Where providers of group insurance contracts, such as associations and companies, pursue their own financial interest with their offering, they may be required to register as insurance intermediaries. How group insurance policies can be designed and, where necessary, alternatives created, even without the intermediary licence under § 34d GewO (German Trade Regulation Act).
The policyholder as intermediary
The BGH (Federal Court of Justice) held, in a judgment of 15 December 2022 (Case No. I ZR 8/19): “An enterprise which, as policyholder, maintains a foreign travel health insurance policy together with a foreign and domestic repatriation-costs insurance policy as a group insurance arrangement for its customers with an insurer, and which sells consumers memberships entitling them to claim the insurance benefits in the event of illness or accident abroad, receiving remuneration from the members it recruits for the cover thereby obtained, is an insurance intermediary within the meaning of § 34d para. 1 sentence 1 GewO and therefore requires authorisation from the competent Chamber of Industry and Commerce.”
Accordingly, advertising for the voluntary accession of one’s own customers (as insured persons, VP) to a group insurance contract in return for remuneration paid to oneself (as policyholder, VN) constitutes insurance mediation requiring a licence (ECJ (Court of Justice of the European Union), judgment of 24 February 2022, C-143/20 and C-213/20). Ultimately, this triggers corresponding documentation and advisory obligations, including the customary intermediary liability.
Business models put to the test
This applies, for instance, to mediating the status of an insured person, as where credit institutions provide insurance cover in this way under a residual-debt insurance policy.
Employers who arrange entry into a company health insurance scheme (bKV, betriebliche Krankenversicherung) or a direct insurance policy (DV) could also be affected, unless privileged – for example, where they pay the contribution themselves. In days gone by there was a notice at the cloakroom stating that, for the 50-Pfennig cloakroom fee, one was insured against loss of one’s coat and the like – might an intermediary licence be required for that today as well?
Pure reinsurance of an occupational-pension (bAV, betriebliche Altersversorgung) commitment, by contrast, will not fall under this rule. For where the policyholder (VN) merely covers their own obligation towards the insured person (VP), the case structure described above does not arise.
However, anyone who is not sufficiently “privileged” – as an employer or otherwise through some ancillary transaction (such as the purchase of real estate in exchange for a reinsured life annuity) – becomes, through such a promise of a benefit claim, an insurer in their own right, and as such then falls under insurance supervision. And must unwind the arrangement on account of possibly unauthorised insurance business.
It helps, then, to exclude any legal claim against oneself – acting as a so-called support fund (UK, Unterstützungskasse). However, the pledge or assignment of the reinsurance as security would in that case likewise fail, for want of any legal claim against the UK capable of being secured. The assignment of the reinsurance would no longer be pure reinsurance, since it would itself create the legal claim to the insurance benefit – which makes it “insurance mediation” once again.
A UK which offers services for uncertain risks without conferring a legal claim falls under the VersStG (German Insurance Tax Act) – meaning no VAT is charged. In tax terms it is in fact an insurer, because the insurance tax (VersSt) is not to be circumvented simply by declining to grant a formal legal claim. The UK will also have to state this on its invoices for contributions, and likewise declare the customary VAT exemption.
Permissible mediation of insurance cover for merely co-insured persons
If a licensed intermediary recruits the insured persons (VP) for the group insurance (GV) in any event, no further action is needed – save that the intermediary must now discharge their duties towards the VP just as if the VP were themselves the principal.
It is not affected where the VP are compulsorily co-insured under the GV.
This covers, for example, any VP who is a “member” of a policyholder association – such as compulsory group liability cover for everyone in a cycling club, even if it costs an additional contribution beyond the club membership fee. Not every such association, however, has yet reflected this accordingly in its rules and documents.
Alternatively, the association may pay the contribution to the group insurance itself: joining is voluntary but costs nothing extra, being already included in the association fee for all – and thus, in that respect, insurance cover free of charge.
The support fund (UK) as the ideal solution?
There is also the option of a support fund without legal entitlement that offers its own insurance concepts, which anyone may take out voluntarily but which are each underpinned by a reinsurance policy (not, conceptually, a group insurance policy). The UK is then mediated, with a reference, where applicable, to the reinsurance it has concluded. The UK’s claim – as the insured party under the reinsurance policy – may then be assigned to the VP. However, this security interest by way of assignment fails if – as is usual with a UK – there is no principal claim to be secured (no legal claim to an insurance benefit against the UK). This can nevertheless be arranged by tying it to the UK’s benefit commitments in the individual case.
According to a statement by BaFin (German Federal Financial Supervisory Authority), however, the cession or assignment is problematic, because by ceding such a legal claim against the insurer (VR) the UK itself confers a legal claim and would thereby become an insurer in its own right. It cannot then be an intermediary, but an insurer – which would be bad enough in itself, with all the attendant obligations. After all, insurers must as a rule hold authorisation from BaFin before commencing business – conducting unauthorised insurance business is not advisable.
Assignment or pledge
Instead of working with insurance intermediaries, legal advice could also serve, as it were, as a fallback – for example, insurance counsel. This too may give rise to complications.
In any event, it is preferable not to cede the reinsurance claims, but merely to represent that the UK is able to perform, despite having no legal claim to its benefits, because it will assuredly receive them from the reinsurer.
Pledging the reinsurance (by analogy with the position under the bAV) is likewise not possible, because there is no legal claim against the UK (unlike the bAV claim against the employer, who is thereby privileged and does not become an insurer) on whose non-fulfilment the pledge could take effect.
Nor is the reinsurance voluntary – anyone who takes out the relevant UK product with the UK and pays the premium for it is then compulsorily covered by the UK under the reinsurance. And the UK itself receives the benefits in order to provide its own from them. In a specific benefit case, however, it may grant a direct claim against the insurer. It may also use the insurer as the UK’s service provider, for instance to settle claims on the UK’s behalf.
Mediating a UK is, of course, not insurance mediation within the meaning of the VAG (German Insurance Supervision Act), VVG (German Insurance Contract Act) and the like. From a tax perspective, however, it is – so that intermediaries of a UK need not charge VAT on commissions.
The support fund as an insurer under tax law
Under the Value Added Tax Act and the Insurance Tax Act, however, a UK is an insurer and, depending on the type of insurance, pays insurance tax or is exempt from it – for example in health and life insurance – and is likewise not subject to VAT, for everything that would constitute insurance were there a legal claim. By the same token, the intermediary of a UK is an insurance intermediary for tax purposes, because for tax purposes they arrange insurance with the UK (irrespective of any reinsurance). No licence is required for this, because under trade and supervisory law the intermediary does not broker insurance. The tax authority merely wishes to prevent, for example, an insurer (VR) from excluding the legal claim in order to save insurance tax by posing as a UK.
The designations used across the legal system are not uniform. In the 19th and early 20th century the “murderer” in the criminal code also denoted women, as a generic masculine, whereas the “citizen” in the electoral law meant men only. Dr Rita Süssmuth was the first woman to be admitted as a trainee physician (Arzt im Praktikum), having been offered the prospect of being allowed to forego that career step if she declined to sign as “Arzt im Praktikum”, since the term supposedly denoted not men but an institution. The argument was abandoned, however, when she asked whether institutions could become pregnant, in light of the regulations on pregnant trainee physicians. She nonetheless 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
www.experten.de (published 04/08/2023 under the headline: How insurance can be sold without a broker’s licence).
Link: www.experten.de/2023/08/wie-versicherungen-ohne-vermittlerzulassung-vertrieben-werden-koennen/
