Insurance broker liability through “waiver of documentation and advice”.

Financial Services (Univ.Wales), MM (Univ.), Chartered Financial and Investment Adviser (A.F.A.), Lecturer in Civil Law and Insurance Law (Univ. of Cooperative Education), Banker (www.fiala.de)
Consultation and documentation are expressly waived !
With sample protocol authors (for example software manufacturers, federations, “specialized authors to the insurance broker right” – also in the employment relationship with the insurer, working groups with self-created certifying – probably as source of income, management consultations for insurance mediators) the clause is offered gladly “the customer renounces expressly a consultation and documentation”. (Who likes, search in Google.de for “customer expressly waives consultation documentation” – or for similar formulations. The saying goes “ignorance is no excuse”). Many insurance agents were grateful for this assistance, but only as long as they did not know the legal background with their own liability. What is piquant about this is that in some cases even lawyers are said to have been involved in such samples or their distribution: Unfortunately, the operating instructions “on risks and side effects” are missing from the vast majority of sample forms. This means that the insurance broker is sure of liability (!) – and the lawyer is sure of recourse later on, which is often hopeless for him.
Legal requirement:
The Act states “The policyholder may waive the advice or documentation under subsection (1) only by separate written statement, provided that the policyholder has been expressly advised by the insurance intermediary that waiver may adversely affect the policyholder’s ability to bring a claim for damages against the insurance intermediary under section 42e.” On the face of it, the problem facing intermediaries can be described in the following words, paraphrased from an association executive: “In a few years, we’ll know through case law what the government might have meant by its laws.” However, this oath of disclosure in the legal art of interpretation does not serve the insurance broker in any way.
Risk: Exclusion of consultation !
For decades, business owners have been happy to try to “zero out” their performance obligations and responsibilities. The courts reacted to this with a case law on § 242 BGB (good faith). The legislator later created the AGBG (Law on General Terms and Conditions). Intermediary “forms and templates” are such general terms and conditions. The central norm at that time was § 9 AGBG:
§ Section 9 General Clause (AGBG) (1) Provisions in general terms and conditions are invalid if they unreasonably disadvantage the contractual partner of the user contrary to the requirements of good faith. (2) An unreasonable disadvantage shall be assumed in case of doubt if a provision 1. is incompatible with the fundamental ideas of the statutory provision from which the deviation is made, or 2. restricts essential rights or obligations arising from the nature of the contract in such a way that the achievement of the purpose of the contract is jeopardised. The beauty of this standard is that it is also applicable to general merchants, entrepreneurs, etc. Applied to the insurance broker, this means that he can never exclude advice “across the board” and even more so “through forms”. This is because the basic idea of the insurance brokerage contract is the duties of trusteeship, as cardinal and primary duties. By the way, the liability cannot be limited to “1 million” in a “blanket” way: Such model clauses are often spread – unfortunately, they are often null and void as well!
Federal Supreme Court: No exclusion of advice by insurance broker forms !
The Federal Court of Justice (BGH) clarified in its judgement of 20.01.2005 (Ref. III ZR 251/04) that the exclusion of consultancy obligations in a form is invalid. The BGH even expressly referred to the above-mentioned § 9 AGBG in the leading sentence. For insurance broker practice, it follows that any waiver of advice form is null and void. Therefore, if market participants recommend such blatantly unlawful models to insurance brokers, the suspicion will be allowed that they could not have been legally knowledgeable in the fundamentals at the time of drafting.
Risk: Exclusion of documentation !
The insurance broker in the liability process often only has his hand file, including the documentation. Even insurance brokers who are unfamiliar with the law should be aware of the guiding principle of the Sachwalter ruling (ruling of the
BGH from 22.05.1985, Az.: IVa ZR 190/83): “The insurance broker is for the area of the insurance relations of the insured person cared for by him his trustee; therefore he meets the burden of proof for the fact that the damage would have occurred also with contract-appropriate fulfilment of his clearing-up and consultation duties”.
Federal Supreme Court: The insurance broker bears the burden of proof !
If the insurance broker therefore waives the documentation, he only endangers himself by waiving the most important means of evidence in the liability process. In practice, it is hardly conceivable “that a waiver can have a detrimental effect on the policyholder’s ability to assert a claim for damages against the insurance intermediary under § 42e” – the opposite will be the case, in that the lawsuit against the insurance intermediary will then, in case of doubt, be successful.
Tips for the insurance broker:
Also in the case of the waiver of consultation, as otherwise in the case of the insurance brokerage contract, individual designs and sound legal training on how to deal with this topic are required. Insurance broker Ralf W. Barth: “I ask myself whether the providers and advisors of a documentation waiver are actually aware that the asset damage liability insurers could have the possibility of refusing cover in the event of a claim according to today’s standard VSH conditions in the case of a documentation waiver.” If the VSH insurer were to rightfully deny coverage in the event of a claim due to lack of documentation and true to its VSH terms and conditions, the question arises as to whether the provider giving this incorrect advice, or providing appropriate waivers, would be liable for it? Hopefully then at least he is sufficiently VSH-insured. Insurance broker Andreas Bosl: “Before the “documentation and advice waiver”, the insurance broker should settle his “last things”, and consider an anticipated succession or a charitable trust. Because in the event of a claim, in the event of subsequent insolvency, he will hardly have any assets left to dispose of freely, either in this way or in any other way.” Insurance broker Hermann Siebenhaar: “The call for uniform broker contracts leads to a desolate situation for the insurance broker (liability). The call for uniform protocol models also has the same consequence. The exclusion of advice, with whatever text, violates the main duties of an insurance broker (except of course single-company agents, multiple agents)”.
(experten.de (12.07.2007))
Courtesy ofwww.experten.de.

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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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