Doubtful contribution increases

Most health insurers rely on impermissible premium adjustment clauses. Private health insurance policyholders may be entitled to reclaim.


At a hearing on 4 March 2010, the twelfth chamber of the Munich I Regional Court (Case No.: 12 O 23234/09), which specialises in insurance law, expressed the view that many premium adjustments by private health insurers could be invalid.

The basis for the court’s comments was the complaint of an insurance policyholder who had come across a clause in his contract conditions (AVB) which, contrary to a ruling of the Federal Court of Justice from 2004 (Ref.: IV ZR 117/02 = NJW 2004, 2679), allowed the premiums in his “observation unit men” to be adjusted even if the “triggering factor” relevant in this respect had exceeded the agreed limit only in the “observation unit women”, for example:

„… If the comparison shows a discrepancy of more than this percentage for at least one observation unit, the tariff premiums of all observation units shall be reviewed and, if necessary, adjusted with the approval of the trustee. If the discrepancy exceeds five percent, the premiums of all observation units in the rate may be reviewed by the insurer and, to the extent necessary, adjusted with the approval of the trustee …”.

In fact, his inquiry with the insurer revealed that in 2003 and 2004, the “triggering factor” exceeded the required limits only for observation units other than the plaintiff’s, and a premium increase was nevertheless made.

When asked about this, the insurer only offered an amount in the low three-digit range, as a corresponding increase in premium would have taken place at the latest at the next review. The insured was not satisfied with this, however, and sued not only for reimbursement of the excess premiums paid as a result of what he considered to be unjustified increases in 2001 and 2002, but also for a declaration of the invalidity of the clause in the insurance conditions that had been amended in the meantime and of the adjustment of conditions.

During the conciliation hearing, the judges indicated that they largely followed the plaintiff’s submission. Thus, according to a preliminary assessment, all premium adjustments between 2001 and 2004 were invalid because either the “triggering factor” had only exceeded the relevant hurdles in one other observation unit or it had only been between five and ten percent.

However, in view of the invalidity of the clause, this was not sufficient for a premium increase, as the statutory limit of at least ten percent thus applied. So it says literally in the minutes of the meeting:

“Respondent is advised that the Board finds the original clause which was intended to carry the increase invalid.”

However, the court went even further: the validity of the clause was not only in question because in the old version there was no – as the BGH clarified – legally required separation between the observation units, but also because the insurer linked the possibility of agreeing a lower percentage to an optional provision not provided for by law.

This opens up the possibility for him to do and leave what he wants in a legally questionable way. For example, with a “trigger factor” of between five and ten percent, it could always increase premiums in the event of cost increases, but in the event of decreases it could refrain from making the necessary premium reductions at the expense of the insured. The Court of First Instance made the following verbatim comments in that regard:

“Doubt exists to the extent that a five percent increase is agreed to be discretionary.”


Many insured persons affected

This further reason for a possible inadmissibility of the clause, as seen by the court, affects considerably more private health insurers, since many sets of terms and conditions contain such an optional provision for a reduced limit compared to the ten percent provided for by law, while an insufficient separation between the observation units in the GCI occurred only in isolated cases.

However, not all tariffs of every insurer are affected – for example, tariffs of the former DBV-Winterthur Krankenversicherung – now AXA – only provide for the statutory limit of ten percent anyway. The judges also considered an adjustment of the conditions as of January 1, 2005, which had been made on the basis of the BGH ruling, to be ineffective, since a change in the supreme court ruling does not provide any justification for this. The transcript of the meeting notes:

“Further, the substitution is not likely to be effective in 2005.”

The proceedings before the Munich Regional Court I finally ended with a settlement according to which the insurer undertook to pay the amount of more than EUR 4,300 claimed by its customer and the policyholder acknowledged the amended clause at issue as well as the current premium as effective with regard to future premium adjustments.

The judges had previously pointed out the economic problems associated with a decision. It is noteworthy that in mid-January another (Appeals) Chamber of the Munich Regional Court I had still decided – hardly tenable in view of the above-mentioned assessments of the Twelfth Chamber – to reject a clause with comparable wording:

„… If the comparison of the required insurance benefits with the calculated insurance benefits for an observation unit shows a deviation of more than ten percent, the tariff contributions of all observation units of the tariff shall be reviewed and adjusted, if necessary. If there is a discrepancy of more than five percent, the rate premiums may be reviewed and adjusted as appropriate.”

can only be interpreted to the effect that a premium adjustment (in conformity with the BGH) can only be made if the trigger factoris exceeded in the corresponding observation unit. The clause should only be “understood to mean that the rates may only be adjusted if the comparison of the required insurance benefits with the calculated insurance benefits for an observation unit shows a deviation of more than ten percent.”

The 34th Chamber considered such an interpretation to be the only possible one, although the defendant insurer itself had submitted a letter of the Federal Financial Supervisory Authority (BaFin) of January 2007 in the appeal instance, in which the supervisory authority criticised that “so far … no adjustment of § 8b GCI to the case law of the BGH had been made”. Significantly, the 34th Chamber of the Munich Regional Court I did not say a word about this written statement by BaFin in the reasons for its judgment dismissing the action. In the absence of leave to appeal, the decision became final. Since the trustee, whose consent must be obtained before any change in premium, decides in each case on the increase or reduction actually submitted to him and not (only) on the fixing of a new premium amount, the question of the effectiveness of premium adjustments also arises, for example, after inadmissible increases in the past, even if in the individual case the conditions are fulfilled per se on review.

by Thomas Keppel and Dipl.-Math. Peter A. Schramm

by courtesy of (published in Performance, issue 05/2010, pages 58-59)

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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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