bAV: Pledge gap – No insolvency protection for widows ?

by Johannes Fiala, Lawyer (Munich), M.B.A. (Univ.Wales), M.M. (Univ.), Certified Financial and Investment Advisor (A.F.A.), EC Expert (C.I.F.E.), Banker (www.fiala.de )
occupational pension commitment for widows and orphans:
In its advertising for occupational pension schemes, the insurance industry claims that various implementation channels are protected against insolvency. This advertising is often, according to the new BGB since 01.10.2002, a reason for the customer to also hold the insurer liable: Product providers are liable for incorrect advertising statements according to §§ 453, 434 BGB, as if it were a ?guaranteed characteristic?. To put it exaggeratedly ? some insurers still advertise the ?3-litre car and the egg-laying milch sow?
Fact is for example: The insolvency administrator can collect and realise the pledged reinsurance of a pension commitment (BGH ruling of 07.04.2005). The comparison with training documents of insurers, initiators, financial planner schools and bAV seminar providers shows the gaps. If the training was liable to pay the costs, a resignation of the advanced training contract can threaten after the new law of obligations. This can also result in a claim for indemnification against sales employees: Insurers are also liable for incorrect, because incomplete, training. The lawyer calls this then instruction being to blame for. Many an agent has been held liable by his client and then tries to shift the responsibility to the product provider or the broker pool. For broker pools and structural distributors this is often a “practically uninsurable cluster risk”.
A typical case of extensive legacy of faulty design is the commitment with pledging of the occupational pension if (also) a widow’s and widower’s pension or an orphan’s pension is provided for.
Faulty Pledge:
As a rule, a declaration of pledge is issued to the GGF or employee. If all goes well, the pledge is effectively notified to the insurer. Most entrepreneurs do not have any proof ? and many an insurance broker starts to wonder when he is reminded of his ?risk observation and follow-up duty? after the administrator’s judgement. Here liability threatens from the unexpected side. Plaintiffs can be widows, widowers and orphans.
Ineffectiveness of the pledge:
A pledge becomes ineffective if the claim to the pension (from the pledge) and the attachment lien (from the pledge) fall apart. This is not an ?innovation in the BGB? ? but in the practice of some insurers for decades simply by incomplete training and/or incorrect forms into the world set.
This is ineffective, for example, if the CDF dies and has not appointed the widow as heir to his assets. Then the lien of the GGF from the pledge in the inheritance does not (legally) pass into the hands of the widow either. The (foreign) heir has then legally acquired the lien ? the widow is entitled to the provision after the promise, but then unfortunately without security by a lien. If the claim (widow’s provision) and the lien (with the heir) fall apart, the nice security of a pledge of the reinsurance is over: the widow is left without ?protection by a lien?, which, however, she does not notice at first.
The same situation arises if the GGF divorces: With the application for divorce, the spousal inheritance right ends. From the dream of a ‘secure pledge’ for the wife, and later widow.
Solution approach for practice:
The intermediaries, meaning agents and brokers, should return the nice pledge forms to their insurers and structural distributors by return of post. Reason: ‘I don’t want to be liable for nonsensical gaps’. Clever insurance brokers have been using the help of lawyers or professional bAV experts for years ? they pay the hourly fee out of petty cash, so to speak. Of course, the prudent insurance broker will ensure that future widowers or widows and also any potential affected orphans receive their own separate pledge statement.
Why the clever insurance brokers do not hang this on the big bell: Simple ? by such fundamental errors, which have apparently been the order of the day with some insurers for decades ? you can calmly convince new clients that they need a trustee on their side.
Suggestion: The form managers in the sales departments should do their homework. This is really not difficult. The purchase of a cookbook for laymen (e.g. ?bAV-Praxishandbuch? from the Haufe-Verlag, to be read there in group 5 on pages 53 ff.) proves that for years this ?VH-Tip? has been pointed out to avoid faulty pledging.
In any case, the widow then confirms in conversation that the nice intermediary of Pfefferminzia was present at the Christmas dinner every year, and of course always approved every new car. Of course, for decades new life insurance policies have been taken out for reinsurance ? but unfortunately the forms have had the same gaps for decades.
Distribution Approach:
At seminars, the faces of tax advisors turn red and green when they are told about the pitfalls of the pledge law and recognise the gaps in the pledge in their occupational pension files, ‘but I got that from the friendly agent at Pfefferminzia Insurance’. How often will this intermediary be recommended? There are two reasons for contacting the customer or GGF: firstly, the liability may not yet be statute-barred, and the gap would therefore have to be repaired as soon as possible; and secondly, it could turn into a friendly conversation with a new insurance requirement for the old customer.

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About the author

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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