BGH – Liability of tariff change optimizers also applies to old cases

Health insurers may demand an exclusion of benefits in the target tariff if the policyholder changes tariffs. The policyholder does not need to have an increased risk for this. This is clear from a ruling of the Federal Court of Justice (BGH). As a result, tariff change optimizers who accept unreasonably high risk surcharges for additional benefits when changing tariffs may be liable for damages. Liability also arises for old cases. “Sooner or later, neither tariff change brokers nor policyholders who change tariffs will be able to avoid having old and new tariffs compared by experts,” warn guest authors Dr. Johannes Fiala (*) and Peter A. Schramm (**).


The Federal Court of Justice (BGH, ruling of 13 April 2016, file no. IV ZR 393/15) ruled on the exclusion of additional benefits and the alternative of requiring a risk surcharge when changing tariffs: “With regard to the additional benefit, the insurer may therefore also carry out a health check to calculate the appropriate risk surcharge (cf. Kalis in Bach/Moser, Private Krankenversicherung 5th ed. § 204 marginal no. 80; Reinhard in Looschelders/Pohlmann, VVG 2nd ed. § 204 marginal no. 15; MünchKomm-VVG/Boetius ibid. marginal no. 335; Lehmann, VersR 2010, 992, 994).

The defendant submitted in this regard – which is disputed by the plaintiff – that the determination of the specific risk surcharge of € 133.96 corresponds to the plaintiff’s individual risk at the time of the desired change of contract with regard to the additional services. However, as the Court of Appeal rightly pointed out, this question does not need to be decided here. The action is already unfounded because the plaintiff demands a change of tariff without including a risk surcharge and without excluding benefits. However, as stated above, the defendant has in any event a right to be excluded from the benefit of the additional benefits of the target tariff”.


Higher Regional Courts hostile to the PKV collective were rejected

The BGH has thus confirmed the Stuttgart Higher Regional Court (OLG ruling of 16.07.2015, Az. 7 U 28/15). The prohibition of the OLG Karlsruhe (judgement of 14.01.2016, Az. 12 U 106/15), according to which insurers (VR) were not allowed to demand a new risk surcharge for additional benefits when changing tariffs, is thus also no longer applicable. It is not his view that “the basis of the risk classification is always the state of health at the time of the (first) conclusion of the insurance contract. In this respect, the insurer is not entitled to take into account circumstances which have occurred or have been ascertained after the original commencement of insurance.”.


Karlsruhe Higher Regional Court attempted consumer protection for PKV-insured persons against the collective

For persons with new pre-existing conditions, new up-to-date risk assessments are regularly carried out and risk surcharges for the additional benefits are demanded when changing tariffs.

According to § 204 of the German Insurance Contract Act (VVG), the following already applies according to the wording: “insofar as the benefits in the tariff to which the policyholder wishes to switch are higher or more comprehensive than in the previous tariff, the insurer may demand an exclusion of benefits or an appropriate risk surcharge and to this extent also a waiting period for the additional benefits; the policyholder may avert the agreement of a risk surcharge and a waiting period by agreeing an exclusion of benefits with regard to the additional benefits”.


The Higher Regional Court saw this as much more customer-friendly, as it was only the risk classification in the original application that was to be taken into account. So if the person concerned was originally in perfect health and is now seriously ill, the additional benefits would have to be granted without a risk premium. The current BGH decision sees this differently. The BGH protects the collective from the fact that sick persons only insure the higher benefits when needed.


Liability for damages of tariff change optimizers and tariff change brokers

However, the BGH has also clarified that the amount of the risk surcharges for additional benefits in the event of changes in tariffs is in principle subject to judicial review. The consequence of these decisions is that tariff change optimizers who accept unreasonably high risk surcharges for additional benefits in the event of a tariff change are liable for damages. They do not (yet) forfeit their remuneration, but they do enable the customer to offset this with damages due to poor performance, i.e. not to pay the optimiser in the end.

Sooner or later, neither tariff change brokers nor policyholders (VN) who change tariffs will be able to avoid having old and new tariffs compared by experts.


Exclusion of benefits instead of risk surcharge?

Insurers, on the other hand, are recommended to demand a “higher or more comprehensive benefit exclusion for the additional benefit” (target tariff) “in so far as the benefits in the tariff to which the policyholder wishes to switch are higher or more comprehensive than in the previous tariff” (target tariff) until further notice, not a risk surcharge (§ 204 Para. 1 Sentence 1 No. 1 Half-Sentence 2 VVG). Then the question of appropriateness or correct calculation does not arise, because the exclusion of benefits is also permissible for the healthy person.


Tariff change guidelines of the PKV

The tariff change guidelines of the private health insurance association also provide for this possibility, because according to these “the insurance company can also demand an exclusion of benefits or an appropriate risk surcharge and a waiting period for the additional benefits on the basis of a risk assessment”. This does not preclude the BoD from generally requiring only the exclusion of benefits at all times, irrespective of a risk assessment.

Responsible insurers should use this option of the tariff change guidelines in order to protect their tariff collectives from tariff changers who only want to insure additional benefits when they become ill. By excluding the additional benefits, they can achieve greater contribution stability and protect their tariff collectives from these late tariff changers. In addition, the general exclusion of benefits saves the costs of a risk assessment and thus many millions of euros per year.

The Federal Court of Justice rejected a misinterpretation of the guidelines, which would also require a risk assessment to exclude benefits. The PKV Association has also at no time claimed that it wanted to restrict the statutory rights of insurers when changing tariffs here, which the law gave them for good reasons to protect insurance collectives.


Tariff change brokers and tariff change optimizers in liability?

A liability of the tariff change optimizers also arises for old cases. Even if this jurisprudence is new and could not have been known before, they are liable for any damage without any other fault, only if they have offered illegal legal services, obviously even in difficult cases. So when the optimiser said that the return to the higher benefits of the old tariff may depend on a risk assessment – in fact these benefits are generally excluded by the insurer for the healthy person. It also makes sense to file an action for a declaratory judgment for future damages – by their customers.


According to the prevailing opinion, the “only” tariff change broker is a provider of (illegal) legal services according to the Legal Services Act (RDG) – for which liability is even assumed for any damage, regardless of any other concrete fault. In order not to have the tax investigation department as a constant companion in the house, they then also charge value added tax – just like any legal insurance legal adviser with a licence under the RDG. If they were only allowed to act as brokers, they would not have to do so.


Insurance brokers have the choice between plague and cholera

The announcements of the private health insurance association seem to emphasize the possibility of changing to a different tariff due to changed demand, also with regard to additional services of the target tariff. According to the Federal Court of Justice, however, an insurer could generally exclude any additional benefits when changing tariffs, so that this proclaimed possibility of adapting insurance cover to changed requirements would then not even exist.

This could also result in liability for brokers. For some insurers could hold the UN captive at its once chosen level of performance, with only the option downwards, regardless of whether it is in perfect health.

Only if the insurer undertakes, in accordance with the terms and conditions (possibly as an option right or contractually specified tariff change right, which both occur), to offer tariff changes to higher-value tariffs without the possibility that it demands an exclusion of benefits (but only appropriate risk surcharges) for additional services, would the broker be safe from this. The possibility of freezing the insurance cover once selected, without distinction for all upwards, will be subject to clarification by brokers, with considerable liability risks depending on the specific conditions of the insurer.

However, it could also be necessary to inform the public that insurers who unnecessarily facilitate the change of tariffs could damage their collective by segregating them, which could lead to higher premium growth – a measurable loss.

It should also be remembered that the UN could have the broker pre-finance the legal dispute with the BoD if the UN believes that the BoD – contrary to the Federal Supreme Court – has harmed the collective: whether through unnecessary costs in the millions for health checks or through tariff changers included in the target tariff without exclusions of benefits, unless otherwise contractually promised by the BoD from the outset.


Risk premiums are the worst alternative

The attempt to compensate for the additional benefits by means of risk surcharges instead of excluding them is risky and ultimately not feasible with certainty. For example, private health insurance and actuaries have pointed out in various ways that, particularly due to inflation and medical progress, a reliable assessment of future additional benefits due to pre-existing conditions is not feasible, which has led to a general rejection of the inclusion of an individual ageing provision based on this.


The Lehman bankruptcy has shown what future statements by qualified statisticians and mathematicians can only ever achieve on the basis of empirical data from the past. Risk assessors do not have the ability of clairvoyance for actual developments, even if they are only average. The costs of systematic misjudgments in risk surcharges would then ultimately have to be borne by all policyholders by means of timely avoidable premium adjustments.


PKV insurers must be able to prove correct PKV contributions in court

The close-meshed network of legal regulations prevents VR from levying unacceptably high fees. UN members are even protected by the possibility of having the correct amount of contributions reviewed in court. Reminders of overly high contributions are also ineffective, because the UN must be informed in accordance with the UN Convention on Human Rights. § Section 203 VVG only pay correctly calculated contributions. VR are happy to be able to prove this in court. This strengthens the trust in the private health insurance, and the Karlsruhe Higher Regional Court also refers to the mandatory provisions of § 203 VVG. § Section 203 (1): “In the case of a health insurance where the premium is calculated according to the type of life insurance, the insurer may only demand the premium to be calculated in accordance with the technical calculation bases pursuant to Sections 146, 149, 150 in conjunction with Section 160 of the Insurance Supervision Act.

Thus, if the UN disputes that the premium is correctly calculated under these laws and refuses or reduces its premium payment, the BoD must provide full evidence of this if it wishes to sue for the premium. The same applies if the effectiveness of a reminder or termination due to default of payment is disputed. This is not very difficult for him, because in the end he only has to explain and present his well-documented extensive calculation bases and offer proof through actuarial expert opinions. Contrary to the possibly effective approval of an expressly mentioned risk surcharge, the continued payment of the premium in the alleged deception that it was not in accordance with the provisions of Article 5(1)(a) of the Directive is not a sufficient reason for the continued payment of the premium. § Section 203 VVG correct, does not constitute an approval that already obliges the premium to continue to be paid.

However, an approval of an inappropriately high risk premium, which was made erroneously in the assumption that the BoD was entitled to levy it, is probably also contestable.


Insurers often cannot substantiate their rates?

Must a BoD review the calculation of its tariffs in accordance with § 203 (1) VVG, he must ultimately only submit up to 25 kg of files to the court for evaluation. 8 to 13 kg are already common in simpler cases, if it is only a question of the extent of the last three premium adjustments, provided that the contribution is assumed to be correct at least for the period before. One can have the confidence that BoDs will be able to provide this proof in court. The opinion of some UN agencies that they are exposed to the premium increases of the private health insurance system without any protection is therefore completely unfounded. The opposite is true – the premium calculation of the private health insurance is subject to very strict legal regulations, compliance with which the private health insurance company must prove in court in full in the event of dispute.


Difficult and highly liable business with PKV tariff optimisation

Tariff change brokers, like any insurer according to §§ 6, 204 VVG, would have to take into account every tariff ever issued, with currently no less than one VN in this potential target tariff. Customers are usually spared this as a tariff change comparison so as not to confuse – which in fact leads to liability.

The rate change optimiser has to deal not only with sick people but also with healthy people if they refuse to answer the risk questions requested by the BoD and the rate change does not take place. Or even the healthy person has to do without the additional benefits. Claims for damages are, as it were, pre-programmed here, provided that a private health insurance expert has first found the hairs in the soup well-foundedly substantiated.


Inappropriate risk surcharges as a gateway

The BGH postulates that the amount of this risk surcharge is deemed to be adequately subject to judicial review. Furthermore, if the BoD alternatively requests that the additional services be excluded, it can always do so and there need not be an increased risk of this. A waiting period may also be requested.

In legal disputes, the risk surcharge for the additional services according to § 204 VVG is also increasingly being challenged more frequently than allegedly inappropriate, which can be verified in court by expert opinions. On the other hand, the exclusion of benefits can simply be demanded by the insurer, even if it is bound to the tariff change guidelines of the private health insurance association, in order to protect the tariff collective. This gives the BoD the opportunity to offer the inclusion of these additional services in return for a voluntarily agreed risk surcharge without having to take into account the provisions of section 204 VVG.

Not every insurer is prepared to rely on a decision by a court of last instance – such as the Last Judgement. The mere publication of such decisions could cause unnecessary damage to the company’s image. Nevertheless, the BoD will examine whether the UN has a war chest and is serious about it, or whether it will end up starving to death with its concerns as an average troublemaker. The protection of insurance collectives from harmful tariff changes is worthwhile, as VR, to ward off a misunderstood “customer friendliness” in individual cases. Appropriate communication should ensure that the customer understands why this is ultimately collectively in his best interest. Insurers and their actuaries are the best consumer protectors here, protecting the insured as a whole against selfish individual policyholders to the best of their ability.


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


by courtesy of (published on 10.06.2016)


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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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