Insurance & Reinsurance 2024

Last Updated January 23, 2024


Law and Practice


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Insurance law in France is mainly governed by the Insurance Code (IC), the Social Security Code, the Mutual Code, and the Monetary and Financial Code (MFC). Other codes, such as the Civil Code, may also apply to a lesser extent.

EU legislation also has a significant impact on French insurance regulation ‒ for example, Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (the “Solvency II Directive”) or Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution (the “Insurance Distribution Directive”). Finally, case law emanating from French courts is particularly important, in that it interprets and applies French insurance law and, so doing, clarifies insurers’ and policyholders’ respective rights and obligations.

Reinsurance, for its part, is governed by the Civil Code rather than the IC. As such, reinsurance practice benefits from greater contractual freedom than insurance practice. Moreover, French reinsurance practice is influenced by English reinsurance practice to a significant extent – whether it be in terms of product design or dispute resolution.

In France, insurance and reinsurance activities are regulated by an independent administrative authority known as the French Prudential Supervision and Resolution Authority (Autorité de Contrôle Prudentiel et de Résolution, or ACPR). It licenses and controls insurance and reinsurance, as well as banking activities. The ACPR has three functions:

  • a regulatory function – the creation of soft law, through issuing general rules and guidelines (by way of circulars, decrees, etc) for banking, insurance and reinsurance activities;
  • an oversight function – via continuous and ad hoc controls of insurance companies and intermediaries; and
  • a disciplinary function – with a range of possible sanctions.

The ACPR is a member of the European Insurance and Occupational Pensions Authority (EIOPA), which was created on 1 January 2011 and is one of the three supervisory authorities of the European System of Financial Supervision. It is independent, but reports to the European Parliament, the Council of the European Union, and the EC.

To be authorised to write insurance or reinsurance, any new insurance or reinsurance company must respect the licensing procedure as set out in Articles L321-1 to L321-3 and R321-1 to R321-5 of the IC. These articles were amended on 8 October 2021 in order to impose a duty to inform the EIOPA before granting authorisation (under the Freedom of Establishment) to a (re)insurance undertaking in another EU member state if the proposed scheme of operations suggests that the (re)insurer’s activities will have a significant impact on the French market.

The ACPR can grant licences either conditionally or unconditionally or, alternatively, refuse to grant them altogether. Its decision is based on the following criteria: 

  • the integrity, expertise and experience of the applicant’s managers;
  • the extent and suitability of the technical and financial means that the applicant plans to implement; and
  • the applicant’s shareholding structure and shareholder status.

Moreover, insurance undertakings operating in France must respect the Solvency II Directive and, as such, must:

  • have a governance system that ensures sound and prudent management;
  • comply with minimum capital requirements;
  • have an adequate risk management system; and
  • organise regular internal reviews.

The ACPR grants licences to insurance undertakings for specific categories of business. Applicants must choose between 26 categories listed in Article R321-1 of the IC. Unlike reinsurance companies, insurance companies cannot be listed for both life and non-life insurance business.

Article 991 et seq of the General Tax Code regulates the French insurance premium tax (IPT), which applies to all insurance policies covering risks situated in France. Insurance undertakings that are not established in France must be registered with the French tax authorities and assign a representative who is responsible for paying the IPT. The rate of the IPT depends on the insured risk, and can vary from 7% to 33%.

The approach of French jurisdiction to overseas-based insurers or reinsurers doing business in France (or with counterparties in France) varies depending on where the insurer or reinsurer is registered.

Insurance and Reinsurance Companies Registered in an EU Member State or in an EEA State

Insurance companies

Pursuant to Articles 147 to 149 of the Solvency II Directive and Article L310-2 of the IC, the Freedom to Provide Services and the Freedom of Establishment allow any insurance company authorised in a member state to carry out its insurance activities throughout the EU.

A non-French insurance undertaking wishing to exercise its freedom to provide services must have received authorisation for its activities from the supervisory authorities of its home state. The Solvency II Directive provides that the authorisation granted by a member state is valid throughout the EU.

Reinsurance companies

Directive 2005/68/EC of the European Parliament and of the Council of 16 November 2005 on reinsurance and amending Council Directives 73/239/EEC, 92/49/EEC, as well as Directives 98/78/EC and 2002/83/EC (the “EU Reinsurance Directive”), facilitated the conduct of reinsurance business within the European Economic Area (EEA) by extending the European passport system to reinsurers. Thus, the approval issued by the authorities of the EU member state in which the reinsurer’s head office is located will be valid throughout the EEA. The reinsurer can then act outside said EU member state under the Freedom to Provide Services or the Freedom of Establishment (Article L310-1-1-1 of the IC).

Other Foreign Insurance and Reinsurance Companies Operating in France

Insurance companies

Foreign insurance companies located outside the EU and the EEA may only operate in France after obtaining an administrative licence and a special licence for the benefit of a general representative (Articles L310-2, I, 4° and L329-1 of the IC). Following Brexit, from 1 January 2021, this regime now applies to insurance companies located in the UK. However, it should be noted that, pursuant to a 16 December 2020 Ordinance and Article A310-1 of the IC, UK-based insurers were allowed – and, indeed, obligated ‒ to keep on performing their obligations under policies that were still in force on 1 January 2021, albeit on a purely run-off basis (see 12.1 Significant Legislative or Regulatory Developments).

Reinsurance companies

Reinsurers whose head office is not located in the EEA may also reinsure insurance companies established in France.

Foreign reinsurers, in principle, must not be treated more favourably than European reinsurers (Article L310-1-1 of the IC). However, these reinsurers may benefit from the same rules as European reinsurers if the regulations of their head office country are deemed to be “equivalent” to the EU regulations. This equivalence system was necessary to comply with the WTO agreements aimed at liberalising international trade in services – in particular, the General Agreement on Trade in Services.

In practice, equivalence allows foreign reinsurers to reinsure European companies under the same conditions as European reinsurers. These “equivalence” decisions are taken by the EC. On 5 June 2015, the EC granted equivalence for a period of ten years to six such countries: Australia, Bermuda, Brazil, Canada, Mexico and the USA. Switzerland was granted unlimited equivalence.

There are no limitations in France on the introduction of fronting arrangements by reinsurance companies. Moreover, there is no obligation for the cedant to retain any share of the risk.

After a marked decrease in M&A transactions during 2020, 2021 saw a significant uptick in transactions, with 17 M&A transactions taking place during the first three quarters of 2021. This pace continued and, indeed, accelerated in 2022 ‒ a total of 23 M&A transactions occurred during the first three quarters of the year.

Major insurers are redistributing their development efforts on corporate risks and reconsidering their presence in mature global markets.

In France, most insurance products are distributed by traditional actors (eg, brokers and general agents) and directly by employees of the insurance company. However, new ways of distributing insurance are emerging, such as:

  • online insurance comparators websites;
  • insurtech; and
  • high street banks that increasingly offer insurance products.

The Insurance Distribution Directive, which came into force in France on 1 October 2019, changed the EU’s legal framework for insurance distribution.

First, it modified Article L112-2 of the IC ‒ as a consequence of which, insurance distributors must now provide their clients with a standardised document that summarises the key characteristics of the envisaged insurance contract.

Second, the scope of the applicable regulation has been broadened. Indeed, Article L511-1 et seq and Articles R511-1 et seq of the IC, which regulate the activity of distributing insurance products, now also apply to the distribution of insurance products online and over the telephone. Moreover, Article L511-1, which used to apply only to intermediaries who undertook distribution as a principal activity, now also applies to insurance companies and includes most distributors who undertake this activity on a secondary basis.

Finally, pursuant to Articles A512-6 and A513-7 of the IC, insurance company employees, general agents and brokers must hold a master’s or bachelor’s degree or professional certificate in finance, banking or insurance.

Article L113-2 of the IC governs the policyholder’s disclosure obligations, which mainly consist of completing a questionnaire drawn up by the insurer, as well as answering any questions clearly phrased and submitted by the insurer by other means (eg, letter, fax or email).

As a matter of French insurance law, the insured is under no obligation to spontaneously disclose information that might be relevant to the policy and the scope of their disclosure obligations is exclusively determined by the insurer’s questions. However, if the insured does elect to spontaneously disclose information, then the statements must be accurate and truthful or else the contract could be avoided for fraudulent misrepresentation.

During the life of the policy, the policyholder also has a continuous duty to disclose all changes relating to the information that was disclosed in the insurance questionnaire or in response to the insurer’s questions at inception. Pursuant to Article L112-3 of the IC, if the insurer’s questions are not sufficiently clear and precise, the insurer may not then rely on the fact that the insured’s answers are vague or unreliable to try to limit or deny coverage. It is therefore key that insurers draft their subscription questionnaires with this principle in mind and draft individual questions in a sufficiently precise fashion.

The French legislature has amended the regime that governs borrowers’ insurance in respect of residential mortgages. As of 1 June 2022, the requirement to complete a medical questionnaire has been removed for mortgages below EUR200,000 that will mature before the policyholders’ 60th birthday ‒ with a view to enabling a wider group of people to have access to mortgages. Therefore, for these products, insurers will no longer be able to rely on policyholders’ medical information to calculate premiums or to decide whether they underwrite the risk. Moreover, since 1 September 2022, these borrowers’ insurance contracts can be terminated at will by policyholders without paying any fee.

Policyholders’ Failure to Comply With Their Obligation to Provide Information

The IC provides sanctions in the event that policyholders fail to comply with their legal obligation to disclose relevant information either at the beginning of the insurance contract or during its lifespan. These sanctions vary, depending on whether or not the policyholder was acting in good faith when they failed to disclose any information or provide accurate answers.

The insurer can avoid the policy, which will be deemed to be null and void, if the inaccurate information or the lack of disclosure:

  • was deliberate and in bad faith; and
  • influenced the insurer in deciding to provide cover or setting the amount of the premium.

However, if the insured was acting in good faith when they provided or failed to disclose the information at issue, the IC provides a more forgiving sanction. The policy will not be deemed null and void, but the indemnity owed by the insurer will be reduced, according to a rule of average (based on the premium the insurer would have requested had the risk been accurately disclosed).

Notably, in decisions handed down in 2019 and 2021, the French Supreme Court held that ‒ pursuant to European Law ‒ auto insurers could not invoke policyholders’ misrepresentations in order to limit or deny coverage to third-party victims.

Insurers’ Failure to Comply With Their Obligation to Provide Information

Insurers’ obligation to provide information is set out in Article L112-2 of the IC, which provides that – prior to entering into the insurance contract – the insurer must provide the potential insured with:

  • a copy of the proposed insurance contract; and
  • information sheets concerning:
    1. the amount of the premium and the cover provided by the policy; and
    2. the law that applies to the contract (if not French law).

The IC does not provide for any sanctions should the insurer fail to deliver the information sheets or a copy of the proposed insurance contract. Established case law, however, holds that the insurer will not be able to invoke certain clauses (eg, exclusion and forfeiture clauses) against the insured if the insurer failed to bring their contents to the insured’s attention and such clauses will be deemed unenforceable as a result. Furthermore, as Article L112-2 requires the information to be provided before entering into or amending the insurance contract, insurers cannot remedy the situation by providing the information in question at a later date.

When an intermediary is involved in the negotiation of an insurance contract, it can act on behalf of the policyholder or the insurer, depending on the nature of the contractual relationship.

The insurance broker’s role is to source the policies that are best-suited to the profile of its policyholders in terms of protection, guarantees or rates. They then take care of the administrative set-up of the contract and negotiate its terms. Brokers provide clients with pre-contractual advice on premiums and coverage; therefore, they fall under the category of insurance distributors. As such, they have legal obligations in relation to the pre-contractual information and advice they provide.

Insurance brokers can also be involved in claims handling. They assist the policyholder or insured in the case of a loss, including during the investigation and the adjustment of the loss, and may also advise insurers when choosing the party-appointed adjusters. The broker’s involvement regarding the handling of the claim depends on the extent and complexity of the loss and the sophistication of the insured. Brokers can, however, act on behalf of the insurers – for instance, by collecting premiums owed under the policy.

In principle, the insurance contract comprises an offer and an acceptance by which the parties demonstrate their will to be bound. It is a consensual contract but the consent given does not have to take a specific form; rather, it may be express or implied.

However, pursuant to Article L112-4 of the IC, policy clauses that stipulate nullities, forfeitures or exclusions shall be valid only if they are printed very clearly – for example, underlined or in bold (or both) – so that the design of the contract itself immediately brings the insured’s attention to such clauses. Moreover, to be valid, the scope of exclusion clauses must not be so wide as to deprive the policy of its initial purpose. Finally, in a recent decision, the Supreme Court ruled that amendments to an existing policy are only valid if made in writing.

Moreover, to be valid, the insurance contract must be based on an insurable interest. It is indeed required that the interest exists on the day of subscription in order for the insurer to be liable for the coverage. The notion of the insurable interest is expressly referred to in Article L121-6, paragraph 1 of the IC, which provides that any person with an interest in the preservation of an object may have it insured.

According to Article L112-4 of the IC, the insurance policy is dated the day it is issued and it must indicate:

  • the names and domiciles of the contracting parties;
  • the insured object or person;
  • the nature of the risks covered;
  • the time from which the risk is guaranteed and the duration of this guarantee;
  • the amount of this guarantee; and
  • the insurance premium or contribution.

The policy should also indicate:

  • the law applicable to the contract where French law does not apply;
  • the address of the insurer’s registered office and, where applicable, the branch granting coverage; and
  • the names and addresses of the authorities responsible for supervising the insurance undertaking granting cover.

Finally, insurance contracts’ legal requirements vary according to the nature of the risk. Indeed, insurance against “large risks” (as defined by the IC) allows for more flexibility than where there are standard risks against which consumers will take out insurance. As such, “large risks” insurance contracts – unlike consumer or standard insurance contracts – are not subject to the following:

  • Article L112-2 of IC, which requires the insurer to provide the insured with an information sheet on the price and guarantees, as well as a copy of the draft contract;
  • the first paragraph of Article R126-2, which prohibits the stipulation of deductibles or ceilings specific to damage resulting from acts of terrorism; or
  • the obligation that the policy be drafted in French or, indeed, governed by French law.

In the context of a group insurance, the policyholder is bound to provide the members with a notice prepared by the insurer defining the coverages and their terms and conditions of entry into force, as well as the formalities to be completed in the event of a claim. They must inform participants in writing of any changes to their rights and obligations at least three months before their expected effective date.

Moreover, credit institutions that engage in insurance operations of any kind are subject to the ordinary rules applicable to all insurance intermediaries. The loan insurance operation must comply with the rules that apply to the distribution of non-life insurance, especially the following:

  • the obligations relating to the medium of information (dematerialisation) – ie, certification on paper or on another durable medium – as codified in Article L521-6 of the IC; and
  • the provision of a standardised insurance product information document (IPID), referred to in Article L112-2 of the IC.

The credit institution satisfies the membership formalities by issuing borrowers with an insurance application form, also known as a membership application or individual membership application form. In practice, this document is not necessarily separate from the loan contract, as the application for membership may be included on the same form. In this case, however, it is required that the borrower’s membership be evidenced by a signature separate from that showing their acceptance of the offer of credit.

Finally, under French insurance law, the beneficiary of the loss payee clause can act directly against the insurer for payment of the benefit provided for in the contract.

Reinsurance leaves the field open to contractual freedom. Built on a practice that is not inclined to strict drafting, certain clauses can radically change the economics of the contract.

As mentioned in 1.1 Sources of Insurance and Reinsurance Law, reinsurance practice is not governed by the IC in France. Instead, it is governed by the principles of the Civil Code – meaning that the practice of reinsurance enjoys somewhat more contractual freedom than that of insurance. When it comes to dispute resolution and product design, French reinsurance is influenced by the English practice.

“Large risks” insurance contracts are more regulated than reinsurance contracts, although though their regime still allows a certain degree of flexibility (see 6.4 Legal Requirements and Distinguishing Features of an Insurance Contract). “Standard” or consumer insurance contracts, however, are heavily regulated and must abide by numerous and detailed requirements ‒ all of which are aimed at protecting the insured (as a consumer and the less sophisticated of the two parties in the insurer‒insured relationship).

All risks (property damage, personal injury, liability, life) corresponding to classes 1 to 26 of Article R321-1 of the IC may be transferred to a securitisation undertaking in an ART, either:

  • directly by the insurance or reinsurance undertakings, under French or foreign law; or
  • indirectly by another insurance risk securitisation vehicle, under French or foreign law, approved in accordance with Article 46 of the EU Reinsurance Directive.

Indeed, Order No 2008-556 of 13 June 2008 introduced the option for securitisation undertakings to bear insurance risks. It also defined the regime applicable to securitisation transactions carried out by French insurance and reinsurance companies.

In accordance with Article L214-189 of the MFC, a securitisation undertaking must be approved by the ACPR to bear insurance risks. The ACPR verifies that:

  • the statutes or regulations of the securitisation undertaking actually authorise it to bear insurance risks;
  • the persons responsible for the management of the securitisation undertaking are of good repute and have appropriate professional qualifications; and
  • the securitisation undertaking has put in place administrative and accounting procedures to identify and assess the insurance risks objectively ‒ as well as internal control and management mechanisms that enable it to monitor the evolution of these risks.

The ACPR also verifies that the asset composition and risk coverage strategy of the securitisation undertaking are compatible with the rule limiting the total amount of commitments to the value of its assets, as required by Article D214-237, 5° of the MFC.

Securitisation undertakings underwriting insurance risks are, in fact, subject to dual supervision:

  • first, the approval of the securitisation undertaking by the ACPR; and
  • second, the supervision of the securitisation undertaking’s management company by the French Financial Market Authority (Autorité de Marches Financiers, or AMF).

However, according to Article L310-1-2 of the IC, contracts through which a securitisation vehicle assumes an insurance risk do not constitute insurance contracts.

Whether written in other jurisdictions or under French law, ART transactions do not constitute insurance contracts under Article L310-1-2 of the IC.

An ART written in another jurisdiction may be transferred:

  • directly by the insurance or reinsurance undertakings; or
  • indirectly by another insurance risk securitisation vehicle, approved in accordance with Article 46 of the EU Reinsurance Directive.

The main priority when interpreting an insurance contract is to respect the will of the contracting parties. Hence, where the policy is clear, the courts must simply apply and enforce it. However, if the policy is ambiguous and needs to be interpreted, the courts and parties can use extraneous evidence about the negotiations, the circumstances in which the contract was placed, or the “usual practice”. They can also refer to the (non-mandatory) contractual interpretation guidelines provided in the Civil Code (Articles 1188 et seq), which are as follows:

  • one must look for the common intention of the contracting parties, rather than focus on the literal meaning of the words;
  • where this intention cannot be inferred, the contract must be interpreted according to the meaning that a reasonable person in the same situation would ascribe to it;
  • the contract is to be interpreted in its entirety;
  • contracts that concern the same operation should be interpreted together, rather than independently from one another;
  • specific provisions take precedence over more general provisions; and
  • a non-negotiated contract is interpreted against the drafter.

French insurance law tends to be pro-consumer and consequently pro-insured. Ambiguous policy provisions are therefore often interpreted in the manner that is most favourable to the insured (which may, in turn, lead to their being set aside). The following additional rules regulate the interpretation of an ambiguous policy.

  • First, according to the French Consumer Code, if the insured is a consumer then the ambiguities must be interpreted in its favour.
  • Second, in case of ambiguities, the non-negotiable standard terms of the contract shall be interpreted in whichever way is least favourable to the insurer.
  • Third, the IC adds that certain key clauses (such as exclusion clauses) must have a clear scope and be readily understandable by the insured upon first inspection. The aim is to prevent any doubt regarding what is covered and what is excluded from coverage. As a consequence, exclusion clauses that require interpretation will be set aside, as will exclusion clauses that rely upon open-ended lists and use such phrases as “including” or “such as”. (Note that, in a recent decision, the French Supreme Court held that this was the case even in instances where the risk that effectively occurred was one of the risks that were explicitly identified in the open-ended list.)

An insurance contract contains an implied warranty ‒ that is, a promise by the insured that statements affecting the validity of the contract are true. Moreover, Article L113-2 of the IC provides that the insured must answer the questions asked by the insurer in a truthful fashion.

Under French law, policies can include condition precedents – one example of such would be a stipulation that the insurance contract will not be considered entered into or binding until the first premium has been paid.

Policies can also include coverage conditions, which are distinct from conditions precedent. Indeed, if a condition precedent is not met, the insurance contract will be deemed to have never existed. In contrast, failure to satisfy coverage conditions for a certain time will merely suspend the insurer’s obligation to provide insurance cover during the relevant period before resuming as soon as the condition is met again. Such conditions feature frequently in insurance cover for breaking and entering or theft, where the insurer’s cover obligation is conditional upon certain security measures always being maintained (eg, the presence of a functioning alarm system protecting the risk).

It should be borne in mind that coverage conditions are distinct from exclusion clauses ‒ as a consequence of which, their validity is not dependent on:

  • appearing in bold print in the contract; or
  • being drafted in a readily understandable fashion and with a narrow scope.

Insurers can add a mediation and conciliation clause in their policies in order to address any disputes over coverage under an insurance contract.

The requirements regarding these clauses vary depending on the identity of the insured ‒ for instance, “large risks” insurance contracts can stipulate mediation and conciliation clauses, with no obligation to specify the exact means of initiating mediation. However, if the insured is a consumer, the insurance contract must indicate how to initiate the mediation, pursuant to Article L112-2 of the IC. Moreover, when the insured is a consumer, arbitration clauses contained in the insurance contract are automatically deemed null and void. In accordance with the applicable case law, if an insurance contract contains a conciliation clause or a mediation clause, the parties must go through these steps before they can take legal action.

The limitation period that applies to claims relating to the performance of insurance contracts lasts two years, pursuant to IC Article L114-1. This time limitation period only starts to run from the moment the insured becomes aware of the loss. It can be interrupted by the insured sending a letter to the insurer to that effect via registered mail with confirmation of receipt. On 21 December 2021, an exception was introduced for cases where damage resulting from land movements due to drought and soil dehydration is recognised as a natural disaster; the limitation period has been extended to five years in such cases. The time limitation period can only be successfully invoked by the insurer if the policy in question reinforces the articles of the IC that govern the time limitation period and indicate how it can be interrupted.

The two-year time limitation that applies to insurance contracts has been challenged before the French Constitutional Court on the grounds that it is excessively short and unfair if the insured is merely a consumer. However, on 17 December 2021, the Constitutional Court ruled that the two-year time limitation applicable to insurance contracts was constitutional and would be upheld.

In a recent decision, the French Supreme Court held that the two-year limitation period only applied to actions relating to the insurance contract itself. Consequently, it does not apply to civil liability claims against the insurer, which are subject to a five-year limitation period.

Choice of Jurisdiction

In the absence of a clause conferring jurisdiction, the jurisdiction is determined according to the rules of private international law. For French courts, these rules derive from four texts:

  • European Regulation EC 44/2001 of 22 December 2000;
  • the Brussels Convention of 27 September 1968;
  • the Lugano Convention of 16 September 1988; and
  • the common French law of jurisdiction.

The criterion for the application of these texts is the domicile of the defendant.

Choice of jurisdiction for defendants domiciled outside the EU or the European Free Trade Association

For defendants domiciled outside the EU or the European Free Trade Association, the international jurisdiction of French courts is determined by extending the rules of internal territorial jurisdiction.

Among these rules of internal territorial jurisdiction several articles apply:

  • Articles 14 and 15 of the Civil Code; and
  • Article R114-1 of the IC for insurance matters.

These articles establish a jurisdictional privilege in favour of litigants of French nationality. Article 14 provides that a foreigner, even if not residing in France, may be cited before French courts for the performance of obligations contracted by them in any country with a French person. Article 15 adds a privilege of exclusive jurisdiction and provides that a French person must be brought before a French court for obligations contracted by them in a foreign country, even with a foreigner.

Nonetheless, Article R114-1 of the IC derogates from the ordinary rule of jurisdiction (ie, the jurisdiction of the court of the defendant’s domicile). Indeed, in the event of a dispute, this rule would oblige the insured to cite their insurer before the court of the domicile in which the company’s registered office is located.

Consequently, French law has established that the defendant is brought before the court of the insured’s domicile in all proceedings relating to the determination and payment of an insurance indemnity. However, there is an exception to this rule if the dispute relates to buildings ‒ in which case, the defendant is then cited before the court of the location of the insured objects. Moreover, in the case of insurance against accidents of any kind, the insured may cite the insurer in the court local to the place where the event occurred.

Defendants domiciled in an EU member state, Switzerland, Norway or Iceland

If the defendant in the action is domiciled in an EU member state, Switzerland, Norway or Iceland, the standards that apply will be the Brussels I bis Regulation and the revised Lugano Convention.

This regulation tends to protect the weaker party. Thus, an insured beneficiary or policyholder can decide to claim against an insurer either in the courts of the EU member state where the claimant is domiciled or the EU member state where the insurer is domiciled. The insurer, however, has no choice and must claim in the courts of the EU member state where the defendant is domiciled.

Choice of Law

In insurance matters, conflicts of law are governed by two distinct sets of rules:

  • the Rome Convention of 19 June 1980; and
  • the laws transposing the European Directives of 22 June 1988 and of 8 November 1990 – that is, Articles L181-1 and seq of the IC in France.

To determine which sets of rules apply, it is necessary to locate the risk situation. Indeed, when the risk is located outside the EEA, then the Rome Convention will determine the applicable law.

For risks located in the EEA, the law is based on the rules laid down by the national transposition of the following European Directives:

  • Council Directive 90/619/EEC of 8 November 1990 on the co-ordination of laws, regulations and administrative provisions relating to direct life assurance, laying down provisions to facilitate the effective exercise of freedom to provide services and amending Directive 79/267/EEC, amended by Council Directive 92/96/EEC of 10 November 1992, for life insurance; and
  • Second Council Directive of 22 June 1988 on the co-ordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and laying down provisions to facilitate the effective exercise of freedom to provide services and amending Directive 73/239/EEC, amended by Directive 92/49/EEC of 18 June 1992, for non-life insurance.

On one hand, the main rule regarding life insurance contracts is expressed by Article L183-1 of the IC, which indicates that the contract shall be governed by French law – to the exclusion of any other law – if the agreement is made in France. However, if the policyholder is an individual and national of another member state of the EEA, the parties to the insurance contract may choose to apply either French law or the law of the EU member state of which the policyholder is a citizen.

On the other hand, in the case of non-life insurance contracts, Article L181-2 of the IC says the contract shall be governed by the law of the state with which it has the closest links. The contract is presumed to have the closest links with the EEA member state in which the risk is located.

The parties may derogate from this connection principle by choosing the applicable law, as offered to them in Articles L181-1 and L181-2 of the IC. But said choice must be express or result with certainty from the clauses of the contract or the circumstances of the cause. Finally, according to the Article 13 of the Brussels I bis Regulation and Article 11 of the Lugano Convention, the injured party may bring a direct action ‒ albeit only if it is possible to do so according to the applicable law.

It should be noted that, even though the above-mentioned regime enables the parties to apply another law than French law to the insurance contract, this does not mean to say that such a policy would be exempt from any impact from French insurance law. Indeed, on 15 June 2023 and then on 12 October 2023, in the context of direct actions by a French claimant against a Dutch insurer regarding an insurance contract governed by Dutch law, the Supreme Court applied mandatory provisions of the IC (specifically, those that relate to the layout and drafting requirements applicable to exclusion clauses) ‒ despite the fact that the policy was not governed by French law ‒ and set aside the litigious policy’s exclusion clauses on the grounds that they did not meet the requirements provided in the IC. These decisions have been criticised for introducing a significant amount of legal uncertainty when dealing with policies that are governed by foreign laws.   

The victim will be able to bring the civil liability insurer before the court of the EU member state or contracting state in which they have sued the liable insured. However, the latter has other options when it comes to jurisdiction.

As direct actions against the liability insurer of the alleged liable party are allowed under French law, it is therefore possible for the injured party to bring a direct action in front of French courts.

Insurance disputes in France are litigated in the following tribunals:

  • first-instance commercial courts;
  • first-instance civil courts (formerly County Court and High Court);
  • courts of appeal; and
  • the French Supreme Court (the Cour de Cassation).

The first-instance commercial court or the first-instance civil court have jurisdiction subject to the identity of the parties (ie, whether the parties are civil or commercial entities). Decree No 2019.912, which has come into force on 1 January 2020 merges the County Court and the High Court, which now constitute a single court (Tribunal Judiciaire).

Once the first-instance decision has been handed down, the parties that wish to do so can bring an appeal, without seeking prior permission. The distinction between civil and commercial entities disappears upon appeal, as the courts of appeal hear both types of cases alike.

Once the court of appeal has rendered its decision, it is possible to bring a second and final appeal before the French Supreme Court only if it relates to a point of law, as the French Supreme Court only hears appeals on points of law.

In France, in order to force the counterparty (defendant or debtor) to comply with the judgment against them, the party will have to go to the enforcement authorities. They alone have the power to force the debtor to pay, calling on law enforcement if necessary.

Under the Brussels I bis Regulation, which governs the recognition and enforcement of judgments in cross-border cases, if the party has an enforceable judgment issued in an EU member state then it can go to the enforcement authorities in any other member state (eg, where the debtor has assets) without any intermediary procedure being required. The Brussels I bis Regulation abolishes the “exequatur” procedure. The debtor against whom the party seeks the enforcement may apply to the court requesting refusal of enforcement.

The purpose of enforcement is generally to recover sums of money, although it may also be to have some other kind of duty performed ‒ for example, a duty to do something (such as deliver goods or finish work) or refrain from doing something (such as trespassing).

In practice, the party needs to have an enforceable document (a court judgment or a deed) if it wishes to apply for enforcement. The enforcement procedures and the authorities who handle them (courts, debt collection agencies, and bailiffs) are governed by the national law of the EU member state where enforcement is sought. Foreign decisions taken in third countries (ie, outside the EU) can be enforced via the exequatur proceeding.

Arbitration clauses in commercial insurance and reinsurance contracts can be enforced as per any arbitration clause in other kinds of contracts. To be valid and enforceable, the arbitration clause must have been accepted by the party to whom it is opposed. Moreover, arbitration clauses are not enforceable against non-professionals (ie, persons who did not enter the contract in the course of their professional activity).

A standard arbitration clause for insurers and reinsurers to use has been prepared by the French Centre for Reinsurance and Insurance Arbitration (Centre Français d’Arbitrage de Réassurance et d’Assurance, or CEFAREA-ARIAS), which is an association created to promote arbitration and mediation in the field of insurance and reinsurance.

According to Article 1487 of the French Code of Civil Procedure, if amicable enforcement is impossible, the award can be enforced via an exequatur order. An enforcement or exequatur order is the act by which the exequatur judge orders that an arbitral judgment be executed.

Excluded from the scope of the Brussels Convention, international arbitration is governed by international conventions ‒ the most important being the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 (the “New York Convention”). However, the New York Convention is not often applied for exequatur proceedings in France. Indeed, it specifies that rules of the state of origin may apply where they are more favourable to the recognition of awards. As French law is liberal on this point, it is essentially the rules of the Code of Civil Procedure that are to be applied.

In order to comply with the new requirements of the Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (the “EU Consumer ADR Directive”), insurers have set up – within the framework of the Fédération Française de L’Assurance ‒ a unique mediation system managed by an association called La Médiation de l’Assurance. Insurance companies that are members of the Fédération Française de l’Assurance – ie, most companies operating in France – have undertaken to join La Médiation de l’Assurance and to respect the terms of its mediation charter. The association receives around 20,000 claims per year.

The mediator is appointed for three years and the charter of La Mediation de l’Assurance defines its powers, as well as the rules applicable to mediation in assurance. The mediator is authorised to deal with disputes that may arise between individuals and insurance companies in order to seek amicable solutions. In addition, mediation may be extended by agreement to other disputes, such as those with a third-party beneficiary or disputes relating to professional insurance (excluding large risks).

According to the mediation charter, the mediation process is a written one ‒ the insurance companies and intermediaries have a maximum period of five weeks to respond to requests for information or documents from the insurance ombudsman. As it is a mediation, however, the opinion that is finally handed down is not binding upon the parties.

In France, in the event of a delay in compensation, the insurer may be required to pay damages to the insured. If the insurer is late in complying with its obligations, the insured must send a summons to perform its obligation to pay the insurance indemnity in the form of a registered letter with acknowledgement of receipt. Interest starts to accrue from the time the registered letter is received by the insurer.

Regardless of the type of insurance, the interest is based on the indemnity owed by the insurer. It is calculated based on the statutory rate of interest in force at the time.

The IC indicates specific rules for delays and interests regarding:

  • traffic accidents (regulated by Articles L211-8 and seq of the IC);
  • life insurance (governed by Article L132-23-1 of the IC); and
  • compulsory construction insurance (ruled by Article L242-1 and seq of the IC).

Pursuant to IC Article L121-12, the insurer automatically benefits from subrogation rights (up to the amount of the indemnity paid out) from the moment it has indemnified its insured – provided the loss fell within the policy’s scope of coverage. Otherwise, the payment is deemed ex gratia and automatic subrogation does not apply; however, in such cases, the parties can nevertheless agree to bestow subrogation rights upon the insurer by way of a subrogation agreement. Article L121-12 of the IC also provides that the insurer is exonerated from its obligation to indemnify the insured if the latter’s conduct constitutes a waiver of its right of action against the liable third party, such that the insurer would be prevented from exercising its subrogation rights in the event it paid an indemnity.

Once it is subrogated into the insured’s rights, the insurer has an exclusive right of action against the liable third party. The insured cannot, therefore, initiate proceedings regarding the part of its loss that has been indemnified (unless it produces a joint prosecution agreement entered into with the insurer). The subrogated insurer benefits from all the transferred rights previously held by the insured, including access to rights such as arbitration agreements. Conversely, all defences that could validly be invoked against the insured (including time limitation) can now be raised against the subrogated insurer.

In France, insurance companies tend to enter into partnership strategies with insurtech companies, as they often perceive them as means of accelerating innovation and digitalisation. Insurance companies are generally trying to make the most of insurtech’s strengths (agility, technology) without being exposed to some of its perceived weaknesses (financial fragility, operational risks).

Naturally, there is no one single way to proceed and insurers’ approaches are quite varied. Some are staking on significant partnership opportunities, through different funds and structures, whereas others are adopting a more selective strategy and focusing mainly on technological partnerships with more limited scopes.

Some of the criteria that are commonly relied upon to select insurtech partners are:

  • their ability to provide, or help provide, improved customer service in an automated fashion;
  • their expertise in relation to data and security; and
  • the quality of their managers with regard to projects.

The following four channels of co-operation are (often jointly) used by the various insurers.

  • Commercial partnerships – in this case, insurers want to benefit from the agility and flexibility of insurtech companies offering new customer services or making a commercial difference, which could fit within their strategic target, but which they themselves do not have the capacity to offer quickly at this stage.
  • Technological partnerships – these partnerships do not directly concern the commercial sphere but rather fraud prevention and expertise. This configuration can also be adopted when the insurer wishes to remain in control of the customer relationship. They then use a white-label technology provider in order to benefit from the technology while securing their customer relationship.
  • Minority shareholdings – these shareholdings are generally aimed at influencing the governance and development of insurtech companies without, however, affecting the partner’s start-up spirit.
  • Takeovers – this may originate from a desire to invest in a “gem” that the insurance company believes in enough to provide with all the (financial) means necessary to grow. Another motivation may be to secure key technological know-how by controlling the insurtech company entirely. Both cases raise the question of how to integrate these start-ups into large insurance companies without stifling their agility.

At the end of 2020, several French insurtechs created an association for French insurtech companies, which now boasts more than 100 members.

In France, most insurtechs identified in the market operate as insurance brokers. As such, they generally need to register at the Organisme pour le Registre des Intermédiaires en Assurance (ORIAS) and respect the regulations that apply to insurance intermediaries.

However, since 2019, some insurtech companies have obtained authorisations from the ACPR to carry out insurance business in France. They will, therefore, bear the financial risks associated with their insurance business instead of relying on a partnership with existing insurance companies, as is usually the case.

At the same time, the EIOPA implemented an insurtech task force (ITF) to work on issues arising from insurtech and, in particular, analyse the use of big data by (re)insurance undertakings and intermediaries (both incumbents and start-ups). Furthermore, the ITF maps the supervisory initiatives undertaken by different jurisdictions in the field of insurtech, with a view to establishing efficient and effective supervisory practices. At a later stage, the ITF will also focus on the convergence of supervised algorithms and explore the benefits and risks arising from the use of blockchain and smart contracts for (re)insurance and consumers.


According to the 2023 Fédération Française de l’Assurance report on emerging risks, cyber-risk remains the main preoccupation for insurance and reinsurance companies (as in 2021 and 2022). Insurers operating in France are still developing new insurance products to best meet the needs of the market and respond to this emerging type of risk. To address these risks, a legislative framework has been established at the French level by the Military Programming Law 2019–2025 (Loi de Programmation Militaire, or LPM) and at the European level by the Network and Information Security (NIS) Directive in order to strengthen the security of sensitive information systems.

Moreover, the ACPR warned insurers that, in view of the increasing exposure of companies and individuals to cyber-risk, cyber-insurance is one of its control and oversight priorities. In this context, it has identified the following areas for improvement:

  • comprehensively assessing portfolios’ exposure to cyber-risk (including as a result of so-called silent cyber cover) and, if relevant, integrating the assessment into the ORSA (Own Risk and Solvency Assessment) report;
  • clarifying definitions and terminology relating to risks in order to enable an unambiguous offering to policyholders;
  • gradually building the statistical bases that will make it possible to better delimit the guarantees and to price them in a relevant way; and
  • raising awareness and training stakeholders in cyber-risk, both on the part of policyholders and sales forces (promotion/prevention co-ordination).

In May 2021, several insurers have announced that they would cease to cover payments made to ransomware operators. This announcement was part of a more general debate – notably, before the French Parliament – on whether such ransom payments should be prohibited, as they may contribute to money laundering, financing terrorism and the development of cybercrime. As a consequence, Article L12-10-1 was introduced in the IC (see 12.1 Significant Legislative or Regulatory Developments for further details).

Environmental Risks

According to the 2023 Fédération Française de l’Assurance report on emerging risks, climate change is the second main preoccupation for insurance and reinsurance companies today (as in 2022). In France, climate change is generating more frequent and more damaging natural disasters, including the floods in the Aude, hailstorms in the Charente, and especially hurricanes Irma and Maria in the French West Indies.

In France, the monitoring of climate risk for the financial sector was introduced by the Energy Transition Green Growth Act (Loi relative à la Transition Énergétique pour la Croissance Verte, or LTECV) adopted in August 2015. Article 173 of this law requires all institutional investors to publish information on:

  • how their investment policy takes into account criteria relating to compliance with ESG objectives; and
  • the measures implemented in order to contribute to the ecological and energy transition.

As part of its supervisory tasks, the ACPR is responsible for verifying that all insurance undertakings apply the contents of Article 173 of the LTECV.

Furthermore, the EIOPA has provided the EC with an opinion recommending a further review of environmental risks by the EU Insurance Distribution Directive and the Solvency II Directive. This opinion suggests that, in order to better integrate sustainability risks into Pillar 2 of the Solvency II Directive, the EC should amend several articles of the delegated Solvency II Directive and EU Insurance Distribution Directive ‒ in particular, those that relate to:

  • the principle of the prudent person;
  • the management function of risks;
  • the actuarial function; and
  • the compensation policy.


In France, new products and alternatives are being developed to address the cyber-risk. As of October 2019, the Ministry of Economy and Finance provides French companies with a cybersecurity self-diagnosis toolbox that is easy to access, practical and free of charge. The company must go to a government website to find out its level of computer security in four key areas: passwords, data back-ups, messaging and browsers.

Furthermore, insurance companies have launched new insurance products to best meet the needs of the market. Some of these products target individual consumers with regard to possible risks concerning internet use, such as:

  • identity theft;
  • cyber-harassment of family members;
  • disputes relating to the purchase of goods or services;
  • disputes on social media platforms; and
  • fraud.

These products may also provide other services, such as identifying fraudulent websites and suspicious emails or abnormal credit card activity.

More established insurance companies have, for their part, widened their range of insurance products to help SMEs face cyber-attacks. The new range of cyber-risk insurance includes several customised offers, depending on the turnover and risk typology of the companies. These insurance contracts provide cover in relation to the prejudice suffered as a result of cyber-attacks and may also provide specialised assistance to the insured.

Following a survey carried out by the ACPR among French insurers in 2021, the ACPR has noted that cyber coverage is mostly available to businesses as part of policies that provide coverage for a multiplicity of risks – rather than as a standalone insurance product. In this respect, the ACPR notes that energy companies and mobile carriers/internet providers are starting to offer cyber coverage to their customers as an add-on to their contracts.

Climate Change

Based on a survey carried out by the ACPR among all French insurers in 2018, and information published by insurers pursuant to Article 173 of the LTECV, the ACPR has noted that most insurers implemented the following steps in connection with this emerging type of risk:

  • an internal definition of climate change risk and a process for analysing this risk in all or part of their assets and/or liabilities;
  • processes to know the carbon footprint of all or part of their asset portfolio (companies, sovereigns, French regions, etc) to identify the companies and sectors with the highest emissions;
  • specific monitoring and a sector policy aimed at limiting investment in sectors qualified as “non-green”; and
  • a policy to raise awareness of climate issues in the operational teams in charge of investments, as well as specific policies to encourage companies to take part in the energy transition and reduce their carbon footprint; and
  • tools to improve the consideration and effective integration of climate change risks into their risk management system, such as:
    1. implementing internal reporting for monitoring exposure to these risks;
    2. internal risk measurement models; and
    3. assessments of these risks in their ORSA reports.

In a 2022 monitoring report on the climate commitments of banks and insurers, the ACPR and the AMF noted that:

  • banks and insurers are generally committed, even though transparency is uneven regarding their voluntary commitments and the way they address regulatory requirements;
  • banks and insurers should track their processes and results in order to assess outcome and identify possible improvements to better achieve their aims; and
  • only a minority of companies have set specific targets that define a pathway out of coal financing by 2030 or 2040.

French insurance law has not undergone any major change or reform during the past year.

On 28 November 2022, the Digital Operational Resilience Act (DORA) was adopted by the Council of the European Union. Its requirements, which operators will have 24 months to implement, aim to render financial institutions less exposed and more resilient when it comes to cyberthreats. As such, the regime that stems from DORA will have an impact on insurers, as well as a significant proportion of their clients. In this context, the ACPR conducted a survey in 2022, with responses from 239 organisations, which indicated a growing awareness of cybersecurity challenges. However, as per the ACPR, there is still room for improvement when it comes to enhancing their resilience to cyber-risks and preparing for upcoming tasks ahead of the January 2025 implementation of the DORA Regulation.

On 9 June 2023 and further to Law No 2022-1726 of 30 December 2022, a tax Decree No 2023-449 was published, making the establishment of reinsurance captives in France financially appealing. The legislator’s objective is to encourage the formation of such structures within the national territory.

Regarding cyber-risks, and as mentioned in 11.1 Emerging Risks Affecting the Insurance Market, a new provision labelled Article L12-10-1 was introduced in the IC. This provision outlines criteria for insurance compensation eligibility after losses from an automated data-processing system breach. To qualify, victims must file a criminal complaint within 72 hours of detecting the breach. Importantly, this regulation applies exclusively to individuals and businesses engaged in professional activities.

Furthermore, various regulatory developments in Europe and France are going to have impacts on the insurance sector in 2024 ‒ in particular, those linked to issues of sustainability and extrafinancial standards. Indeed, the Corporate Sustainability Reporting Directive on the publication of non-financial data (CSRD), voted in December 2022, will be implemented progressively from 1 January 2025, based on 2024 insurers’ data for carbon emissions:

  • direct emissions (Scope 1) linked to their equipment and facilities;
  • emissions linked to the production of the energy used (Scope 2); and
  • emissions produced by third parties involved in value creation, including distribution, claims management, asset management, etc (Scope 3).

This analysis will be repeated for social and societal impacts as well as governance aspects.

Equally, the implementation of the delegated regulation of 21 April 2021, regarding the effective consideration by insurance intermediaries and insurance companies of the sustainability preferences of customers, is impactful. In France, for instance, Law No 2023-973 of 23 October 2023 on green industry imposed an obligation for unit-linked contracts to meet sustainability requirements ‒ namely, from 1 January 2024, all unit-linked policies must refer to at least one unit of account considered to be “green”.

Finally, the discussions that took place at the 2023 United Nations Climate Change Conference or Conference of the Parties of the UNFCCC (known as “COP28”) hold potential implications for future regulatory frameworks and the coverage of climate risks. Potential agreements and commitments emerging from COP28 discussions could influence how governments and industries approach climate risk mitigation and adaptation strategies. This may impact the development and refinement of insurance coverage models tailored to address the challenges posed by climate change.

Additional Market Developments

As mentioned in 3.1 Overseas-Based Insurers or Reinsurers, following Brexit on 31 December 2020, insurers based in the UK lost the “passporting rights” provided by EU legislation enabling them to sell insurance in France. Therefore, from this date onwards, they could no longer sell insurance on the French market without setting up entities in other EU member states or seeking the required accreditations from the French regulator. Changes were made to the IC, however, to enable them to keep on performing their obligations under policies that were still in force 1 January 2021 ‒ albeit on a purely run-off basis.

The ongoing conflict in Ukraine has already resulted in losses for insurers, particularly in aviation and trade credit insurance. Although the full impact remains uncertain, it is anticipated that insurers will continue grappling with losses in these specific sectors.

Furthermore, the COVID-19 pandemic has highlighted the potential for future health crises to disrupt operations and incur significant losses for (re)insurers. In response, insurers must ensure the presence of ample reserves and appropriate reinsurance coverage.

Additionally, the inflation of losses in recent years has strained insurers’ profitability, with natural disasters such as floods and wildfires playing a substantial role. The estimate suggests that losses related to natural disasters costed French insurers around EUR10 billion in 2022.

Insurers are also under increasing regulatory pressure in several domains (cyber, AML, etc). The development of AI and its widespread adoption create the potential for new liability risks to be taken into account by insurers issuing professional liability insurance coverage.


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