Firm-affiliated insurance intermediaries: tied agents, untied brokers?

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*by Dr. Johannes Fiala, lawyer (Munich), mediator (Univ.), MBA Financial Services (Univ.Wales), MM (Univ.), certified financial and investment advisor (A.F.A.), lecturer for civil and insurance law (BA Heidenheim, Univ. of Cooperative Education), banker ( and Dipl.-Math. Peter A. Schramm, expert for actuarial mathematics (Diethardt), actuary DAV, publicly appointed and sworn by the IHK Frankfurt am Main for actuarial mathematics in private health insurance (
“A non-insurance company, i.e. a company from the insurance-taking sector or an association of such companies establishes its own intermediary company (company-affiliated intermediary): what is the status of its intermediaries (brokers, agents, commercial representatives,…) and what are the consequences of the VersVermG for these intermediaries?” Agent or broker? Like any normal intermediary, the “firm-affiliated intermediary” (FVV) must also determine whether an agent or broker activity is to be carried out. In principle, therefore, no special features apply under the VersVermG. Only if major risks alone constitute the task of the FVV can the duty to document and advise be dispensed with. However, it is not permissible to waive this requirement in “third-party business”. This applies mutatis mutandis to those insurers who to this day sweepingly encourage their agents to use ineffective “documentation and advice waiver” forms, § 307 BGB. The Wiesbaden Association This association examines the FVV whether they operate in accordance with the “Agreement of the insurance companies for the implementation of legally justified commission schemes from 1971”. The aim is, among other things, to ensure that the prohibition on commission payments is not violated, because if too much commission is paid to their intermediaries, the premiums might have to increase. It is also a question of equal treatment of all policyholders. The aim is to prevent insurers from formally transferring an insurance agency to a company for the sole purpose of obtaining advantages for this policyholder by circumventing the prohibition on commission payments. Düsseldorf Regional Court, judgment of 24.5.2006, Ref. 34 O 67/06 The Regional Court of Düsseldorf has ruled that the prohibition of commission payments pursuant to § 81 para. 2 sentence 4 VAG is constitutional. The association of insurance undertakings and insurance brokerage companies in the Wiesbaden Association does not violate provisions of the ARC, since the agreement only serves the purpose of preventing unlawful conduct with regard to Section 81 (1) of the ARC. 2 sentence 4 ISA. For the determination of a violation of the prohibition of commission fees, it is important to take an economic view. An infringement is indicated if not all the conditions of the Wiesbaden Agreement are fulfilled. Status fallacies If an FVV acts as a broker, however, its employees are not “sub-brokers” – these would only exist in the form of tipsters in loan brokerage. Numerous independent brokerage firms have been advised that their “freelance” employees (with their own business registration) should also register and insure themselves as brokers: Not only is this wrong for agents working for a broker, but VSH coverage is at stake – even more so if the broker has not properly co-insured and registered their employees with their own VSH insurance company. House agency? House agency is an outdated term for a commercial policyholder (i.e., a company) that wants to share in the commissions of the policies it writes itself. This is not always so easy because of the prohibition on commission payments. Therefore, he is assigned his own agency (in-house) by the insurer so that he can be officially paid commissions – or parts of commissions – as an agent. However, if the sole purpose of the agency is to circumvent the prohibition on commission payments, then this arrangement is impermissible. But the boundaries are floating. One cannot prohibit an insurance agency from also carrying out property management and real estate brokerage and, conversely, one cannot prohibit a real estate agent or property manager from also taking over an insurance agency. If he then mainly only receives commissions for his own contracts, this is hardly controllable. Brokerage or provision of insurance cover? An FVV can also broker contracts to the company’s customers, for example, together with the delivery of electronics also the associated electronics insurance, or insurance for the private needs of the company’s employees. On the other hand, it does not count as mediation to the end customer if the latter is merely provided with insurance cover in return for payment; in this example, the electronics supplied would be insured for an additional fee, but the policyholder is the supplying company. Insurance advice and legal advice allowed? Firm-affiliated intermediaries (FVV) often take on additional tasks than those of brokers or (multiple) agents. Although the Wiesbaden Association requires that the company is formally an independent company – possibly dependent within the group – its employees often also have, for example, an employee contract as employees of the company (or group) , and can thus also provide legal advice to their employer as employees, i.e. without insurance mediation in individual cases, they can also provide insurance advice and even other legal advice. This also applies in part if the FVV exists within the framework of an association of companies. With regard to liability, interesting questions arise here, in particular with regard to the delimitation of activities. Risk management and management consultancy FVV also act as (internal) management consultants in risk control and alternative methods of risk transfer. They are often highly trained specialists who advise on the nature and extent of the risks incurred and the methods of controlling and bearing them far beyond the scope of mere insurance cover. It is therefore not only a matter of arranging good and inexpensive insurance cover, but also of avoiding unnecessary insurance by partly carrying the risk oneself or by alternative means. The extent to which this is insured as an activity of the broker then requires a more detailed examination of all the circumstances.
( (20.08.2007))

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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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