He who writes, stays – but not always!

You can’t hold an insurer liable for every piece of information. When assurances of the insurer are worthless explain attorney Johannes Fiala and PKV expert Peter A. Schramm in the proven series over consulting errors with the switching of private health insurances.

In order to be able to meet an important business partner, have the route explained to you at the petrol station, even in writing to be on the safe side. Late at night you end up with it at the end of a gravel road in no man’s land – the business deal is gone, with a lost profit the damage amounts to 100,000 euros.

A less good idea in this situation would be to try to hold the gas station attendant liable for this. He never intended to be liable: legally it was a non-binding declaration of knowledge. Declarations of knowledge are opinions about certain facts or facts and therefore not legal transactions.

For example, this includes a confession, a pardon, a receipt, the architect’s audit note on an invoice – and risk-relevant information in the insurance application.

Customers, but also brokers, like to ask the insurer exactly which benefits are hidden behind a clause. There is always a more or less helpful answer, also gladly in writing or by e-mail. Afterwards one would like to remind the insurer of it – only the answer did not take at all to the contract file and even deleted long ago.

If it is presented to him by the broker, the insurer does not care:

“Yeah, I guess that’s when we thought it was, only it was just a mistake!”.

The insurer will argue that the contact person at the insurer was clearly a “call centre blonde” and had no expertise. Thus, the insurer’s helpfulness may prove to be a courtesy without liability.

Might as well have just asked your own cleaning lady for her opinion. But of course, the chairman or professor can also express a non-binding opinion. Such information ultimately represents non-binding declarations of knowledge.

This is because the insurer does not express that he wishes to be bound by it as in the case of a declaration of intent and that he wishes to be liable for it. Unfortunately, the situation is different for the broker who uses such information as a basis for his advice to the client.

The broker is then very much liable for this, because he certainly has an economic interest and must be particularly knowledgeable by nature. So if, for example, the insurer thought that the usual fee rates for speech therapy agreed as reimbursable under the terms of the contract were 80 euros per session, no one could derive a claim from this if he subsequently paid only 60 euros.

It is possible that the information was simply wrong – but it is also possible that it was still correct at the time in question and that the insurer has since only changed its benefit principles because, for example, it now uses the average value and not the upper range or because it only had an insufficient overview of the market for speech therapists’ fees at the time.

Genuine declarations of intent are required

The broker can do little with non-binding declarations of knowledge – but they do pose a liability risk. The first step must be to recognise in all correspondence with insurers how binding the insurer’s documents are to be assessed. Insurers’ administrators are trained to respond only in a non-binding manner as long as binding determinations can be avoided.

Experience shows that most – clients and brokers alike – are content with this and don’t even recognize the difference.

Tip: Every time you receive information from insurers, immediately and routinely request a binding declaration of intent that you can place in the contract file, such as a “side letter”.

If this is denied, the broker knows what to (not) make of it. The customer is entitled to a correct and complete policy according to § 3 VVG. Conscientious brokers must have policies from certain insurers reviewed and adjusted several times. But a declaration of intent can also be challenged on the grounds of mistake. That settles it. However, it is replaced by a claim for damages.

However, anyone who now thinks that the difference between the 80 euros per session for the speech therapist and the 60 euros paid will be reimbursed as a loss by the insurer for past and future treatments is mistaken. Because if the insurer had given the correct declaration of intent, according to which he only wants to refund 60 euros, then the customer would also only have received 60 euros. The insurer will therefore argue that there has been no loss in performance.

Dproving harm is problematic.

Only for the past the customer could argue that he would have refrained from the treatment in knowledge of the reimbursement only up to 60 euros or would have visited a cheaper speech therapist. However, to convince the court, he must also explain and, if necessary, prove this.

For the future, he could argue that if he had been aware of the insurer’s declaration of intent without error, he would have insured himself in another tariff that pays up to 80 euros. Only he must prove this also and a possibly higher premium of this tariff can be offset. And he must also prove at what premium – with any risk surcharges – he would have been accepted by that insurer and continued to be insured over time, taking into account premium adjustments.

A private actuarial report can cost a four-digit euro amount – with a bit of luck, the lawyer will be paid by the legal expenses insurance. It is therefore easy for a broker to become liable here. However, even if it is obvious that the broker gave incorrect advice, the customer may not have suffered any damage as a result or it may be very difficult for the customer to prove this.

Should the customer nevertheless attempt to do so, such processes can drag on for a long time, including expensive expert evidence. In the end, there is usually a settlement, which often only recovers part of the costs for the customer. If the broker, for his part, is expert and legally well advised, he can often ward off the matter altogether. It is not uncommon for the costs of lawyers and experts to be borne by the VSH insurer.

But maybe the usual prices for speech therapy sessions are 80 Euros – then the information was not wrong at all and the advice was correct.

The customer should simply have sued the insurer in time before the statute of limitations ran out and provided the evidence in court by way of expert opinion via market research. However, the broker can also be liable for not having thought of this when providing support in the event of a claim, although unfortunately his liability only begins to expire when the statute of limitations for an action for damages against the insurer comes into force. Experience has shown that some insurers have very restrictive ideas about healthcare prices when processing benefits.

For example, the sales manager’s opinion of the agreed reimbursable customary fee rates may be correct, but the benefits department may have a different opinion.

by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm

by courtesy of

www.performance-online.de (published in Performance 03/2011, pages 38-39)

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About the author

Dr. Johannes Fiala
PhD, 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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