As the Czech Republic is a civil law country, the primary source of law is legislation and the subordinate legislation issued on its basis.

The public-law aspects of insurance and reinsurance regulation arise mostly from EU law, particularly from the EU Directive 2009/138/EC (the Solvency II Directive), and are implemented through Act No 277/2009 Coll., the Insurance Act (the Insurance Act). This Act sets out the conditions for the operation of insurance and reinsurance companies and establishes minimal standards of their activities. The regulation of insurance and reinsurance distribution derives from EU Directive 2016/97 on insurance distribution (the IDD) and is implemented by Act No 170/2018 Coll., on Insurance and Reinsurance Distribution (the IRDA), which governs the conditions for distribution and the requirements applicable to all distribution channels.

The primary source of private-law regulation of insurance and reinsurance is Act No 89/2012 Coll., the Civil Code. Sections 2758 to 2872 of the Civil Code are devoted to insurance and set out the basic requirements for insurance contracts and the obligations of the contractual parties. Reinsurance does not have its own specific private-law regulation and is therefore generally governed by the rules applicable to the most similar contractual type, namely the insurance contract. 

A specific regulation is Act No 30/2024 Coll., on Motor Vehicle Liability Insurance, which supplements and further develops the provisions of the Civil Code on compulsory motor vehicle liability insurance, alongside certain public-law matters related to the functioning of motor vehicle liability insurance and the activities of insurers’ bureaux.

Although legislation is the primary source of law, interpretation by certain institutions is essential for practical application, even though it is not legally binding. In this respect, benchmarks, and decisions of the Czech National Bank, as well as Supreme Court and other civil court decisions, are of particular importance.

Regulation of insurance and reinsurance in the Czech Republic is based on a multi-layered framework of national and EU law. The primary supervisory authority is the Czech National Bank, which licenses insurers, reinsurers, and intermediaries, supervises compliance with prudential rules and reporting obligations, and oversees cross-border activities under the EU passport regime. The Ministry of Finance contributes to shaping the legislative framework and issues certain implementing decrees, including those related to Act No 30/2024 Coll., on Motor Vehicle Liability Insurance, although all primary legislation must be adopted by Parliament. As a member of the European Union, the Czech Republic applies EU law directly and implements key directives such as Solvency II and IDD as described in 1. Basis of Insurance and Reinsurance Law. European bodies also play a role: the European Commission issues directly applicable regulations, and the European Insurance and Occupational Pensions Authority (EIOPA) provides standards and guidance. Although such guidance is not legally binding, it is essential for practical application.

Only insurers and reinsurers licensed by the CNB under the Insurance Act may write insurance and reinsurance business in the Czech Republic. EU/EEA insurers may operate via freedom of services or establishment; non-EU insurers require full CNB authorisation.

Licensing Scope

• There is no separate licensing regime for consumer, SME or corporate insurance.
• Licensed insurers may underwrite insurance within the classes specified in their licence (life, non-life, or both), aligned with the Solvency II Directive.
• Reinsurance business may only be written by entities holding a reinsurance licence for life, non-life, or both.

Requirements for Obtaining a Licence

• Applicants must take an approved legal form, namely a Czech joint-stock company, a co-operative, or an authorised branch.
• Applicants must meet prudential standards, including Solvency II capital requirements (MCR, SCR), minimum and solvency capital requirements, appropriate governance and risk management frameworks, fit-and-proper requirements for management, and effective internal control and audit functions.
• It must be demonstrated that key management positions are held by suitably qualified and reputable individuals who are free from conflicts of interest.
• A comprehensive business plan is required, supported by realistic underwriting assumptions and solvency projections.
• Ownership structures must be transparent, with CNB approval obtained for any qualifying holdings.

Differences by Business Type

• Consumer insurance is subject to enhanced consumer protection rules under the IRDA, Civil Code and Act No 634/1992 Coll., on Consumer Protection – covering advice, disclosure and product oversight.
• SME insurance is governed by the standard protections of the IRDA but benefits from fewer statutory safeguards than consumer insurance, placing it between the consumer and corporate regimes.
• Corporate insurance is treated as non-consumer business and is characterised by greater contractual freedom under the Civil Code and the Insurance Act.

Excess Layers and Reinsurance

• There is no separate regulatory regime for excess layers of insurance, which are treated as standard insurance business and therefore subject to full licensing, capital and governance requirements.
• Reinsurance is subject to the same prudential rules, including counterparty risk and capital adequacy under Solvency II.

The Czech Republic does not impose a standalone insurance premium tax on premiums paid by policyholders to insurers. The provision of (re)insurance and services related to (re)insurance provided by (re)insurance intermediaries are also exempt from the VAT under Czech law. However, insurers are subject to corporate income tax on their net profits, which naturally include revenue derived from premiums.

(Re)insurers registered in a non-EEA country wishing to provide (re)insurance services in the Czech Republic must establish a subsidiary or a branch in the Czech Republic and secure a standard licence for (re)insurance activity as described in 2.2 Writing of Insurance and Reinsurance. The same applies to UK entities after Brexit. The Insurance Act prohibits the conduct of insurance or reinsurance activities in the Czech market without a licence from the CNB. An undertaking operating without a licence may be fined up to CZK50,000,000 by the CNB. Such conduct may also constitute the criminal offence of unlawful business activity under Act No 40/2009 Coll., the Criminal Code. There is an ongoing discussion about introducing a specific criminal offence for the unauthorised operation of insurance activities.

If an entity licensed within the European Economic Area (EEA) wishes to provide (re)insurance services in the Czech Republic, it may do so without obtaining a separate Czech licence under the EU passport regime. This requires only a notification to the CNB, submitted through the supervisory authority in the entity’s home state. The entity may either establish a branch in the Czech Republic (freedom of establishment) or provide services without a branch or other permanent presence (freedom to provide services). In both cases, the entity remains primarily regulated by its home-state authority but must comply with Czech rules on distribution.

Czech law does not explicitly regulate fronting, nor has the CNB adopted an official approach towards it. Therefore, fronting is generally permitted if an insurer with a proper licence from the CNB concludes an insurance contract and cedes the risk to another licensed (re)insurance company. However, the cedant must still comply with its regulatory obligations, such as having a risk management system that reflects fronting and satisfying the Solvency Capital and Minimum Capital Requirements, as well as complying with distribution rules, especially those relating to consumers. CNB and EIOPA also warn that insurance undertakings should not display the characteristics of an empty shell.

M&A activity in the Czech insurance sector remains robust, driven by consolidation trends and digital transformation. The market attracts both domestic players seeking scale and foreign investors pursuing Central and Eastern European expansion. Strategic buyers include major European insurers and financial conglomerates, while private equity increasingly targets distribution networks and insurtech opportunities.

Recent notable transactions include Generali Česká pojišťovna’s acquisition of D.A.S. (legal protection insurance) in 2025, ERGO pojišťovna’s acquisition by German S.V. Holding in 2021, and UNIQA’s purchase of AXA subsidiaries in 2020. The largest insurers in the Czech market belong to international groups such as Generali, Vienna Insurance Group (VIG), Allianz, and UNIQA.

Inward investment dominates, while outward activity is growing as Czech insurers explore neighbouring markets. Share deals are preferred for preserving licences and contractual continuity.

Regulatory oversight is significant. Transactions may require clearance from the Czech Office for the Protection of Competition (ÚOHS) and, for foreign investors, screening under the Foreign Direct Investment Act. The CNB supervises changes in control, requiring notification at 10% and prior approval at 20%, 30% or 50%. Portfolio transfers also need CNB approval to ensure solvency compliance.

Looking ahead, digitalisation, insurtech integration, and evolving EU and Czech regulatory frameworks will continue to shape M&A activity and increase transaction complexity.

Insurance and reinsurance products in the Czech Republic are distributed under the Act on Distribution of Insurance and Reinsurance which implements the IDD. Typical distribution channels active in the Czech market include:

• tied and multi-tied agents acting on behalf of one or more insurers;
• independent brokers representing clients and offering products from multiple insurers;
• ancillary intermediaries and de minimis intermediaries – ie, entities offering insurance as a secondary service (eg, car rental companies or travel agencies);
• bancassurance (bank-insurance model) where banks usually act as insurance agents, particularly for credit-related and life products;
• direct sales – eg, insurers selling via local offices, websites or apps; and
• insurtech and digital brokers – ie, technology-driven platforms offering advisory or distribution services.

The CNB supervises all intermediaries and maintains a public register (REGIS). Intermediaries must register with the CNB and meet the requirements of credibility and professional competence (ie, passing a professional exam relevant to the insurance type, or in the case of group insurance, completing a professional education, and completing annual training with accredited providers). Professional indemnity insurance is mandatory for independent intermediaries (ie, brokers and agents). Distributors licensed elsewhere in the EU/EEA may operate in the Czech Republic under freedom of services or establishment.

The IRDA recognises three main types of intermediary licence granted by the CNB: (i) independent intermediary licence; (ii) tied agent licence; and (iii) ancillary intermediary licence. Additionally, the IRDA also recognises (i) a de minimis intermediary, who is exempt from the regulation, except for certain basic regulatory rules, and (ii) policyholders offering group insurance for remuneration who are, effective as of July 2025, subject to full regulatory obligations, including CNB registration and compliance with IDD rules.

Conduct-based rules apply to all distributors (intermediaries as well as insurance companies), including obligations to:

• act honestly and fairly and professionally, in the customer’s best interest;
• assess customer needs and provide suitable recommendations; and
• keep records of advice and provide mandatory pre-contractual information.

Czech insurance law is based on the principle that the insurer is the expert and knows about what information is needed to underwrite an insurance risk. If the insurer requires information from the insured, it must submit clear written questions during the negotiation process. The insured is not under a general duty to volunteer information; if no written questions are asked, the insurer’s ability to refuse or reduce benefits or withdraw from the policy is significantly limited.

The insured’s primary obligation is to answer the insurer’s questionnaire truthfully and completely. If the insured provides false or incomplete answers, the insurer may terminate the contract or deny claims, provided it proves that it would not have entered the contract, or would have done so under different terms, had the true facts been disclosed. The insurer is not obliged to verify the information provided by the insured but must inform the prospective policyholder if it becomes aware of discrepancies between the offered insurance and the policyholder’s requirements.

If the insurance contract refers to insurance terms and conditions, insurers must ensure that policyholders make themselves familiar with them.

The insurer also has an obligation to provide information required by the IRDA, the Insurance Act, the Civil Code, and the EU Regulation 2016/679 (the GDPR). This includes details about personal data processing, the insurer and intermediary, the insurance product, the insured’s rights, and dispute resolution mechanisms. The rules apply similarly to consumer and commercial contracts, though consumer protection principles require clearer language and fairer interpretation in consumer cases.

If the policyholder or the insured fails to answer the insurer’s questions truthfully and completely, the insurer has three options: (i) refuse the insurance benefit, (ii) reduce it, or (iii) withdraw from the insurance contract.

The insurer’s actual options depend on the circumstances, particularly when the insurer first becomes aware of the true facts (before or after the first insured event) and whether truthful and complete answers would have affected the conclusion of the contract (eg, a higher premium or no contract at all).

To withdraw from the insurance contract, there must be a contradiction between the information provided by the insured and the facts known to the insured at the time, which would have prevented the insurer from concluding the contract. Otherwise, the insurer may only refuse or reduce the insurance benefit, which is possible after the first insured event.

If the insurer fails to inform the prospective policyholder about discrepancies between the offered insurance and the policyholder’s requirements or does not answer the policyholder’s questions truthfully and completely, the policyholder may withdraw the contract. Failure to provide all legally required information may constitute an administrative offence and result in a fine. In certain cases, this failure may also extend the policyholder’s right to withdraw, particularly if the policyholder is a consumer.

In the Czech Republic, the involvement of an intermediary in the negotiating of an insurance contract depends on their status and, where applicable, the entity with which they have a contractual relationship.

If the intermediary is independent, their position depends on whether they have a contract with the insurer (acting as an agent representing the insurer) or with the customer (acting as a broker). If the intermediary is a tied agent or an ancillary insurance intermediary, their position is determined by the entity they represent; given the market situation (see5.1 Distribution of Insurance and Reinsurance Products), they will generally act as an agent.

The intermediary is obliged to comply with applicable insurance distribution regulations, provide accurate and complete information to both parties, and ensure that the customer receives all legally required disclosures (see also 5.1 Distribution of Insurance and Reinsurance Products).

It should also be noted that, although intermediaries often use their own questionnaires for insured, the insured is only obliged to answer the insurer’s questions truthfully and completely. To preserve all rights and obligations, even when using an intermediary, the insurer must submit written questions to the insured (which may be delivered through the intermediary), and the insured must respond to those written questions.

The essential elements of an insurance contract in the Czech Republic are (i) the undertaking to provide insurance benefits (usually monetary) upon the (ii) occurrence of an insured fortuitous event, in return for (iii) consideration in the form of an insurance premium.

Under the Czech Civil Code, an insurance contract must generally be in written form, except for short-term insurance not exceeding one year (eg, travel insurance under one year). After conclusion, the insurer must provide confirmation of the contract with details listed in Section 2777 of the Civil Code. Mandatory content includes identification of parties, beneficiary, insured risk, insurance period, premium terms, coverage scope, exclusions, and claims procedures.

The policyholder must have an insurable interest (Sections 2761 to 2765 of the Civil Code), meaning a legitimate economic interest in their own life, health, or property. This ensures the insured will suffer a real financial loss if the insured event occurs. Without insurable interest, the contract is invalid. There is a presumption of interest where a relationship or advantage exists if the insured person remains alive, or where loss of another’s property would directly cause financial harm to the policyholder. Future insurable interests may also be insured in property insurance.

Insurance contracts are based on the principle of utmost good faith, requiring full disclosure of material facts by both parties. The insured is obliged to answer the insurer’s questions truthfully and completely.

In the Czech Republic, insurance contracts can be concluded for the benefit of third parties such as tenants, subcontractors, or mortgagees (Section 2768 of the Civil Code). These beneficiaries (oprávněné osoby) are entitled to insurance proceeds even if they are not named insureds, provided the insured consents after being informed of the contract’s content. Consent of the beneficiary is also required, but it can be given later, even at the time of claiming benefits.

The policyholder must have an insurable interest in the third party’s property or liability, which is generally presumed if there is an economic or legal connection; consent from the third party confirms this interest.

Insurance policies may also cover multiple insureds without listing each individually. In such cases, the contract must identify beneficiaries by a specific status that clearly determines the person at the time of the insured event. Examples include compulsory motor vehicle liability insurance, where every driver of the insured vehicle is covered although the policyholder is the vehicle operator or owner, and D&O insurance, where coverage extends to anyone who becomes a statutory body during the policy period.

Beneficiaries who are not named insureds have no disclosure obligations when the contract is made. Disclosure duties apply only to the policyholder and any named insured, who must answer the insurer’s questions truthfully.

For consumer insurance contracts, the process of drawing up insurance contracts follows the general framework under the Civil Code, with additional consumer protection rules. If the consumer is a party, Act No 634/1992 Coll., on Consumer Protection, applies, setting out obligations for insurers and penalties for specific offences.

Special provisions in Sections 1841 to 1851 of the Civil Code govern financial services contracts with consumers, including rules for distance contracts, withdrawal periods and prohibitions on claiming compensation for unordered performance. In life insurance, consumers also have access to out-of-court dispute resolution through the Financial Arbitrator, whose decisions are binding but reviewable by civil courts; proceedings are free and simplified for consumers.

Reinsurance contracts differ fundamentally. They are agreements between insurers to transfer or share risk and do not involve consumers or individual insureds. Consumer protection rules and beneficiary-related provisions do not apply. The process focuses on negotiation between professional parties, risk assessment, and treaty or facultative terms, governed by principles of utmost good faith.

Alternative risk transfer (ART) transactions such as industry loss warranty contracts and insurance-linked securities are not widely used or subscribed to by Czech companies in practice. Their presence on the Czech market is very limited and, where they are used at all, they are typically accessed cross-border, through foreign insurers, reinsurers or special purpose vehicles rather than structured domestically. However, recent catastrophic events (such as floods or storms) and evolving market conditions are gradually increasing interest in instruments such as parametric coverage.

Czech law does not contain a specific legal regime for ART products as a distinct category, neither has the CNB issued any specific rules or guidance. Whether a particular ART transaction is recognised as an insurance or reinsurance contract depends on its substance rather than its label, focusing in particular on:

• the existence of risk transfer;
• the presence of an insurable interest;
• whether the risk assumed is uncertain and fortuitous; and
• whether the arrangement involves the undertaking of risk in return for consideration.

If the ART product is considered insurance, it must comply with all general insurance regulation, including licensing requirements applicable to insurers and intermediaries, the establishment of an appropriate risk management system, and compliance with solvency and minimum capital requirements.

On the other hand, purely financial or capital market instruments without genuine insurance risk transfer would not fall within insurance regulation but might be subject to other financial market regulation, mainly to Act No 256/2004 Coll., on Capital Market Undertakings and Act No 240/2013 Coll., on Investment Companies and Investment Funds.

Czech law does not have any explicit rules on ART transactions written in other jurisdictions, and the CNB has not adopted a specific approach to such transactions. Therefore, the information provided in 7.1 ART Transactions also applies to foreign ART transactions.

The interpretation of insurance contracts is not significantly different from other types of contracts. However, certain differences may apply, particularly due to the fact that the insurer is obligated to exercise due professional care and is therefore perceived as a professional.

The dominant principle of contract interpretation (and in Czech law in general) is the principle of interpreting legal actions according to the will of the parties involved. It is therefore, to a certain extent, irrelevant how a specific legal act is named, but what is decisive is the will of the parties and the characteristics that the legal action actually exhibits (although there are legal acts that must be named in accordance with their content for the sake of certainty). Extraneous evidence, including evidence about the negotiations or the “usual practice”, may also be used to determine the will of the parties.

In cases where the will is uncertain, individual principles of interpretation are applied to assess the case. In insurance (given the way insurance contracts and insurance terms and conditions are created), the dominant interpretation method is contra proferentem – ie, interpretation to the detriment of the party who proposed and used the provision first, which is usually the insurer.

In consumer cases, the decisive principle is interpretation in favour of the consumer – ie, if the meaning of any provision of the contract or insurance terms appears to be contentious, it will be interpreted in a manner more favourable to the consumer. This interpretation is relatively common in consumer cases and is widely applied by civil courts.

In the Czech legal system there is no specific concept of “warranty” as recognised in common law jurisdictions. Rather, insurance contracts refer simply to the rights and obligations of the parties, where some of the contractual provisions may correspond to what would be called a warranty under common law. In addition, some provisions may take the form of conditions precedent or subsequent.

The rights and obligations of the parties arise not only from the contract itself, but can also arise from the operation of the law.

Czech law does recognise the concept of conditions and differentiates between suspensive and resolutive conditions. In principle, these terms correspond to common law concepts of conditions precedent and conditions subsequent, respectively. As with any other contractual provision, conditions must also be expressed in a clear and comprehensible manner. However, it is not necessary to denote a specific contractual term as a suspensive or resolutive condition, which ultimately is the result of contract interpretation.

The insurance disputes over coverage are the most common types of disputes in the insurance field and are handled by the civil court. If one of the parties to the dispute is a consumer, then the dispute may be settled in a specific alternative dispute resolution mechanism set out in 9.7 Alternative Dispute Resolution.

If reinsurance is also arranged in a certain situation, the reinsurer can only be a party to a potential dispute as an intervener on the insurer’s side, because the person entitled to claim insurance benefits has no claim against the reinsurer, but only against the insurer. An intervener is a party to the proceedings with the rights and obligations of a party to the dispute, and their participation is conditioned, for example, in the case of reinsurance, by a direct financial interest in the outcome of the dispute.

Only the insured or beneficiary may claim insurance benefits directly from the insurer. In the case of liability insurance, the injured party may only claim insurance benefits from the insurer if it is agreed in the contract or if regulated by law (an example of this regulation is compulsory motor vehicle liability insurance).

Insurance benefits may be claimed from the insurer at any time within the limitation period. The limitation period is three years and ten years for life insurance. This limitation period (subjective) normally begins to run when the subject becomes aware of certain aspects of the legal relationship (for example, in the case of a claim for damages, knowledge of at least the approximate amount of the damage and, at the same time, knowledge of the person responsible for causing the damage). The subjective limitation period is also limited by the objective limitation period, which, regardless of the knowledge of the entitled party, expires no later than ten years after the occurrence of the damaging event. A specific characteristic of insurance is that the limitation period begins one year after the insured event. However, the limitation of the claim for insurance benefits consisting of liability insurance shall occur at the latest upon the limitation of the right to compensation for damage or injury covered by the insurance. The case may be initiated even after the limitation period has expired, but it will be dismissed after an objection of limitation has been raised.

The person entitled to claim insurance benefits (ie, typically the insured person and, in the case of life insurance, the beneficiary, but in the above-mentioned cases also the injured party) may bring an action for insurance benefits at the earliest once they have been notified that the investigation has been concluded and that the claim has been refused, reduced, or, in the case of indemnity insurance, assessed at a lower amount than they consider justified. The investigation must be completed within a reasonable period of time, which is considered to be three months, and, if necessary, within a further reasonable period following the removal of the reasons preventing its completion within that timeframe. If the person claiming the insurance premium considers the length of the investigation of the insured event to be too long, they may also sue the insurer for insurance benefits.

The applicable law and jurisdiction in the Czech Republic are governed primarily by European regulations. In the area of international jurisdiction, this is EU Regulation 1215/2012 (Brussels I bis Regulation), and in the case of applicable law, EC Regulation 593/2008 (Rome I Regulation). Czech legislation, which applies in situations where European regulations do not apply (for example, in the case of reinsurance), is contained in Act No 91/2012 Coll. (Act on Private Law).

The choice of law is generally possible in insurance law, although it is limited in consumer contracts (by Article 6 of the Rome I Regulation and by Section 86 of the Act on Private Law). The choice of law is also limited in general when the parties cannot choose any law but must choose the law connected to the insurance contract in the manner stated in Section 6 (2) of the Rome I Regulation.

The Czech Republic is also party to certain international conventions. Most important in this respect is the Hague Convention on the Law Applicable to Traffic Accidents.

The litigation process begins when the person entitled to claim insurance benefits disagrees with the findings of the assessment of the claim and decides to take the case to court (unless they choose one of the ADR methods described in 9.7 Alternative Dispute Resolution). The first step for such a person is to send a pre-litigation notice to the insurer. If the pre-litigation notice is not delivered to the insurer at least seven days before the action is brought and there are no valid reasons for not sending it, the plaintiff cannot recover litigation costs from the insurer, even if they are fully successful in the case (however, there are exceptions to this rule).

Once the lawsuit has been filed and the court fee has been paid, the court will deliver the documents to the insurer as the defendant and at the same time give it the opportunity to respond within a specified period. Failure to meet this period will result in an automatic loss by default judgment.

The subsequent court proceedings serve to examine all evidence and hear the arguments of both parties of the dispute. All claims must be supported by evidence by the time the proceedings are concentrated (usually by the end of the first hearing). Expert opinions and expert statements often play a key role, as without them the court cannot decide on a technical factual issue.

Civil proceedings end with the judgment. Court proceedings are in two instances, and it is therefore generally possible to appeal against the judgment. Once it is no longer possible to appeal against the judgment, it becomes legally binding. It is also possible to file an extraordinary remedy against a legally binding judgment (an extraordinary appeal to the Supreme Court or a constitutional complaint to the Constitutional Court for interference with constitutionally protected rights). The success rate of extraordinary remedies is usually low, as there are strict conditions and the Supreme Court must be convinced that the lower court decision was incorrect in terms of legal analysis (ie, the Supreme Court does not review the evidence because it is actually bound by the factual findings of lower courts).

Domestic judgments are enforceable at the moment when the judgment is legally binding (if the judgment does not state earlier enforceability) and the deadline for compliance with the judgment has run out (usually 3 or 15 days). The judgment becomes legally binding when it can no longer be appealed. An appeal may be filed within 15 days from the date of delivery of the judgment of the court of first instance, unless the appeal is excluded on substantive grounds (in the case of minor disputes or only in relation to the reasoning of the judgment).

A domestic judgment may be enforced by the bailiff or by judicial enforcement of decisions. From a practical standpoint, the enforcement by the bailiff is more common and also more effective.

In the case of foreign judgments, the Czech Republic is party to the Brussels I Regulation and the Hague Choice of Court Convention. The domestic legal regulation is set out in Sections 14–16 of the Act on Private Law.

Under Czech law, confirmation from the relevant foreign authority is required that the judgment has become final and has been recognised by the Czech public authorities. The grounds for non-recognition of a foreign judgment include, for example, non-recognition of a foreign judgment due to a conflict with the public policy of the Czech Republic, the existence of a final decision issued in the Czech Republic or a final decision from another country having been recognised, or the fact that proceedings in the matter have already been initiated in the Czech Republic, prior to the foreign judgment.

The Czech Republic is also party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention).

In addition, the Czech Republic is a UNCITRAL Model Law jurisdiction, or more precisely a jurisdiction whose arbitration legislation is predominantly inspired by the UNCITRAL Model Law. The relevant domestic framework is set out in Czech Act No 216/1994 Coll., on Arbitration and Enforcement of Arbitral Awards (the Arbitration Act), which deviates from the UNICITRAL Model Law in certain local aspects.

Therefore, the Czech Republic is arbitration friendly and arbitration clauses are in general enforceable. However, under Section 106 of Act No 99/1963 Coll., Civil Procedure Code, if a case is brought before a civil court, potential court proceedings shall be suspended and the matter referred to an arbitral tribunal only if the defendant draws attention to the existence of the arbitration clause and the matter can be resolved by arbitration under Czech law (eg, in consumer contracts and disputes within insolvency proceedings). The courts do not examine the existence of an arbitration clause ex officio.

Domestic arbitration awards are enforceable if there is no possibility to annul them. The arbitration award may be annulled in an annulment procedure under Section 27 of the Arbitration Act. The grounds for annulment mirror those set out in the UNICITRAL Model Law. Czech law also allows annulment proceedings to be initiated on the basis of newly discovered facts or evidence.

For foreign arbitration awards, the Czech Republic is party to the New York Convention, which obliges contracting states to mutually recognise arbitration agreements. This framework is reflected in Sections 120 et seq. of the Act on Private International Law, which are likewise aligned with the UNCITRAL Model Law.

Civil courts are the dominant method of resolving insurance disputes in the Czech Republic. Arbitration and mediation do not play a significant role, although mediation is sometimes ordered in court disputes.

Of the alternative methods of resolving legal disputes, the proceedings before a financial arbitrator are more significant. These proceedings may be conducted in matters of life insurance disputes and only on the initiative of the consumer. They result in a decision of the financial arbitrator, which may become enforceable; however, at the initiative of any party to the proceedings before the financial arbitrator, that decision may be challenged and annulled in subsequent civil court proceedings.

The Bureau of the Czech Insurance Association’s ombudsman is the entity authorised to protect consumers in accordance with Section 20f of the Consumer Protection Act in disputes relating to non-life insurance (ie, disputes not handled by the financial arbitrator). The Bureau of the Czech Insurance Association’s ombudsman also initiates proceedings at the initiative of the consumer, and their outcome may only take the form of an agreement between the insurer and the consumer, rather than a binding decision. The Bureau of the Czech Insurance Association’s ombudsman assesses the dispute impartially and subsequently submits a legal opinion to both parties together with a proposed settlement agreement.

The insurance benefit is due within 15 days from the date of conclusion of the investigation of the loss event. The investigation should take three months; however, if it is not possible to finish the investigation of the loss event within three months, the insurer must inform the insured of the reasons why it is not possible and, at the insured’s request, provide a reasonable advance payment of the insurance benefit.

The penalty for failure to provide insurance benefits when due is default interest, which is calculated according to the CNB repo rate (set on the first day of the half-year when the insurer became in delay) plus 8%, for the duration of the delay.

Other penalties like damages are uncommon in insurance cases as it is typically difficult to establish a causal link between the late payment of the insurance benefit and any loss suffered by the insured. Czech law does not recognise the concept of punitive damages.

According to Section 2820 of the Civil Code, the insurer is subrogated to the rights of the insured arising from the loss event at the moment the insurance benefit is paid. From that point, the insurer acquires the right to recover damages or assert similar claims against third parties and may exercise those rights in its own name without any formal requirements, such as an assignment agreement.

The insurer’s subrogated rights are limited to the amount of the insurance benefit paid and cannot exceed that amount. Subrogation is further restricted where the liable party is a person living in the same household as the insured, unless the loss was caused intentionally.

The insured has to provide the insurer with all relevant information and documents in this matter. In light of Supreme Court decision No 23 Cdo 2633/2023, it is strongly advisable for insurers to carry out a thorough investigation and obtain all necessary documentation from the insured before paying the insurance benefit, as the Supreme Court held that it may be impossible to compel the insured to provide such documentation after payment has already been made.

One of the most significant ongoing developments in the Czech insurance market is the continued effort by insurers to operate on a fully paperless basis, covering the entire insurance life cycle, including distribution, contract management and claims handling. These efforts are, however, subject to several legal and practical constraints. In particular:

• the obligation to maintain a non-discriminatory approach towards customers who require paper documentation as a reliable alternative to electronic communication;
• the requirement for the insurance contracts concluded for a period exceeding one year to be made in writing (this requirement may be satisfied through the use of an electronic signature compliant with the EU eIDAS Regulation); and
• the provision of all mandatory information and records of meetings to customers on a durable medium.

Another area of sustained interest is the development of remote client onboarding and digital distribution, notably through co-operation with comparison websites and online intermediaries. In some cases, insurance products are embedded into non-insurance digital platforms and offered as an ancillary or complementary element of a broader service (for example, rental-related coverage or event- and transaction-based insurance). Nevertheless, the mass development of these methods remains quite limited due to strict local AML regulation, especially due to specific rules on usable methods of client identification.

In response to recent advances in artificial intelligence, insurers are increasingly seeking to integrate AI-based solutions into their internal processes. Typical use cases include data-driven risk assessment and underwriting, contract administration, more efficient claims handling (for example, verification of uploaded documentation), fraud detection, and the use of chatbots or voicebots in customer communication. The deployment of such solutions must, however, comply with applicable regulatory frameworks, including the EU regulations AI Act, DORA and GDPR.

Further innovation can be observed in the use of data to refine premium calculation and offer behaviour-based incentives. Examples include the collection of data from smartphones or wearable devices to adjust life insurance premiums based on physical activity, as well as mobile applications monitoring driving behaviour in order to grant discounts on motor insurance premiums. Certain insurers have also experimented with IoT-based solutions, such as water-leak detection systems, with the aim of preventing losses and reducing claims. In 2025, the Czech Insurers’ Bureau launched the Bouračka web application, which digitises the reporting of minor traffic accidents as an alternative to traditional paper forms.

The CNB has not introduced a dedicated regulatory regime for insurtech. Business models are assessed under existing insurance legislation, and any entity conducting insurance or distribution activities must be registered with the CNB (exemptions are described in 5.1 Distribution of Insurance and Reinsurance Products) and comply with all regulatory requirements. Insurers or intermediaries using third-party technology providers remain fully responsible for compliance, including outsourcing and ICT risk management under the DORA Regulation. Customers must be able to request paper documentation, and electronic records must meet EU eIDAS timestamping standards.

The CNB promotes innovation through its fintech contact point (2019) and the CNB Lab launched in November 2025, focusing on AI, digitalisation, data science. CzechInvest operates a fintech sandbox, but these initiatives are not insurtech-specific. The Czech Insurtech Association also plays a significant role in shaping the insurtech ecosystem. It provides consultation, organises events and training, and facilitates dialogue between insurers, startups, regulators and the public.

The market emphasises digitalisation, automation, personalised products, and risk assessment, while facing challenges such as restrictive regulation and IT infrastructure adaptation.

The Czech insurance market is increasingly influenced by technological, environmental, and demographic developments. Cyber risks remain one of the most significant challenges, amplified by the growing use of digital platforms and artificial intelligence. Insurers face operational and reputational threats from cyberattacks and data breaches, prompting regulatory action.

The EU Directive 2022/2555 (NIS 2 Directive) has been transposed into Czech law through the Act 264/2025, Coll. (Cyber Security Act), imposing stricter cybersecurity obligations on critical entities, including insurers. More importantly, the directly applicable EU Regulation 2022/2554 (DORA) introduces comprehensive ICT risk management and resilience requirements for financial institutions, including insurers.

The adoption of artificial intelligence and automation in underwriting, pricing, and claims handling brings efficiency gains but also risks related to algorithmic bias, transparency, and data governance. These developments increase the importance of compliance with GDPR and EU AI Act standards.

Climate and catastrophe risks are gaining attention, particularly in property insurance. Although the Czech Republic faces moderate exposure compared to other regions, recent extreme weather events (such as tornados or increasingly frequent floods) highlight the need for robust catastrophe modelling and stress testing under Solvency II.

Longevity risk is another emerging challenge, as rising life expectancy impacts annuity and pension portfolios. Regulators require enhanced reserving and scenario analysis to ensure sustainability.

The CNB’s addresses these risks through prudential supervision, ICT risk management standards, and alignment with EU frameworks (Solvency II, DORA, AI Act), while maintaining strong consumer protection principles.

Given the cyber risks mentioned in 11.1 Emerging Risks Affecting the Insurance Market, we are seeing an increase in cyber insurance, although the increase has not been significant so far due to disproportionately large claims. At the same time, demand for D&O insurance is growing, and it is becoming increasingly common.

In relation to weather- and climate-related risks, there is also potential for the development of parametric insurance products or products incorporating parametric features. This type of insurance is not yet well developed in the Czech Republic, although it clearly has potential, and a number of insurers active on the Czech market are known to be considering or in the process of developing such offerings.

Demand is also increasing for insurance covering dependency on the assistance of others as a result of health conditions, driven in part by tax incentives effective from 2024. Insurers are responding by offering various forms of dependency insurance or long-term care coverage.

From a regulatory perspective, a key recent development is the amendment to the IRDA, adopted following the judgment of the Court of Justice of the EU in Case C-633/20, TC Medical Air Ambulance Agency. Previously, some market participants acted as policyholders and offered customers the option to join a group insurance contract for a fee, without needing a CNB licence and subject only to limited obligations. The Court of Justice ruled that such policyholders qualify as insurance intermediaries and must comply with the IDD. Consequently, affected entities are now making organisational changes to obtain CNB licences and meet full regulatory requirements.

Another major issue is the implementation of the EU Regulation 2022/2554 on digital operational resilience for the financial sector (DORA), focusing on managing ICT third-party risk.

The Czech market is also preparing for the IRRD Directive. In October 2025, the Ministry of Finance issued a consultation paper on certain points of transposition, with ongoing discussions on funding mechanisms for insurer resolution.

Finally, Act No 333/2025 Coll. amended the Civil Code (new Section 2832a) to introduce an insurer’s duty to notify beneficiaries (effective 1 January 2026), and the CNB clarified that branches of EU insurers may operate via separate legal entities under outsourcing rules, subject to Solvency II and governance requirements.