Abolish commissions for life insurance in Europe?

– On the design of insurance products in Europe –


Brokers’ brokerage fees and agents’ commissions will fall as a result of the Life Insurance Reform Act (LVRG) – but at the same time there will be a shift in life insurance away from one-off to ongoing remuneration for agents.

This is what Stuttgarter Lebensversicherung has to say about its new remuneration model: The model is primarily aimed at intermediaries who attach importance to good customer care, want to prevent cancellations and achieve calculable income in the long term. Admittedly, it is not particularly attractive for people starting out in their careers, but the placement fee is not a start-up programme.

The invention of zillmerization in life insurance by the mathematician August Zillmer in 1863 served primarily to establish professional life insurance sales through high one-time commissions and to help the product of life insurance to become more widespread for the first time. This was the only way to secure a livelihood for full-time career starters in sales right from the start. Previously, most intermediaries worked as a sideline to another main job that already provided their livelihood. There was hardly any professional insurance distribution – it had to be built up in the first place.

Today, however, with established sales structures and a sufficient number of intermediaries, there is no longer any political need for such business start-up and expansion programmes as 1863. The supply of the population with life insurance and brokerage services is not endangered by the LVRG. There is a functioning sales force that will continue to function even without high one-time fees.

Anyone who has paid attention to developments in Europe could have guessed where the journey would lead. The work by Monir Talin “Member State Limits to the Design of Insurance Products in the European Single Market for Insurance”, 278 pages, price EUR 48, published by Verlag Versicherungswirtschaft, is informative in this respect.

This paper addresses the issue of divergent national contract regimes that hamper cross-border insurance transactions within the EU. It identifies the extent to which mandatory national law inhibits cross-border insurance business between Member States. Compatibility with Community law is discussed and basic contours of Community borders are clarified. The focus is on the insurance markets in Germany, France and the United Kingdom.

The study also contributes to the possibilities and tendencies of the future design of a unified European insurance contract law, as it is emerging, and thus also provides insights for the interpretation and future development of German insurance contract law.

This shows how consumer protection is implemented in some countries by means of regulatory restrictions or even bans – e.g. on commissions – while in others it is implemented by means of strict information requirements, although convergence can be expected in the future.

In detail, the work for the EU examines in a comparative way how and with what considerations the following have been implemented: – Requirements for targeted regulation of the premium (in the case of natural catastrophe insurance as well as mandatory bonus-malus systems) – Mandatory risk inclusions (in the case of terrorism, natural catastrophe and technological catastrophe risks) – The exclusion of freedom from benefits in the case of misconduct on the part of the policyholder (in the case of a breach of obligations and the bringing about of the insured event) – Minimum surrender values in endowment insurance.

The work is of interest to anyone who wants to understand the considerations on which insurance policies will be based in the EU and the individual member states in the future, what trends can be expected, and why things are developing in a way that often takes much longer to come to light. It is therefore of interest to practitioners interested in contract drafting as well as to researchers and academics.


by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm

by courtesy of


www.experten.de (published October 2014)

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Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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