The question of whether financial penalties imposed for personal data breaches—particularly administrative fines—can be insured remains one of the most contested issues in cyber risk and insurance law across Europe. National legal systems assess the issue primarily through public policy doctrines, focusing on deterrence, punishment, and the distinction between intentional and negligent misconduct.
Across European jurisdictions, a theme emerges: administrative fines are generally viewed as punitive in nature and therefore uninsurable, especially where the breach involves intentional or wilful misconduct. However, the legal position is far from uniform. Some jurisdictions leave room for coverage in cases of negligence, while others adopt a stricter stance that excludes insurance coverage for administrative and regulatory fines and penalties altogether. In practice, insurance markets have responded by offering coverage for defence costs, investigation expenses, and ancillary losses, even where the fine itself is expressly excluded.
This alert summarizes the position in each of France, England, Germany, and Italy, highlighting statutory principles and evolving regulatory guidance. It is vital reading for lawyers and insurance managers who have responsibility for European data protection, cyber risk, and insurance.
France
Under French law, the insurability of financial penalties imposed by the data protection authority (the Commission Nationale de l’Informatique et des Libertés (CNIL)) has not yet been definitively resolved by the courts. There is no precedent expressly holding that administrative fines imposed by the CNIL for personal data breaches are uninsurable as a matter of law.
Guidance can be drawn from French case law and regulatory practice in other areas. In particular, French courts have consistently ruled that financial penalties imposed by the financial markets regulator (Autorité des marchés financiers) are not insurable, on the basis that such penalties sanction intentional misconduct. French insurance law permits coverage only for accidental events or losses arising from negligence, while losses resulting from the insured’s intentional acts are excluded as a matter of public policy.
More recently, the banking and insurance supervisory authority (Autorité de contrôle prudentiel et de résolution) issued a communication stating that financial penalties imposed by administrative authorities should not be covered by insurance, subject to judicial review. While this communication does not have the force of law and is not directly enforceable, it is highly influential in shaping market practice and supervisory expectations.
These factors suggest that financial penalties arising from intentional breaches of personal data regulations are unlikely to be insurable in France. Conversely, where a penalty results from negligent conduct rather than deliberate wrongdoing, insurance coverage may still be arguable, depending on policy wording and judicial interpretation. As a result, many French insurance policies condition coverage for fines and penalties on their being “insurable as a matter of law,” leaving the ultimate determination to the courts.
England
Under English law, there is likewise no authority directly holding that fines imposed by the Information Commissioner’s Office (ICO) for data protection breaches are uninsurable. Nonetheless, there are public policy constraints that may limit the scope for such coverage, particularly for sanctions of a penal nature.
The clearest guidance comes from the UK financial regulator. The Financial Conduct Authority (FCA) expressly prohibits regulated firms from insuring regulatory fines and penalties imposed by the FCA. Such insurance is considered contrary to public policy, because it would undermine the deterrent effect of regulatory sanctions. While insurance may cover legal and professional fees incurred in responding to FCA investigations, the fines themselves are uninsurable.
Some English case law supports this restrictive approach. In Safeway Stores Ltd v Twigger, the Court of Appeal maintained that a company could not recover competition law fines—whether from its employees or their insurers—where the fines resulted from the company’s own deliberate misconduct in entering into anti-competitive agreements. The court emphasized that allowing such recovery would offend public policy by diluting the punitive and deterrent function of the penalty. More recently, in Patel v Mirza, the Supreme Court indicated that the following factors should be considered before upholding a public policy defence: the underlying purpose of the prohibition transgressed; any other public policies that may be rendered less effective by denial of the claim and whether upholding the defence would be a proportionate response, bearing in mind the seriousness of the conduct and whether it was intentional.
In practice, English cyber and liability insurance policies commonly provide cover for civil fines and penalties only where insurable “as a matter of law”. In the absence of any direct legal authority, the insurability of ICO fines needs to be considered on a case by case basis, taking all relevant factors into account including whether the breach was negligent and the level of harm that has been caused. If not intentional, or in any way deliberate, there may be scope for recovery.
Germany
In Germany, the insurability of administrative fines, including General Data Protection Regulation (GDPR) penalties, remains legally unsettled and is assessed primarily through the lens of public policy under section 138(1) of the German Civil Code.
The prevailing concern among courts, regulators, and legal commentators is that transferring the financial burden of a sanction to an insurer would weaken its intended deterrent and preventive effect. On this basis, the dominant view in German legal scholarship is that insurance coverage for fines and penalties is incompatible with public policy and therefore void.
Some commentators have argued for a more nuanced approach, suggesting that a distinction should be drawn between intentional misconduct (which should be uninsurable) and negligent infringements (which might, in principle, be treated differently). However, this view has not gained broad acceptance, and there is currently no authoritative case law endorsing such a distinction in the context of administrative fines.
In the absence of judicial clarification, strong indicators suggest that insurance coverage for GDPR fines would be considered unenforceable under German law. Insurers offering such coverage could also attract regulatory scrutiny from the Federal Financial Supervisory Authority, reinforcing the cautious stance adopted by the German market.
Italy
Administrative fines imposed by the Italian Data Protection Authority (Garante per la Protezione dei Dati Personali) for personal data breaches are generally uninsurable.
Under Italian public policy principles, administrative sanctions are regarded as punitive measures imposed for the breach of a legal obligation. Allowing insurance coverage for such penalties would undermine their deterrent and preventive function under the GDPR. Accordingly, the administrative fine itself—potentially reaching €20 million or 4% of an undertaking’s worldwide annual turnover—is excluded from insurance coverage.
That said, cyber insurance plays an important role in mitigating the broader financial impact of data breaches in Italy. While policies do not cover the fine itself, they typically provide coverage for a wide range of ancillary and consequential costs, including:
- Legal defence costs in proceedings before the Garante;
- Forensic investigations and incident response;
- Notification and communication obligations;
- Third-party liability claims by affected individuals; and
- Crisis management and reputational harm mitigation.
Although the administrative sanction remains uninsurable, Italian companies can still meaningfully reduce their exposure through well structured cyber risk insurance programs.
Key Takeaways for Policyholders
Across Europe, the insurability of financial penalties for personal data breaches is strongly influenced by public policy considerations, particularly the need to preserve the deterrent effect of GDPR sanctions. While approaches vary by jurisdiction, the trend is clear:
- Fines resulting from intentional or wilful misconduct is almost universally uninsurable.
- Administrative fines are often characterized as punitive and as such may be excluded from coverage.
- Some policies may provide coverage for fines resulting from negligent/unintentional breaches.
- Defence costs and related expenses remain widely insurable and commercially significant.
Organizations operating across multiple European jurisdictions should not assume that data breach fines can be insured and should instead focus on preventive compliance and robust incident response planning. Careful review of cyber insurance policy wording is worthwhile to identify any shortcomings in the coverage provided specific to relevant jurisdictions. In an environment of increasing regulatory enforcement, understanding these national distinctions is essential to effective risk management.