Deglobalization has marked the first half of 2025, bringing heightened protectionist policies and declining integration across global markets, according to Swiss Re. In an analysis, the insurer highlighted the impact of these shifts in Europe, citing increased policy uncertainty, volatile financial markets, and a significant drop in consumer confidence, based on survey indicators from the Organisation for Economic Co-operation and Development (OECD). These conditions are beginning to shape the region’s legal and insurance landscapes.
The European insurance industry now faces heightened risks as economic strains fuel perceptions of inequality and price pressure, raising the likelihood of litigious behavior. While social inflation – rising claims costs due to legal and societal factors – has long been present in the United States, Europe is beginning to see conditions that could mirror this trend.
Legislative changes have opened new avenues for collective action. The European Union’s Representative Actions Directive (RAD), which required all member states to create frameworks for group claims by 2023, has now been transposed by most EU members. In parallel, networks such as the Global Justice Network are coordinating high-profile collective actions, including a case against tech company Phillips over alleged product defects. European courts are also hearing international cases, such as claims against Repsol in the Netherlands over an oil spill in Peru and against Dyson in the United Kingdom over labor conditions in Malaysia.
According to CMS, a record 133 class action claims were filed across Europe in 2023, representing a 93% rise since 2019. Opt-out class actions now outnumber opt-in cases, highlighting a structural shift in litigation trends. Further reforms, including the new Product Liability Directive set for 2026, will expand disclosure requirements and broaden definitions of liability, particularly around digital and software-related harms.
Another driver of litigation is the rise of third-party litigation funding (TPLF). A European Commission mapping study published in March 2025 identified nearly 300 active funders in the EU, with investment in the space exceeding €3 billion and projected to rise to €7 billion by 2032. While TPLF can expand access to justice, critics warn of risks tied to transparency, conflicts of interest, and funder control over cases.
In June, the UK Civil Justice Council called for tighter regulation, emphasizing transparency and mandatory legal advice for claimants, though no harmonized EU framework currently exists.
For insurers, these developments signal the need for more precise exposure assessments, adjustments in underwriting, and clearer policy wordings. With litigation risks growing in scale and complexity, European insurers face mounting challenges in managing claims and safeguarding financial stability.
What are your thoughts on this story? Share your insights in the comments below.
