The Federal Court of Justice has ruled that insurance intermediaries are liable for damages suffered by customers in connection with ageing provisions when switching private health insurance (PKV). This also applies to private supplementary health insurance in addition to statutory health insurance.
The executive of an intermediary association once asked his colleagues, “Can you tell me what the commonality is between ‘Kukident’ for third teeth and an insurance broker?” The answer was, “Both adhere equally well.” This joke could make many an insurance broker laugh their heads off. In its ruling of 11 May 2006 (ref. III ZR 228/05), the Federal Supreme Court once again confirmed that ageing provisions are not an individual right of the customer but a purely calculatory or balance-sheet factor in private health insurance (PKV). Therefore, although the lack of information about the loss of the ageing provision was an advisory error leading to liability, the damage could not simply be proven by the lost ageing provision. However, this has now changed due to the health reform of 2007, since every privately insured person can, with the new Insurance Contract Act (§ 192 ff. VVG) from 1 January 2009, in the amount of the basic tariff, de facto individually take his imputed ageing reserve in the private health insurance to the new insurer. In principle, ageing provisions in private health insurance mean a savings process for the insured: the premiums are initially higher than required for the risk, the excess “savings portions” are “accumulated” with compound interest as an ageing provision – in old age this “credit balance” is ultimately to be used to relieve the burden on premiums. An actually well-intentioned intention. The tragedy of this is that for every four new policyholders entering at age 30, only an average of one is still a customer with the same insurer at age 65.
Experts and lawyers uncover misadvice
Badly trained insurance mediators often learn only in the adhesion process, which meaning and mode of operation are connected with the ageing reserves, which are usually calculated in a private health insurance – not however necessarily always also in the private health auxiliary insurance for legally insured ones. Particularly in the case of private supplementary insurance, people insured under statutory health insurance can save considerable costs if the insurer waives the calculation of ageing provisions in its tariff. Intermediaries could then be liable for giving incorrect advice.
Loss of ageing provisions due to change of private health insurance provider
Insurance agents, as we all know, make their living from brokerage fees or commissions. It is therefore not surprising that private health insurance policyholders are “reinsured” up to a good five times in the average course of an insurance life, i.e. they change private health insurers: For the customer, this change is usually associated with considerable disadvantages, because the ageing provisions have so far been completely lost. Today, a change of private health insurance should therefore definitely be postponed until 1 January 2009. When switching private health insurance, two damage items arise. At one point, this may cause the premium to increase unnecessarily, either immediately or later. In its ruling of 11 May 2006, the Federal Court of Justice stated that the customer can demand that this premium loss be reimbursed by the insurance broker. From the customer’s point of view, a further loss is that he loses his ageing provisions. Without an expert witness, the damages are unlikely to be presentable in a liability suit. In the case of a later change from 2009 onwards, the premium would have been reduced by the transfer of the ageing reserve.
Supplementary health insurance: Secure losses through ageing provisions
Statutorily insured customers with private supplementary insurance have the choice of opting for a tariff with ageing provisions or without this “savings contribution”. The insurance broker, as administrator and advisor to his clients, must point this out and explain the differences – after all, we are talking about premium differences of up to 50 percent. For more than every second customer, the ageing provisions mean a certain loss of his “savings premium”, because when changing insurance, these ageing provisions still do not have to be passed on. Most customers do not even remain insured until retirement age – they therefore continuously pay additional “savings portions” without ever getting anything out of it. It would then be better for each customer to save this money separately for their old age, independently of the continued existence of the supplementary insurance.
Legal action options for PKV customers
Anyone who has taken out a supplementary insurance policy as an SHI-insured person can sue their broker if they were not informed about the very probable disadvantages of a supplementary tariff with calculated ageing provisions: The agent then owes the customer the difference in premium – which can be up to 50 percent of the premiums. Anyone who has been encouraged by his agent to change insurers – in return for payment of a commission of eight or more monthly premiums to the agent – can also bring an action for a declaratory judgment on the grounds of an advisory error if he has not been correctly informed about the function and loss of the ageing provision. It should also be remembered that the tariff may be cheaper at first, but later the premiums will increase excessively. This is hardly recognizable for the customer without expert examination. This also allows a comparison with the more favourable premium that would have resulted from a change with the inclusion of the ageing provision in 2009. Furthermore, the lost ageing provision also has a direct impact as a premium loss if a change is made now or later to the industry-standard basic tariff or standard tariff. The damage may therefore take the form of future premiums and their increases, but also the loss of ageing provisions. The starting point for recourse against the intermediary is the comparison of assets on the part of the customer. Further starting points for intermediary liability are errors in rating, because insurance brokers must recognise the value that such statements can have and the impact that this and the conditions can have on premium stability. Furthermore, intermediaries are liable if the customer is foreseeably no longer able to pay his premium. After all, insurance policies have to be brokered in a way that meets the needs of the customer. If the customer wants to cover a risk, the intermediary may therefore not increase the premium by additional “savings portions”, even after clarification, if this would overburden the customer’s permanent ability to pay.
Dr. Johannes Fiala, lawyer, Munich, (www.fiala.de) and Peter A. Schramm, actuarial expert, Diethardt, (www.pkv-gutachter.de)
(versicherungsmagazin 3/2008, 61)
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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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