With every second life insurance customer a claim for damages is possible – is the insurance industry now facing a new billion-dollar liability? This is taken up by the BGH in its new decision (judgement of 14 June 2007 (Ref. III ZR 269/06), in which it points out that an insurance broker is obliged to pay damages if he brokers a life insurance policy to a customer which did not “correspond to his needs and financial capacity”. If the “savings contract” in the form of a life insurance policy runs for only one year, according to a study by Professor Adams, the investor does not even get back two percent of his payments on average – a negative return of over 98 percent. This is pointed out by the Munich lawyer and Versicherungsmagazin author Dr. Johannes Fiala. As Fiala further explains, the assessment of endowment life insurance as “legal fraud” had already been approved by the courts since the judgment of 3 June 1983 (file no. 74 O 47/83) of the Hamburg Regional Court. Professor Michael Adams (University of Cologne) followed this up in 1997 with his essay “The endowment insurance as investor damage”. Another five years later, a dissertation proved that even in the case of life insurance as an investment, the intermediary must observe the BOND ruling (Ref. XI ZR 12/93) of the Federal Court of Justice (BGH) on the obligation to advise investors and objects. Since only about one in four long-term life insurance policies was held out to the end by the investor, the suspicion was obvious that investors were being offered unsuitable policies en masse. While numerous customers with terminated life insurances hope for a new account, with on the average only comparatively minimal additional payments from contract-legal requirements against the insurer, the more weighty requirement lies within the range of the wrong consultation: Investors can require here apart from the paid in contributions also a tidy capital market interest as escaped profit. Investors still have the opportunity to claim damages from claims made in the last 30 years: This is because under the statute of limitations rules in force since January 1, 2002, brokers are liable (calculated from January 1, 2002) for a maximum of ten years. The cases of incorrect advice do not only include contracts where it was questionable from the outset whether the customer would be able to pay the fixed premiums at all in the long term. Often, insurers have their customers submit “non-binding sample calculations” with unrealistically high returns when taking out a policy. According to some rulings, this can lead to the insurer not being allowed to reduce the surpluses at a later date (claim for performance) or to the contract having to be rescinded with repayment of premiums including interest. In order for the customer to know what type of contract – costs, risk premiums, surplus model and other “conditions” – he has concluded, an actuarial appraisal should be carried out. This reveals the discrepancies with the client’s original “need”, i.e. the extent to which the advice is not in line with the client’s needs.
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About the author
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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