Higher Regional Courts of Karslruhe and Stuttgart sentence insurance companies

When insurance companies are liable alongside brokers for misadvice on pensions


Insurance companies are liable in the event of advice errors by insurance brokers

By judgments of the Karlsruhe Higher Regional Court (OLG) of 02.08.2011 (Case No. 12 U 173/10) and Saarbrücken Higher Regional Court of
04.05.2011 (Case No. 5 U 502/10-76), insurance companies were ordered to assume liability for consulting errors committed by insurance brokers. The background to this was the insurer’s recognisable errors on the part of the insurance customer or the transfer of tasks from the insurer to a broker sales structure.
An insurance broker is not someone who is involved as a sub-agent within the framework of a sales structure through a commercial agent, § 59 III S. 1 VVG.


Insurance companies are liable when using so-called master distributors

The OLG Karlsruhe found that insurers are liable for their intermediaries of all kinds if a distribution structure consisting of master distributors, intermediaries and sub-intermediaries is used for the sale of insurance products, similar to so-called structural distributors.
If such a sales organisation – as is the case with some British life insurers in particular – has been entrusted with tasks that are typically the responsibility of the insurer as the provider of an insurance product, the insurer itself is liable. In the background, it was about the use of a “false return expectations” suggesting software, which the customer of a credit-financed pension (“Europlan”) a carefree future pretended. Such models often resulted in five- or six-figure losses for the customers concerned.


Insurance companies are obliged to provide advice in addition to the broker

The OLG Saarbrücken sentenced an insurer in addition to the insurance broker.
The insurance broker had given inadequate advice on the conclusion of a contract for old-age provision. However, the insurer also has a duty to advise if he could and should have realised that the policyholder was in error about the contents of the contract despite the advice given by the broker. Insurance companies have always been obliged to provide information if they must recognise that the policyholder requires instruction (BGH judgement of 13.04.2005, Ref. IV ZR 86/04).


Incorrect advice in occupational pension provision in the case of sales support through forms

Since 2008, insurance brokers have no longer been entitled to give advice, for example on the amendment and review of insurance contracts, or to represent the interests of an insurer out of court (e.g. in the event of a claim), § 59 III and IV VVG.
Likewise, insurance brokers are not permitted to take on the complex issues (such as labour, tax and insolvency law) associated with setting up a company pension scheme, as this requires a legal advisory licence. Insurance companies that use forms “for the establishment of a company pension scheme” to induce insurance intermediaries to enter into individual legal advice with the employer or employee are potentially liable to the insurance customers and their intermediaries for intentional immoral damage, § 826 BGB.
In its judgment of 6 October 2011 (Case No. I ZR 54/10), the Federal Court of Justice ruled that a permissible ancillary service exists in the case of legal advice if this does not predominate in terms of scope, is not to be remunerated separately, and involves simple legal issues that can be read from the law. Permitted are also consultations for which the assignment to a legally recognized case group is possible without any problems. Of course, there must be a connection to a main economic service – such as an intermediary service.


Brokers are used by selective information

Brokers should not assume that they will be provided by insurers with all material or even accurate information about products. In sales, information that promotes sales is often passed on – possibly glossed over – while information that cannot be implemented in sales terms is suppressed.
In the retrospect then from the broker of the insurer or its selling representative as safe prognosis over the net yield which can be expected sold example calculation a bare illustration example with purely fictitious net yield assumptions, so that one should understand only, how then the product in something functions.
In addition, insurers often simply omitted important information – e.g. that the yields assumed in the example calculation could no longer be earned. This in the hope that the broker will present the returns to the investor as very safe and thus broker the contract.


Insurers are liable for brokers acting within their scope of responsibility

The broker should then be solely liable with the statements conveyed to the investor, while the insurer wants to reject any liability and responsibility for this. This was because it involved a broker who, apparently through sheer incompetence, had failed to understand the insurer’s products. Here, however, the courts increasingly see the insurer as being jointly liable because the broker has acted as the insurer’s vicarious agent within the scope of the insurer’s duties. This is not only the case if the insurer intentionally uses others to deceive.


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


by courtesy of


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About the author

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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