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The Federal Court of Justice ordered insurers to improve the surrender value. If cancellation deductions were also made at the time of termination, these must often be refunded.
Insurance customers who have taken out endowment life insurance or private pension insurance (from January 1995, possibly earlier) are affected. Following a decision by the Federal Constitutional Court on 15 February 2006, old contracts (concluded in 1994 or earlier) may also be eligible for back payment and recalculation. If the insurance has been cancelled in the meantime (by mid-2001, possibly even later), the insurer may demand a new settlement and then often an additional payout. This is based on various rulings of the Federal Court of Justice (BGH) of 12 October 2005 (IV ZR 162/03, 177/03 and 245/03). After that, two settlement items are particularly interesting: a) A cancellation deduction is not permitted. b) Just under half of the contributions paid in are to be refunded. The additional payment is particularly high if the contract has only run for a short time. According to the Federal Court of Justice, the cancellation deduction is also inadmissible for contracts that have been running for a longer period of time. In any case, the customer should call in an actuary of his confidence, i.e. an actuarial expert, such as www.pkv-gutachter.de. Not infrequently, this uncovers considerable “errors in re-billing”, such as, _ half of the premiums (to be precise: “half of the unzillmerised actuarial reserve” according to the BGH guideline) were not calculated correctly, _ the usual interest on the late additional payment was forgotten, _ the crediting of the unjustifiably deducted cancellation discounts was not taken into account. One trick insurers use is to offer a goodwill payment – recalculation by an actuary or actuarial expert can mean substantial additional payments. The offers of a settlement or goodwill payment should be checked: The insurance customer should reserve the right to verify the calculation in writing in any case. Leading judges and academics have already commented on this: According to them, first of all, the new settlement is due – because if the claim is not known, it can not be barred by the statute of limitations. Another opinion assumes that the limitation period can only have started to run since the BGH judgements of 12.10.2005. However, there are numerous other assessments of this. The principles developed in the banking sector can be applied here: There, it is a matter of cases in which the bank has unlawfully debited the customer’s accounts for interest and expenses. Unit-linked life or annuity insurance policies may also be affected: According to a decision of the Regional Court Aachen (judgement of October 11, 2002, ref. no. 9 O 355/01) the principles of the Federal Supreme Court (BGH) regarding the offsetting of acquisition costs and lapse deductions as well as the surrender value can apply accordingly. So here, too, there may be additional payments to the insurance customer. Not to be forgotten is the liability of intermediaries and advisors. Anyone who invests their money can expect to receive proper advice. In this context, it may be grossly erroneous to offer a customer a savings contract running for tens of years if it does not appear certain that the customer will be able to “hold out” for the duration of the contract. Often intermediaries look at the commission instead of checking whether there are enough other reserves (in the short and medium term). In the absence of adequate cover against unemployment, disability, illness, etc., it is foreseeable that a life insurance policy may not live to see the contractually agreed end. One approach to advisor liability is then to answer the question: could the client afford this product in the first place? A popular variant is also to sell the life insurance to the customer on credit (immediate annuity). This usually goes wrong, because the interest on the loan is certain, but the increase in value of the life insurance is not. In the end, the lending bank cancels the insurance, and the customer is left with a mountain of debt. Banks and insurance companies, but also their intermediaries, see themselves increasingly responsible if the loan was coupled with a life insurance policy when financing a home. Often only the intermediary earns money from this – for the customer this financing is often much more expensive. Paying off your own four walls can be unnecessarily prolonged from about 15 to an estimated 25 years for the same payment amount. jf
(Landpost 2/2007, 29)
Courtesy of www.landpost.de.