After a claim, insurers have only a limited amount of time to carry out their own checks.
The Cologne Higher Regional Court (OLG Köln, order of 31.01.2012, ref. 2 W 69/11) put an accident victim in his place. The victim had sued the liability insurer too early; the insurer is entitled to a review period of four to six weeks. The insurer (VR) must be given sufficient time to assess and examine the claim. If the insurer sends its external loss adjuster to the policyholder, that adjuster may (also) be paid on a contingency basis – in which case the adjuster tends to present the loss as smaller than it actually is.
Strategic claims handling is part of everyday life in insurance
In occupational disability insurance (BU, Berufsunfähigkeitsversicherung), for example, it can happen that the policyholder is required to travel more than 100 kilometres to the assessor – whereupon a doctor renders an assessment in favour of the insurer.
Increasingly, insurers are dragging their feet in settling claims – which, mirror-image, potentially increases the insurers’ profits. It also helps the insurer if individual insurance consultants (VB) play this game until the insured voluntarily abandons the case instead of enforcing his pension claims. Some insurance brokers try to act as supposed experts in occupational disability claims handling; unfortunately, even isolated retainers given to such brokers are null and void under § 134 BGB (German Civil Code) and §§ 1 et seq. RDG (German Legal Services Act) (BGH (Federal Court of Justice), judgment of 14.01.2016, ref. I ZR 107/14).
Judicial assistance once the insurer’s reasonable examination period has elapsed
Insureds are well advised to seek legal assistance a few weeks after the claim if they or their consultant are stuck. It is rarely effective simply to accept that the insurer keeps demanding new information and medical reports. In the case of property damage (e.g. a motor accident, fire or water damage), at some point one will want to begin clearing up or repairing the loss – yet without a judicial determination of the existing damage it is often impossible to prove anything afterwards. In personal lines (e.g. daily sickness allowance, occupational disability), the state of health can change at any time – which makes a judicial preservation of evidence as to the state of health all the more time-critical. Years later, doctors’ findings are often no longer sufficient for a court-appointed expert to be able to determine occupational disability. Brokers who accompany claims and insurance advisers who handle claims are required to advise the policyholder unambiguously in this respect, so that no evidence is lost or fails to be sufficiently gathered in the first place.
Releasing the insurer from liability where the insured fails to cooperate
As a rule, the policyholder is not left to bear the costs of a lawsuit, as in the Cologne case above. Rather, the policyholder should not rely on an “expert from the other side”, i.e. from the insurer, but should instead commission his own expert to carry out the appraisal and provide advice and support. This is for the simple reason that, in the end, the insurer pays out exactly what it is obliged to pay – in proper preparation for any litigation. At best, such an action for a declaratory judgment or for performance against the insurer will be preceded by a judicial evidentiary hearing as expedited proceedings. It would be fatal if, in the case of a BU pension for example, the claimant had neither submitted a pension application nor provided the necessary medical certificates. If the policyholder refuses to cooperate without justification, the insurer may withhold its benefits – or those benefits are not yet due at all for want of an application for insurance benefits.
Pursuing the most economically advantageous solution can shade into fraud
A genuine joker holding a licence to give legal advice recently wrote online:
“We are currently handling the case of a businessman who, in addition to his occupational disability contract, also receives a daily sickness allowance. Our aim is to keep our client in this cover for as long as possible and to apply for benefits from the occupational disability insurer only after the private daily sickness allowance insurer has paid out. …”
The adviser was evidently unaware of Section 15 of the Model Conditions for Private Daily Sickness Allowance Insurance (MB/KT), under which the sickness allowance ends as soon as occupational disability arises – even where this is established only retroactively, years later. The insurer will reclaim the daily sickness allowance once it becomes aware of the occupational disability (BGH (Federal Court of Justice), judgment of 30.06.2010, ref. IV ZR 163/09), and may report the policyholder, together with his legal counsel, for fraud. Such conduct resembles that of the civil servant’s widow who stores her deceased spouse in the freezer so that the full civil service pension keeps being paid. In countries such as Japan or Greece it is said to be traditionally more common for pensions to be paid out for people who died years earlier. The private health insurer (PKV) may then also cancel the full-cover tariff for the insured on grounds of insurance fraud, whereupon the insured ends up on the basic tariff – which can entail six-figure losses.
Occupational disability cannot be determined by the doctor alone
Moreover, as a rule, the occupational disability insurer will often only step in once the occupational disability has existed for around six months and is medically proven to be current. A daily sickness allowance need not be followed immediately by an occupational disability benefit – indeed, the latter need not even be insured. The criminal-law counsel will be charged with aiding and abetting – “the punishment for the abettor is determined by reference to the penalty threatened against the perpetrator”, § 27 II 1 StGB (German Criminal Code).
More often, insurance advisers used to say that the daily sickness allowance insurer would catch on if occupational disability existed – so the certificate already in the insured’s possession would be withheld, which is precisely what gives rise to the suspicion of fraud. Later, the daily sickness allowance insurer (KTG-VR) demands its benefits back – under threat of criminal charges, and, in the case of civil servants, disciplinary proceedings (cf. BVerwG (Federal Administrative Court), judgment of 05.05.1993, ref. 1 D 49.92). Strictly speaking, doctors cannot determine occupational disability – not least where they lack any additional vocational training – yet they are nevertheless expected to do so, even though they can hardly know what the insured actually has to do at work without an occupational specialist. In this way, the policyholder often ends up being economically harmed by his own adviser, who deliberately fails to have a doctor certify the occupational disability – frequently for purely self-interested economic reasons, up to and including immorality through unnecessarily inflating the hours billed and acting uneconomically by deliberately deferring the application for occupational disability benefits in favour of supposed sickness allowance claims.
Insurance fraudsters can be recognised by unrealistic “optimisation” advertising
A handful of legal advisers are known nationwide in the relevant circles for presenting inaccurately inflated damages in their “loss appraisals” – or for asserting false facts in “legal opinions”, to the detriment of insurers as well as agents and brokers, in order to extract a “rehabilitation contribution” after a claim. In appropriate cases, the insurers point out that they are not there to supply equity capital – for instance where insolvency is plainly looming but more than one brand-new sports car is parked on the doorstep.
For more than 15 years (LKA NRW, organised crime situation report 2015) the licence-free occupation of “pension broker” has existed: in a network with doctors and legal advisers, millions in benefits have been unlawfully obtained from the Employment Agency, pension offices, and pension and health insurers by misrepresenting a person’s state of health. The fabricated medical history costs several thousand euros per case. For “fudging” property damage, victims sometimes pay more than five times the customary lawyer’s fees.
Are insurance advisers honest?
Insurance advisers are expected to help their clients obtain the benefits to which they are entitled. If an insurance adviser handling occupational disability applications advises his client not to pursue the question of a presumed occupational disability and refrains from doing anything to clarify it himself, he is acting at the very least dishonestly where he thereby helps the client to obtain daily sickness benefits to which the client may not be entitled. In doing so he harms the insurer and the insured collective, because in the end the premiums for the daily sickness allowance have to be raised. If he disregards very concrete indications and does not pursue them in depth, this can also give rise to criminal liability. Later, the policyholder, now under pressure from the insurer, will readily explain how the adviser’s counsel really went.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
