The refusal of insurers to provide benefits due to corona-related plant closures continues to make big waves. Voluntary settlement offers for business closure insurance are being critically reviewed, and complaints from businesses are being investigated. The first litigation financiers appear on the scene.
The restaurants may (soon) open again. However, not a day goes by without a report in a local newspaper that a restaurateur is left empty-handed by his insurer despite closure insurance. The ZDF also picked up the topic of these days again. The compromise solution from Bavaria (AssCompact reported), with which insurers agree to share about half of the losses incurred by officially closed companies with appropriate insurance that are not compensated for by state aid, is considered by some to be a concession and by others to be an evasive measure on the part of the insurers. Moreover, some insurers have not joined the compromise. Some insurers accept the corona virus as part of the terms and conditions of the contract and pay, while other insurers look for solutions in individual cases. Some insurers also promise additional assistance.
Unclear conditions not to the detriment of the policyholder
In any case, lawyers warn the companies against accepting blanket settlement offers prematurely. If the insurance conditions do not contain a separate list of diseases in detail, the policyholder may expect that new types of viruses are also covered by the insurance contract if there is an obligation to report them under the Infection Protection Act or a related legal ordinance, according to the argumentation. It boils down to the fact that unclear conditions cannot be interpreted at the expense of the policyholder. The Brokers’ Association BDVM explained early on that the interpretation of the terms and conditions already resulted in an obligation to take action. In addition, § 1a VVG would be added, which would oblige insurers to act in the best interests of their customers, even when settling claims. (AssCompact reported)
Litigation financier sees chance of success
Affected companies that do not want to accept a compromise or settlement offer will probably have to sue. The outcome of such lawsuits is still open. However, the first litigation financiers seem to see a chance of success. For example, the law firm Wirth-Rechtsanwälte informs that it offers cooperation with a litigation financier, Omni Bridgeway AG, in the enforcement of insurance benefits. Affected companies could have their claims under a business closure insurance policy examined free of charge by the law firm there. If the examination is successful, the litigation financier assumes the entire financial risk for the injured parties. The firm itself also reports that it is already busy with a large number of cases. According to media reports, the German Hotel and Restaurant Association is now also supposed to encourage affected businesses to have their claims examined. The aforementioned compromise solution would have been worked out solely by the Bavarian section of the association together with the Bavarian Ministry of Economic Affairs and insurers.
Company closure insurance and short-time work compensation?
A further problem arose when companies received letters from the employment agencies stating that the existence of a closure insurance policy precluded the payment of short-time work benefits. However, the agreed goodwill solution mentioned at the beginning is based on calculations in which a large part of the sales losses are compensated for by short-time work compensation. The Federal Employment Agency had explained to AssCompact that it was always a question of examining the individual case individually (AssCompact reported).
Attorney Dr. Johannes Fiala and Peter A. Schramm, expert for actuarial mathematics, pointed out in a press statement on 27 April 2020 that employers could get into trouble if they accepted a settlement with simultaneous waiver of the original claim from the company closure insurance when applying for short-time work compensation. The payment of short-time work compensation was a subsidiary, i.e. subordinate, social benefit paid by the State.
Anyone who has closure insurance does not need any short-time working allowance for the insured period. The Employment Agency would offset any benefit claims from the insurance contract. The waiver of the full benefit in favour of a “voluntary goodwill benefit” at the expense of the state was an offence against common decency. In the worst case, according to the two authors, one would have to assume a subsidy fraud.
According to Arne Podewils, lawyer at mzs Rechtsanwälte, a directive of the Federal Employment Agency dated 28.04.2020 provides clarity in this regard. Payments by insurers, including pro-rata payments, would not reduce the benefits of short-time work, the statement said. It is irrelevant whether the insurer has recognised a legal claim to the benefit or not. According to Podewils, the uncertainty had led to the fact that the affected companies had initially refrained from further pursuit of the insurance claim from the plant closure insurance, but there was no longer any reason to do so. He recommends that those affected should assert their claims against the business closure insurance with all due consequence.
GVNW wants new pandemic coverage to protect the economy
However, it remains to be seen how strong the wave of complaints will be and what results it will bring. In the social media, a video of restaurateurs, actors and cabaret artists is now circulating against the insurers. Star chef Alfons Schuhbeck has a guest appearance in it. The parties involved are venting their anger and accusing the insurers of abandoning them.
In contrast, the Gesamtverband der versicherungsnehmenden Wirtschaft (GVNW) e.V. (Association of the German Insurance Industry) is looking to the future. It calls for a new pandemic cover to protect the economy. The right conclusions should be drawn from the incidents and precautions should be taken to be able to cope better with similar situations in the future without having to rely first and foremost exclusively on the taxpayer. The GVNW demands that the private insurance industry, together with state support, should establish a suitable structure for covering future pandemic risks. In future, insurance cover against pandemic risks should then be easily accessible for companies and provide comprehensive coverage against the economic consequences of a new pandemic. Such a cover structure could be designed in the form of a pandemic pool, for example. There are numerous internationally functioning examples for the coverage of accumulation risks – for example, natural disasters, terrorism risks or special hazards such as nuclear risks. (bh)
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.asscompact.de (published on 08.05.2020)
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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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