whilst awaiting indemnification may constitute recoverable damages. Case law demonstrates judicial willingness to award statutory interest and, where circumstances warrant, additional damages in cases of unreasonable delay.

Regulatory Supervision and Enforcement

The Dutch Authority for the Financial Markets and the Dutch Central Bank have identified expeditious claims handling as a supervisory priority, particularly in matters involving consumer policyholders. Although regulatory enforcement specifically targeting late payment remains infrequent, systematic delays may attract supervisory scrutiny under conduct-of-business regulations.

Under Dutch law, an insurance broker is regarded as the representative of the insured, and statements or omissions by the broker in the course of placing or administering insurance are attributed to the insured. The insurer may therefore rely on the broker’s representations as if made by the insured, including in relation to the statutory duty of disclosure. Errors or omissions by the broker are at the insured’s risk vis-à-vis the insurer, though the insured may have recourse against the broker in a separate professional liability claim.

However, if the broker acts manifestly outside its authority, and the insurer knew or should have known this, the insured could legally argue that the insurer could not legitimately rely on the representations made by the broker.

In the Netherlands, delegated authority arrangements – such as underwriting and claims-handling mandates are not common. Any arrangements and/or mandates usually either exist for very specific lines (such as marine) or are agreed upon on a case-by-case basis when multiple insurers are involved in the handling of the same (usually large) claim.

By contrast, experience has shown that such mandates and/or arrangements in the Dutch market seem less pervasive than those on the Lloyd’s London market, where cover holders and managing agents often exercise broad binding authority on behalf of syndicates.

Insurers fund the defence of insureds in most if not all third-party liability insurances, such as professional liability, directors’ liability, securities claims and general liability (subject to policy conditions). By funding the defence, insurers serve their interest in mitigating the insured risk. Insureds may also argue that defence costs qualify as mitigation costs which the insurer is statutorily obliged to pay for under Dutch law. It will depend on the policy’s terms and conditions whether the defence costs are included in the insured amount or are covered in excess thereof. Policies may also extend cover for costs of (legal) assistance, which strictly speaking do not mitigate the insured risk of being held liable but address other related needs of the insured such as public relations. Often such extensions are subject to a sublimit.

In practice, the wish of insurers to be involved with the defence of a claim – as regards the choice of defence counsel, defence strategy and any settlement discussions in particular – does not always align with the insured’s wish to deal with the problem it is confronted with autonomously. Particular instances include cases that can be devastating for the insured’s reputation (which is not an insured risk in general) and/or when faced with a liability claim far in excess of the insured amount.

A development relevant to both insured and insurers is the possibility in the Netherlands of starting class actions and/or pursuing class action settlements rather similar to the United States system. This development facilitates mass claims against insureds. These claims can relate to any and all kind of damages (both property and personal injury as financial loss) and can also concern public interest litigation. Litigation funders are meanwhile very familiar with the possibility of pursuing mass claims under Dutch law.

Although cost orders are at the court’s discretion, courts most frequently order the losing party to pay the other parties’ costs. These costs are relatively low, as these cost orders do not reflect the actual lawyers’ fees incurred but only a fixed amount based on a so-called liquidation rate.

Lawyers’ rates are traditionally based on an hourly rate. Specific fee agreements can be agreed upon but not for the entire amount of the fee. Results-based compensation is in principle not allowed in most cases.

Litigation funding is permitted under certain conditions. As regards third-party funding of mass claims, the law aims to protect claimants against “entrepreneurial lawyering”, eg, by requiring that the claimant organisation should be in charge of the claim (and not the litigation funder). The contractual arrangements as regards the financial reward of litigation funders are part of the court’s considerations when determining whether the interests of the members of the class are sufficiently guaranteed by the plaintiff organisation. For example, this will not be the case if the courts consider the litigation funders’ reward to be excessive and/or insufficiently transparent. These considerations are part of a broader assessment by the court as regards the admissibility of a mass claim, which aims to protect the members of the class against possible abuse and/or unprofessional conduct by claimant organisations. As a consequence, it is very difficult to actually get to the stage that mass claims are debated on their merits; claim organisations are trying to convince the legislator to change the law in this respect.

As noted above, the costs risks in connection with litigation are relatively limited for claimants in the Netherlands. As a consequence, there is not a real need to buy protection against these risks in the form of legal expenses insurance for companies and claimant organisations. Legal aid insurance is rather common for consumers.

Dutch insurance law provides insurers with specific rights of subrogation to recover sums from third parties who cause insured losses, but this applies only to indemnity insurance (not fixed-sum insurances) and is subject to important limitations. More specifically, to the extent that the insurer compensates damage, the rights that the insured has against third parties regarding that damage pass to the insurer by operation of law. This automatic transfer of rights occurs upon payment of the claim and gives the insurer direct recourse against liable third parties.

The subrogation right is comprehensive but has key restrictions. The insurer cannot exercise the transferred rights to the detriment of the insured. This protective provision ensures that the insured’s position is not prejudiced by the insurer’s recovery actions. Also, the insurer gets no claim against the policyholder, a co-insured, the spouse or registered partner of an insured who is “not separated from bed and board” from the insured (meaning: is not (factually or legally) divorced or in a divorce), the other life partner of an insured, nor against blood relatives in the direct line of an insured, an employee or the employer of the insured, or someone who is employed by the same employer as the insured.

The subrogation right is specifically set out in Article 7:962, DCC. The first paragraph, states: “If the insured has claims for damages against third parties in respect of damage suffered by him other than from insurance, those claims pass to the insurer by way of subrogation insofar as the insurer compensates that damage, whether obliged to do so or not.”

The law makes clear that claims are brought in the name of the insurer, not the insured. This follows from the legal mechanism of subrogation, where the rights “pass to the insurer by way of subrogation”. Once subrogation occurs, the insurer “steps into the shoes of” the insured and acquires the right to pursue third parties directly.

This article cannot be derogated from, ensuring that these protective provisions cannot be contractually excluded.

The financial distress caused by various macroeconomic factors such as the COVID-19 pandemic and uncertainties caused by growing international tensions, supply chain problems, scarcity of raw materials, lack of grid connections and a lack of personnel also translates into litigation, such as among (former) business partners and shareholders both in civil courts and in inquiry proceedings before the so-called Enterprise Chamber, by trustees in bankruptcy against D&Os, by companies against governmental agencies, in securities claims and in post-M&A litigation. Climate litigation and PFAS-related claims are on the increase. Ground-breaking victories of public interest organisations in claims against the Dutch state (Urgenda) and Shell also inspire more and more organisations to use litigation as a means to force the government and/or companies to effect a legal or policy change.

As regards insurance-related litigation, macroeconomic factors such as sanctions and terrorist or war-related cyber-attacks trigger coverage disputes.

The aforementioned developments are expected to continue in the coming 12 months and possibly increase, with a view to the political crises and increasing distrust towards governments in many countries and increasing international tensions leading to (trade) wars. Also, AI will probably lead to cases which concern both liability issues and coverage disputes.

The aforementioned factors have not led to specific test cases (absent a rule of precedent under Dutch law, test cases are in general not a common feature in the Dutch legal system), although the impact of the judgments in the climate litigation is significant. Sanctions are expected to remain a topic of coverage debates. In addition, the increased use of IT and the impact of the new EU product liability directive might lead to coverage debates about the meaning of property damage and software qualifying as property.

Whether the above-mentioned factors have affected the scope of insurance cover available or changed appetites for risk is a difficult question to answer in general. Without uncertainty and risk there would be no insurance that offers commercial opportunities for insurers, but, at the same time, there are many (macroeconomic) developments at the moment which make it difficult to adequately “price” a risk and to protect insurers against cumulation of risks.

Public reports indicate that insurers in the Netherlands increasingly integrate ESG developments in their business strategies. For example, insurers increasingly take into account climate-related risks and the increasing ESG-related regulatory framework (such as CSRD and SFRD). Insurers also increasingly review and assess corporate governance structures and ESG-related disclosures to assess long-term risk exposures. This is further confirmed by various ESG-related initiatives in the Dutch insurance industry, including initiatives driven by the Dutch Trade Association of Insurers (such as developing ESG reporting standards for the insurance sector).

In addition, the Netherlands has an increasing class action landscape, most significantly since the Dutch Act on the Settlement of Mass Damages Claims in Collective Actions entered into force in 2020. This Act is increasingly used by claim vehicles and NGOs to hold (insured) companies liable for ESG-related failures.

There is also an increasing amount of (class action) litigation around environmental damages against large industry companies. Also because of this development, insurers increasingly use ESG-related exclusions, such as an environmental damage exclusion.

As for the underwriting and litigating of insurance risks practice, for each (re)insurer/underwriter it is important to assess the risks of a portfolio, and more specifically from a GDPR perspective to what extent personal data must and may be provided. If personal data is provided, it should be assessed under what conditions this is permitted in line with the GDPR, including what the applicable legal ground is. This is not only relevant in the litigation phase, but also during the pre-judicial phase. The Dutch Supreme Court ruled in 2023 on the sharing of patient medical data during the pre-proceeding phase in relation to a claim against an insured by a claimant alleging personal injury. According to the Dutch Supreme Court, the insured should ask for the claimant’s consent for sharing the claimant’s health data with a third party, such as an insurance company, in the extrajudicial phase of a liability claim. Such consent should in any case be sought if the medical professional confidentiality duty applies to the insured, but it may be recommendable to always apply the consent requirement in the extrajudicial phase, when the claimant’s health data will be processed.

It follows from the above that legislative developments in relation to ESG, AI, cybersecurity, privacy legislation and product liability are expected to trigger litigation and increase the need for insurance coverage. The envisaged reform of the Dutch pension system also causes a lot of tension and might lead to litigation.

Besides, the possibility for class actions for monetary relief attracts the interest of (foreign) litigation funders and public interest litigation is on the rise.

Regulatory authorities are under increasing pressure from the public to prosecute or investigate publicly debated issues – eg in relation to climate goals, “excessive” bonuses granted to the C-suite and #MeToo allegations.

Reference is made to the Trends and Developments chapter of this guide for more detail.