Design and alternatives to group insurance even without broker licensing

If providers of group insurance contracts, such as associations and companies, pursue their own monetary interest with their offer, they may require registration as insurance intermediaries. How group insurance policies can be designed and, if necessary, alternatives can be created, even if the intermediary license according to § 34 GeWo is missing.


Insurance company as intermediary

The Federal Court of Justice (BGH) ruled in a judgment dated December 15, 2022 (Case No. I ZR 8/19): “An enterprise which, as policyholder, maintains a foreign travel health insurance policy and a foreign and domestic repatriation costs insurance policy as a group insurance policy for its customers with an insurance company and sells to consumers memberships entitling them to claim the insurance benefits in the event of illness or accident abroad, and which receives remuneration from the recruited members for the insurance cover acquired, is an insurance intermediary within the meaning of § 34d para. 1 sentence 1 GewO and therefore requires the permission of the competent Chamber of Industry and Commerce.”.

Accordingly, advertising for voluntary accession of its own customers (as insured person, VP) to a group insurance contract in return for remuneration paid to it (as policyholder, VN) constitutes insurance mediation requiring a license (ECJ, judgment of February 24, 2022, C-143/20 and C-213/20). Ultimately, this results in corresponding documentation and consulting obligations, including the usual intermediary liability.


Business models put to the test

This also applies, for example, to the mediation of the capacity as an insured person, such as when credit institutions provide insurance coverage in a residual debt insurance policy in this way.

Employers who arrange entry to a company health insurance (bKV) or direct insurance (DV) could also be affected if not privileged, unless they pay the contribution themselves. In former times there was a note at the checkroom, according to which one was insured with the 50 Pfennig checkroom fee against coat loss etc. – whether there today also a mediator permission is needed?

The pure reinsurance of a company pension commitment, on the other hand, will not fall under this. This is because if the policyholder (VN) only covers his own obligation to the VP, this does not fall under the above case structure.

However, anyone who is not sufficiently “privileged” as an employer or other person through another ancillary transaction (such as the purchase of real estate in exchange for a – reinsured – life annuity) becomes an insurance company himself through such a promise of a claim to benefits, and as such then falls under insurance supervision. And must rescind due to possibly unauthorized insurance business.

However, it helps to exclude the legal claim against yourself – as a so-called support fund (UK). However, the pledge or assignment of the reinsurance as security would then also come to nothing due to the lack of a legal claim against the U.K. to be secured. The assignment of the reinsurance would no longer be a pure reinsurance, because it would create the legal claim to the insurance benefit. Which makes it “insurance brokerage” again.

The UK, which offers services for uncertain risks, without a legal claim, falls under the VersStG – which means no VAT. accrues. In fact, in the tax sense it is an insurance company, because it should not be possible to circumvent the VersSt by simply not formally granting a legal claim. It will also have to indicate this number on invoices for contributions, and also declare the usual VAT exemption.


Permissible mediation of insurance coverage for only co-insured persons

If a licensed intermediary recruits the VP for the group insurance (GV) anyway, there is no need for action, except that they must now perform their duties to the VP just as if they were the VP themselves.

Not affected if the VP are compulsorily co-insured in the GV.

So about any VP who is a “member” of a VN association. Such as mandatory group liability for everyone in the bike club. Even if it costs extra contribution to the club, besides the membership fee in the club. However, not every such association has yet mapped this accordingly in its regulations and documents.

Alternatively, if the association pays the contribution to the group insurance itself, and although joining the group insurance is voluntary, but does not cost anything extra, but is already included in the association fee for all, so in this respect as insurance coverage free of charge.


The provident fund (UK) as the ideal solution?

There is also the option of a provident fund without legal entitlement, which offers its own insurance concepts that can be taken out voluntarily by anyone, but which are then each underpinned by a reinsurance policy (which is not conceptually a group insurance policy). The UK is then mediated, with a reference to the reinsurance it has concluded, if applicable. The claim of the UK – as the insured party of the reinsurance policy – can then be assigned to VP. However, this security interest in an assignment comes to nothing if – as is usual with the UK – there is no principal claim to be secured (legal claim to an insurance benefit from the UK). However, this can be arranged by linking it to the benefit commitments of the UK in the individual case.

According to a statement by BaFin, however, the cession or assignment is problematic because by ceding such a legal claim to the insurer (VR), the UK itself offers a legal claim and would thus become the insurer itself. In any case, it cannot be an intermediary, but an insurer, which would be bad enough in itself, with all the associated obligations. Finally, insurers must regularly have a permit from BaFin before starting business – doing unauthorized insurance business is not a good idea.


Assignment or pledge

Instead of working with insurance intermediaries, legal counsel could also serve as an outlet solution, so to speak; for example, insurance counsel. This may also offer complications.

In any case, it is better not to cede the reinsurance claims, but only to advertise that the UK is capable of performing, despite not having a legal claim to its benefits, because it will certainly receive them from the reinsurance company.

Pledging of the reinsurance (analogous to that in the case of the bAV) is also not possible, because there is no legal claim against the UK (unlike in the bAV against the employer, who thus privilegedly does not become an insurer), in the case of whose non-fulfillment the pledge could take effect.

The reinsurance is not voluntary either – anyone who takes out the respective UK product with the UK and pays the premium for it is then compulsorily covered by the UK in the reinsurance. And the UK receives their services itself in order to provide its own from them. However, in a specific benefit case, it may grant a direct claim against the insurer. And it can also use the insurer as the UK’s service provider, for example to settle claims for the UK.

The brokerage of a UK is of course not an insurance brokerage according to VAG, VVG, etc. However, from a tax point of view it is – so that brokers of a UK do not have to charge VAT on commissions.


Support fund as an insurance company in tax law

According to the Value Added Tax Act and the Insurance Tax Act, however, a UK is an insurance company and, depending on the type of insurance, pays insurance tax or is exempt from it, for example in health/life insurance, and is also not subject to value added tax, this for everything that would be insurance if there were a legal claim. Similarly, the intermediary of the UK is an insurance intermediary for tax purposes, because it arranges insurance for tax purposes with the UK (regardless of any reinsurance). He does not need a license to do this, because under trade and supervisory law he does not broker insurance. The tax office only wants to avoid that, for example, a VR excludes the legal claim in order to save the insurance tax as a UK.

The designations in the legal system are not uniform. In the 19th/early 20th century, the murderer in the penal code also meant women, as a generic masculine, but the citizen in the electoral code meant only men. Dr. Rita Süssmuth was the first female doctor in training to be admitted, because she was offered the prospect of being allowed to forego this career if she did not sign as a doctor in training, because that did not designate men, but an institution. One gave up, however, when she asked if institutions could get pregnant, in light of regulations on pregnant physicians-in-training. Nevertheless, she still later received a certificate of appointment as a federal minister from the Federal President.


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


by courtesy of (published 08/04/2023 under the headline: How insurance can be sold without a broker’s license).



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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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