1. Book 6 of the Civil Code: The New Non-Contractual Liability Law
The law of February 7, 2024, introducing Book 6 “Non-Contractual Liability,” gives liability law a new look. Book 6 comes into effect on January 1, 2025, and heralds the new non-contractual liability law.
Book 6 aims to modernize non-contractual liability law. The new non-contractual liability law has a significant impact on the insurance sector.
Here you can read more about one of the innovations of the new non-contractual liability law (Book 6 of the CIvil Code) that impact the insurance sector.
2. Estimation of Future Damage Resulting from Impairment of Physical or Psychological Integrity
Article 6.34 of the Civil Code specifies the different methods of compensating future damage resulting from impairment of physical integrity:
- Lump Sum Method
According to the Court of Cassation, the judge can estimate the damage equitably, provided that he states the reasons why he cannot accept the calculation method proposed by the injured party and additionally establishes that it is impossible to determine the damage in any other way.
- Capitalization
The capitalization method is an actuarial calculation that converts all future compensations into a single sum. This method aims to objectify future damage based on mortality tables, the age and gender of the victim, and taking into account interest rates and inflation.
- Indexed Annuity
With an indexed annuity, the injured party receives a fixed amount periodically (monthly) that compensates for their damage. This amount is adjusted according to the evolution of purchasing power.
It is the judge’s task, considering the principle of party disposition, to decide which method is most suitable for adequately and fully compensating the damage. The judge takes into account the situation of the parties and the interests of the injured party.
3. Awarding an Annuity
Notably, the judge has the possibility to impose an annuity even if it is not requested. Under Article 6.34, second paragraph of the Civil Code, the judge can deviate from the principle of party disposition and impose compensation in the form of an annuity when compelling reasons related to the protection of the injured party justify it. The legislator wants to prevent the injured party from easily succumbing to pressure or convenience by accepting a substantial lump sum paid out at once, even though they will suffer damage over a long period. The capital could then be quickly squandered. The following circumstances could justify the awarding of such an annuity against the will of the injured party: (i) limitations and lack of autonomy of the injured party; (ii) their young age; and (iii) the concern to protect them from unscrupulous third parties or to ensure their standard of living.
The judge’s ability to impose an annuity ex officio is of great importance to the insurance sector. The annuity as a method of compensation is currently rarely applied. However, the awarding of an (indexed) annuity offers several advantages. Compensating future damage by awarding an (indexed) annuity also has a disadvantage for insurers. Insurers who compensate future damage based on a lump sum or capitalization can, in principle, close the claim file at the time of compensation (subject to new damage or aggravation of the damage). This possibility does not exist with compensation based on an annuity. The insurer must estimate the lifespan of the injured party and inflation over that period. The insurer must therefore reserve not only the capital but also the indexation. Both the capital and the indexation are based on uncertain parameters. This will require insurers to set aside sufficient reserves in cases of future damage.
4. Indicative Table 2024
The Indicative Table is an important tool for estimating damage resulting from impairment of physical or psychological integrity. The Indicative Table is a guideline used to calculate compensation for victims of crimes and accidents. This table is regularly updated to adjust the amounts and criteria to the current economic and legal context.
The Indicative Table 2024 contains specific rules and amounts for various types of damage. Some important types of damage included in the table are:
- Administrative and Travel Costs: Costs for administration and travel related to the accident.
- Health Costs: Costs for medical treatments, aids, and third-party assistance.
- Personal Incapacity: Compensation for the limitations and inconveniences the injured party experiences in daily life.
- Household Incapacity: Compensation for the loss of ability to perform household tasks.
- Economic Incapacity: Loss of income and increased efforts needed to perform economic activities.
- Loss of a Study Year: Compensation for material and moral damage due to the loss of a study year.
- Damage Suffered by Relatives: Compensation for the damage suffered by the injured party’s family members.
- Funeral Costs: Costs related to the injured party’s funeral.
The Indicative Table also distinguishes between temporary and permanent damage. Temporary damage refers to damage that is transient and expected to recover or disappear over time. Permanent damage, on the other hand, refers to damage that is permanent and cannot be fully restored.
Amankwah Law can assist you with the settlement of claims. Amankwah Law provides legal assistance in insurance disputes and offers legal advice for insurance claims.
Contact Jeffrey Amankwah, a lawyer specializing in insurance law and liability law.