– Why a broker is allowed to give advice on changing tariffs for a contingency fee –
The Federal Court of Justice decided (BGH, ruling of 28.06.2018, file no. I ZR 77/17) that an insurance brokerage contract does not require that the client is to be looked after on a permanent basis according to the agreement reached. Without an explicit agreement to this effect, there is generally no such ongoing care obligation.
No need to support the policyholder in the long term
The BGH emphasises that the insurance broker’s main service is the mediation or (as an authorised representative) the conclusion of insurance contracts.
Ongoing support can be included – which means a continuing obligation – but it does not necessarily have to be agreed. A brokerage contract does not require ongoing support. An insurance brokerage agreement is also present if no ongoing support is promised by the broker.
Tariff change brokers work legally in the brokerage profession – in competition with insurance consultants
The BGH clarifies for the first time that obtaining offers for a change of tariff in private health insurance (PKV) is also part of the insurance broker’s activity. This is also the case if the broker had neither mediated the previous tariff nor took over the ongoing support later on, but limited himself to the one-time mediation of the tariff change.
It is also irrelevant to the Federal Court of Justice that no new private health insurance contract is brokered and that this is not even intended as an alternative – but that the previous contract with the private health insurance company is only continued under changed conditions, in the brokered new tariff.
This means that the broker is also in competition with the insurance advisor – who will not be allowed to receive a performance fee – vis-à-vis consumers in all conceivable lines of business. The insurance broker can be promised a brokerage fee from the policyholder (UN) up to the limit of usury. Admittedly, the tariff change broker still has an obligation to inform about his remuneration model – otherwise he can hardly sue for the brokerage fee with certainty.
Liability for omitted and deficient tariff change advice
Sometimes the new tariff turns out to be more expensive in the end, and the UN later changes the target tariff again in accordance with § 204 VVG. The advice provided by insurers (BoD) and agents can prove to be deficient after examination by a tariff change broker – this gives the UN the option of asking the BoD later for reimbursement of costs and compensation for the premiums paid in excess. This is also the case if he decides to change insurer at a less favourable rate due to inadequate advice on tariff change options from the board of directors, agents or brokers. A broker cannot object here that – unlike when changing insurer – he is not allowed to give advice on tariff changes according to § 204 VVG, because he would allegedly not be allowed to do so.
Continuing obligations lead the broker into ongoing liability
Already the OLG Frankfurt/Main (judgement of 05.07.2006, Az. 7 U 68/05) concluded that a continuing obligation arises when the insurance broker promises additional services, such as portfolio maintenance, monitoring of the risk object, adjustment of the insurance cover to changed circumstances, contract management with a resulting duty of supervision. This can be seen, for example, in the collection of premiums or commissions for care – although here too the extent of care remunerated in this way is questionable. However, there is no need for an express waiver of an ongoing duty of care.
In the case of the Frankfurt Higher Regional Court, the UN could not hold the broker liable for recourse because the broker had not entered into a continuing obligation – the adjustment of a building insurance policy would have had to be initiated by the UN itself, and thus remained stuck on a partial loss. Only if the broker recognises that the UN must take action can he be made aware of the obligation to inform.
Insurance brokerage contract with foreseeable VSH coverage gaps?
There are numerous more far-reaching promises in brokerage contracts which indicate a continuing obligation – even in hidden other places such as letters and statements on the website, in various conceivable promises of the broker to his customers. Some BoDs are quite happy to accept such responsibility voluntarily towards customers – brokers are mutating into insurance agents or insurance representatives.
The insurance broker should make sure that his various conceivable “support services” are not even covered by the insurance coverage according to the common terms and conditions in the financial loss liability insurance (VSH). This also includes activities that are perceived as a service, and which bring some brokerage fees closer to the broker. An exact comparison between the brokerage contract and the Brokerage Terms and Conditions with the VSH Conditions reveals the uninsured area of own promises to VN. Promising insurance policies that are not necessary for the brokerage could even constitute a prohibited passing on of commissions and lead to the invalidity of corresponding contracts.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.experten.de (Published on 27.06.2019)
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About the author
Dr. Johannes FialaPhD, MBA, MM
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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