by Peter Schramm and Johannes Fiala
The case: Insurance broker M looked after his client until the broker’s contract was terminated. Since then he got no more brokerage from the insurer ? and lost its action before the BGH in a judgment dated January 13, 2005.
Commission and brokerage: Intermediaries are divided into two groups. On the one hand, the (multiple) agent, § 84 HGB. The latter receives a commission for mediation and support as a vicarious agent of the insurer.
On the other hand, there is the insurance broker, § 93 HGB. He receives an initial fee for the deal, i.e. the brokerage. In subsequent years, a subsequent fee may arise. This is usually a fee consisting of an agency fee (for the initial contract and/or the non-termination of the existing contract) and a management fee (for administration and portfolio maintenance). According to the prevailing view and (genuine) insurance brokers, and according to reputable commentators, first-courtage and subsequent-courtage are a single claim. Both derive from the successful mediation of the insurance contract (the conclusion).
The BGH now restricts this, however, doubts might be appropriate, because the BGH apparently uses the words ‘commission’ and ‘brokerage’ in its decision without differentiating exactly. Conceptually, a commission only exists for the agent. The insurance broker receives a brokerage fee, even if this is paid out in one go (as is sometimes the case with life and health insurance).
Presumably, another insurance broker will soon file a lawsuit against his insurer ? it will then also be crucial to work out the terminology and special features of the intermediary profession in a way that is comprehensible to the court. In the case decided by the BGH, an expert had not been able to establish a commercial practice in the first instance ? a deficit that continued into the last instance. Thus a repair of this individual case decision would be possible. This is good news for the broker who has the experience to successfully “dissect” an expert opinion, because “the plaintiff broker (or his lawyers) was not able to show reasons to doubt the correctness of the expert’s findings”.
Sale and inheritability of the agency: the agent knows that his insurer(s) have the last word ? an agency contract may be terminated at any time. This can be particularly bitter for heirs, as often the deceased agent’s holdings are passed on to someone else
? this is the end of the money from the stocks. For the insurance broker, this has been different until now. Most brokers have relied on the fact that no one could take away the subsequent commission (through the back door, for example) from the insurance broker and also his heirs.
Principle: In its judgements of 27.11.1985 and 13.06.1990 the BGH had clarified that for the subsequent fee it is sufficient if the insurance broker was involved in the cause. It is sufficient that the broker has a (tacit or indirect) mandate to also bring about the subsequent contracts (in the case of the agent, this is referred to as a ‘non-termination commission’). Contract interpretation and broker coverage:
On the interpretation of the contract it depends, means the BGH now: Above all if the customer gives notice to the broker ? and then another broker takes over, right ? like here
? an agent of the insurer. If you as a broker want to secure your follow-up fee, you have two options: 1. You need clear agreements that can hardly be interpreted in any other way (contract termination by individual agreements). 2. Alternatively, the broker can sue and hope that an expert opinion will establish a commercial practice that is favourable to him.
? because there are weighty voices in the brokerage community.
Doubtful findings on commercial practice: The expert was able to establish that in the case of multi-year insurance contracts in the property insurance sector, the brokerage fee is to be apportioned according to the remaining term ? the previous/old insurance broker therefore does not go away empty-handed.
However, if there is a one-year term with a renewal clause ? and this is likely to affect the vast majority of contracts ? the broker loses his full entitlement at the next renewal date of the insurance contract; until then he retains his remuneration in full. Consequential error of the BGH?
The BGH correctly recognizes that in the subsequent fee there are economically two components ? a (further) remuneration for the (original) brokerage and a remuneration for servicing the policyholder. The BGH then concludes that in the case of one-year contracts with a renewal option, in the property insurance sector, the broker completely loses his brokerage follow-up fee from the time of termination; in doing so, the BGH relies on an allegedly unascertainable commercial custom of a follow-up fee:
The Federal Court of Justice (BGH) means in a sweeping manner “as soon as the broker no longer provides his service, however, his entitlement to his subsequent commission ceases to exist in principle”. However, if one assumes that the insurance broker is legally entitled to a uniform brokerage fee, it is not at all a question of commercial practice:
Finally the support expenditure may be void, if the contracting party cancels the broker: Then the principle ?without work no wage? applies constantly. However this decision before the constitutional court might not have existence ? because the consequence switching brokerage fee would be ?expropriated? as it were by the BGH: The BGH justifies this with the fact that ?the switching of the conclusion of a contract by the broker with progressive time, steps as soon into the background? In the case of a uniform claim to brokerage fees, this would be a violation of the laws of reasoning and therefore also constitutionally contestable.
The BGH further argues that the follow-up fee is a remuneration for the maintenance of the insurance contract by the broker, a “non-termination commission”: The flaw in this argumentation already lies in the fact that brokers do not receive “commissions”.
The decision also makes clear how great the need for efficient lobbying is for many an association that has taken up the cause of brokerage law. But whether they want to do so is questionable. For sure, the insurer does not have to pay a double follow-up fee when changing brokers. If associations take the view that the broker taking over the business is not or only partially entitled to the subsequent fee, the latter will be at a disadvantage. If a brokers’ association is not in a position to take a clear position here and to represent it, then brokers should not be surprised if their own professional interests are not adequately represented in other respects either. The fact that this weakness of the brokers is then also exploited by insurers to their advantage is only one consequence to be expected.
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About the author
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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