The risks appear to be are mounting by the day, according to experts. "There has been a great increase of suits and, consequently, of claims linked to third party liability in France, and this has been a result of domestic and European legislation," says Christopher Schultheiss, a Paris-based lawyer who specialises in civil liability and insurance.

"There are not only new liabilities, but also some that already existed that are becoming more strict," added the specialist lawyer.

It should therefore come as no surprise to AMRAE members that the theme of pan-European liability is a hot topic this week at the 20th Rencontres d'AMRAE in Deauville.

A workshop hosted by Patrick Leroy, the head of AMRAE's Civil Liability Commission, focused on several kinds of liability risks to which French companies are exposed. And this is a group of risks that is certainly not shrinking.

Mr Leroy, for example, has picked up four main operational areas where companies and their managers can find themselves the target of law suits.

They are workplace accidents and work-related diseases, environmental damage, the failure to deliver products as agreed and fraudulent acts.

The latter grouping ably illustrates the pan-European face of liability risks, not least as its cross-border implications significantly increased after the implementation of the UK Bribery Act in 2010.

One of the issues chosen for debate at the AMRAE conference is whether it is accurate to say that European and French legislation that cover civil liability is becoming tougher for companies to comply with.

Mr Leroy, for his part, believes that this may not actually be the case. "New civil liability regulations mainly crystallise jurisprudential developments, social trends and cultural evolution of society," he told Commercial Risk Europe.

Another topic that has raised concerns in France is the latest jurisprudence on the French concept of the 'inexcusable fault,' which indicates when companies can be sued by employees for problems developed while at work.

A recent decision by the French Supreme Court on this issue has fuelled concern among AMRAE members because it means that companies are more exposed to legal suits.

It is a complex and preoccupying subject that has been picked up as the sole theme of another workshop during the Rencontres this week.

The discussion becomes even more complicated because there are other kinds of liability such as criminal and administrative which can apply to areas like environmental damages.

"We have to think of liability from a broad perspective. European directives and their integration into French law has made it possible for companies to face suits on criminal, civil or administrative charges in relation to the environment," Mr Leroy said.

And, of course, for risk managers, an important subject is the extent to which liability risks can be efficiently transferred to the insurance market.

"Although you can find coverage for civil, environmental and other kinds of liability, policies unfortunately bring different trigger points for the guarantee, and they can often have parameters that do no match each other," Mr Leroy noted.

"We would like to see an insurance solution that coordinates all those liability risks. Companies need global insurance solutions for liability risks. A company is one single entity, and boards expect solutions that are global and not divided up into different bits, each working in its particular way," he explained.

Mr Leroy said that the role of risk managers is to map liability risks and try to work with brokers and insurers to find satisfactory strategies to transfer them.

But Mr Schultheiss noted that French companies have found it increasingly difficult to identify all the liabilities that they are exposed to.

One of the problems is that the domestic jurisprudence on this issue has been scattered around several different pieces of law.

A reform of civil liability law in France has been on the books for years, and one of the goals has been to try and bring as many topics together as possible within a single Civil Code. However, there is no deadline for the reform proposals to leave Parliament.

There is also the critical matter of understanding European directives and their integration into local laws in France and elsewhere in Europe.

"The directives are the same for everybody, but details of their implementation vary widely from country to country," Mr Schultheiss said.

EU rules affect business activities in areas that are extremely sensitive such as the environment and civil rights. If companies do not take the local peculiarities of their application in other countries into account they can encounter unpleasant surprises.

"European laws are supposed to unify legislation in the region, but they clearly add to the burden of liability risks faced by French companies," said Mr Schultheiss.

He pointed out that there are a number of projects to unify liability law throughout Europe, but he believes that it will be a long time before such an idea becomes reality.

One of these initiatives is particularly relevant for the insurance sector and is being developed by the Vienna-based European Centre of Tort and Insurance Law, ECTIL.

Mr Schultheiss mentioned as an example the EU Product Liability Directive it has a provision by which individual countries can decide whether producers must be liable for damages caused by their products that could not be known at the time they were made.

This is because the knowledge available at the time of inception did not enable companies to anticipate the subsequent damages cause. Mr Schultheiss says that France and Germany, for example, decided that companies are not liable if they can prove they didn't have the means to know about the damaging effects of a product at the time it was produced.

But French companies that sell a product in countries that took the opposite approach could find themselves in murky waters even if they are compliant with the EU directive in their local market. A training session hosted by Mr Leroy in Deauville was designed to discuss exactly how to carry out a risk mapping exercise focussed on liability risks.

"Moving around the main business of a company there are many peripheral activities where it can be hard to identify liability risks. It is necessary to be well aware of those risks in order to ask the market for the most adequate insurance coverage," he told CRE.

This is made more challenging for risk managers because the level of risk could very well continue to rise in future.

Mr Schultheiss pointed out, for example, that discussions are under way in France and other countries to implement the concept of class actions, a much feared novelty that has caused plenty of headaches for American companies.

"New legislation has proved to be considerably victim-friendly, as legislators are keeping consumers in their minds," he said.

French courts also seem to be taking the side of claimants in recent times. "Victims are more often and better indemnified than a few years ago. They are more aware of their rights and keener to find someone liable for their damages," Mr Schultheiss said.

Some of the reforms to liability laws that have been proposed could in fact be good news for the business community and risk managers.

For example, one idea is to make sure that claimants can only ask for compensation that is equal to the value of the losses suffered.

Others, however, are headed in the other, less welcome, direction and could increase the risk of companies being ordered to pay punitive damages in addition to simple compensation for the actual losses incurred, just as happened with tobacco firms in the United States, Mr Schultheiss explained.

This is a particularly worrying prospect as companies would not be allowed to insure themselves against punitive damages.

The flip side of this trend is that civil liability remains a competitive market for insurers and enables customers to continue to be able to secure satisfactory premium prices, according to one analyst consulted by CRE.

Brokers and insurers have not identified a turning a point in the market so far which is clearly good news for corporate insurance buyers.

But some have expressed concerns about the impact of long tail claims. In other words, there is a worry that insurers could face rising claims from past damages which may not have been adequately covered in the original premiums charged to customers.

This is certainly a concern in markets more vulnerable to legal inflation such as the UK and US—higher inflation and low interest rates clearly do not help the position of the insurers and may persuade them to rack up rates and tighten coverage.

But while such fears remain just that, the general perception is that the soft market still has some life in it yet.

Please sign up here to our full-time mailing list to ensure that you receive our weekly newsletter.

• More France News
• More AMRAE News
• More Legal News
• More Association News