European businesses are facing a changing risk landscape as collective privacy actions gain traction across the region, prompting new concerns for cyber insurance and risk management. As legal frameworks evolve and consumer groups pursue more claims, insurers and policyholders alike are reassessing their exposure to data privacy liabilities.
Walker Newell, senior vice president of management liability at Woodruff Sawyer, has observed a notable shift in the landscape of data privacy litigation in Europe, with implications for the cyber insurance sector.
He outlined the evolving risk environment as European jurisdictions adopt mechanisms similar to US-style class actions, particularly in the context of data privacy and cybersecurity.
Newell explained that the premise behind class actions is simple: a company’s actions negatively affect a large group of people who all experience similar harm. However, the losses for each individual are often too small to motivate them to pursue compensation or attract capable attorneys to take on the case.
“Good lawyers are expensive, litigation is unpleasant, and life moves fast. If individuals are left to fend for themselves in individual actions, the story goes, companies may never be held accountable for bad conduct (unless, of course, the government acts),” he said.
In the United States, this has led to a well-established system where groups of affected individuals can pursue collective legal action, resulting in several high-value settlements in recent years. In contrast, Newell noted that the European Union and the United Kingdom have historically offered fewer avenues for such collective redress.
“One reason is that, unlike in the United States, plaintiffs in European jurisdictions are often required to bear the costs of unsuccessful actions, which can operate as a strong disincentive against litigation unless it is certain to succeed,” he said. However, recent legislative changes may be altering this dynamic, with significant consequences for data privacy liability and the insurance sector.
The European Union’s 2020 directive on representative actions requires member states to provide at least one effective procedural mechanism for consumers to seek injunctive and redress measures. The directive also authorises cross-border actions and more flexible litigation funding.
“European lawyers seem to prefer the terms ‘mass,’ ‘collective,’ or ‘representative’ action instead of ‘class’ action,” Newell said. Since the directive’s passage, several EU countries have amended their laws, with France expanding collective action rights in 2025 and Portugal seeing an increase in mass actions.
The General Data Protection Regulation (GDPR), introduced nearly a decade ago, is described by Newell as “the most muscular data privacy law in the world.” It allows for penalties of up to 4% of global annual revenue for serious violations. While regulatory enforcement has led to significant fines, private consumer actions under the GDPR have attracted less attention until recently.
Newell pointed out that “news reports and our experience working with clients confirm that European consumer groups have been increasingly investigating and filing collective actions alleging data privacy violations against technology companies.” He added that if these claims begin to result in significant losses, the insurance industry will need to respond accordingly.
Turning to insurance coverage, Newell emphasised the importance of policy wording. “While cyber insurance can provide coverage for defence costs and damages arising from class action litigation, it is important to note that not all policies are created equal.”
For a cyber insurance policy to address this exposure, it must explicitly cover class action and mass arbitration claims, and, most critically, include clear language that ensures broad protection for privacy-related issues.
He distinguished between data breach liability cover and broader privacy tort coverage, noting that “the coverage for wrongful collection, invasion of privacy (not arising out of a data breach incident), wiretapping, and other more nebulous legal- and privacy-related concepts known as ‘non-breach privacy’ can vary greatly.” The emergence of non-breach privacy exclusions in cyber insurance policies means that policyholders must pay close attention to the details.
Newell also highlighted the need to review territorial restrictions and the geographic scope of coverage. US-based policies typically offer worldwide coverage, subject to exclusions related to sanctioned entities or specific geopolitical conflicts. In contrast, European policies may impose different limits or deductibles for North American claims, or exclude them altogether.
The future impact of the emerging European privacy mass action environment on cyber insurance premiums and coverage terms remains uncertain.
“The common sense conclusion, if these cases pick up steam, is to expect higher premiums for insureds with material exposure to EU privacy claims (similar to how underwriters scrutinise US privacy risk more harshly than privacy risk in any other region),” he said. “It could also result in potentially higher deductibles for class action litigation, and perhaps even a narrowing of coverage around wrongful collection, invasions of privacy, and wiretapping. However, this would be hard to justify as the EU’s GDPR strictly regulates all of these risk points, and thus, a fit-for-purpose insurance policy should continue to respond to these actions.”
What are your thoughts on this story? Please feel free to share your comments below.
