The Federal Court of Justice (BGH, ruling of 10 March 2016, file no. I ZR 147/14) decided: “The obligations of the insurance broker to provide information and advice primarily include the questions of which risks the policyholder should insure, how the most effective cover can be achieved, with which risk carrier the cover can be taken out and at which premium level which risk cover is available. An insurance broker does not fulfil these obligations merely by pointing out to the policyholder any gaps in an existing insurance policy and the economic risks caused by these gaps and by recommending insurance cover against all risks without examining and discussing the specific case.
This applies accordingly to the insurance representative, § 6 VVG.
Risk investigation and object check
The “examination and discussion in a specific case” is similar to a fact-finding with subsequent evaluation and advice. In life insurance, the broker could be liable because he could have arranged a Dread Disease insurance policy that pays out death benefits even if certain serious illnesses or a short remaining life expectancy are diagnosed. Similarly, if the remaining life expectancy is short and there is a desire to benefit a particular child in the event of death, the mediation of a life insurance policy may be unsuitable – because a bank contract in favour of a third party would have been entirely sufficient. The subsequent revocation of a subscription right by the heirs can lead directly to the accusation of a gap in the advice provided by the mediator.
Insurance products without market overview and renegotiation
In general, the broker’s problem is that his range of products is limited – either as an agent with access only to the existing tariff world, or as a broker through his connection, for example, to pools with a certain selection of risk carriers in cooperation.
Insurance conditions list the things for which benefits are paid. Only on the basis of these, in turn, that which is excluded from them. The normal customer does not even notice the gaps, because he does not know what risks are to be covered.
There is no such thing as DIN standards for insurance companies. Due to the building law it is to be expected that you will not fall into the cellar when entering the house, because the cellar ceiling is missing. Such a building would be defective. On the other hand, there is little that can be used to demonstrate the “inadequacy” of an insurance policy – at least not with regard to the actual benefits.
Liability case of product-related advice
In practice, advice is product-related, not risk-related. There is no talk about risks for which products are not known – such as employee liability. Bad luck for the broker if the product had existed. This is because the BGH expects an identification of the existing risks on the one hand and an examination of whether the tariff to be proposed covers them on the other. These are two sides of the coin – which must be documented, §§ 60 ff. VVG.
Products are occasionally based on fears – then there is cancer insurance and terrorism insurance. Too bad if it was an autoimmune disease or just a random killer. Bad luck for the broker if he has not explained the gap to the policyholder (UN) and asked if he still wants to do so.
Ongoing advisory duties
According to § 6 VVG, insurers (VR) – or the broker – also have advisory duties for ongoing insurance contracts. This also includes advice on services – these can be queried as UN, together with the associated comprehensible written documentation and liability. Bad luck for the broker if gaps in coverage or underinsurance in the event of a claim become apparent – around the corner from another provider, this might not have been the case. And instead of taking out patchy drone insurance, the better advised UN could decide to stop playing with drones altogether.
If the intermediary does not obtain additional information from the doctors treating the insured in the case of risk issues in personal insurance, the Federal Court of Justice could conclude that it has not been determined which “risks the policyholder should insure”. The fact that the UN was often not aware of everything that the board of directors later digs up in the patient’s file leads directly to the accusation of breach of the duty of disclosure – including the failure of the board of directors to perform.
In the case of dread disease, one wonders whether these are really the most common serious diseases or only a selection of serious, rare but spectacularly well known diseases that are covered here. It is already hard to see why you need money when you have certain selected diseases and not when you have others that are just as serious. If you are allowed to tick 6 out of 49 diseases for which the UN is then to receive something, this is more like gambling than insurance.
Insurance coverage as a lottery?
Like, “What are you afraid of?” – “That when I’m sunbathing, an eagle will drop a turtle on my head!” “Then get accident insurance for falling turtles.” Unfortunately, it was the falling flap of a cargo plane on approach.
Liability case of strategic loss adjustment
It is generally known, at least among experts, that in the event of damage the board of directors will legally try to do as little as possible. It would have to induce the intermediary to cross-sell; be it a legal expenses insurance or a savings contract to build up his own war chest. Michael Imhof describes in his guidebook on medical treatment errors that liability insurers still take legal action even with little prospect of success, because “every day won means cash money” for the board of directors: Patients “are exhausted in the many years of proceedings and are tormented and defeated by the stalling manoeuvres of the insurance companies until the last will to fight back is extinguished”. However, this is usually not planned at all, but is only the result of a lack of decision-making power on the part of performance reviewers, who prefer to leave the decision to a final judgement.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.procontra-online.de (published on 06.02.2017)
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About the author
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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