Invalid transactions with insurance buyers

How the Federal Court of Justice legally and legitimately saves the insurers the additional payment(s) –

Financial service providers, consultants and intermediaries, are looking for customers so that they receive more money from their contractual partner – a life insurance company (VR). However, these insurance buyers have great difficulties in developing legally secure business models. Intermediaries who were allowed to learn how the public prosecutor’s offices work – and customers, i.e. policyholders, whose claims became time-barred as a result – fall by the wayside.


Guaranteed repayment promise after “Money back! order”

Guarantees are always welcome. Hardly any intermediaries or advisors inquired about the creditworthiness of the guarantor – who later became insolvent – for up to more than seven euros. The promise to pay the surrender value and a premium at a later date in instalments and with a guarantee usually turned out to be a deposit-taking business prohibited without a banking licence (Sections 32, 54 of the German Banking Act). House searches were the result – sometimes even remand. To this end, the insurance of the consultant or broker denies any insurance coverage in the liability for financial loss (VSH). Thousands of gullible intermediaries have fallen for such offers – often a destruction of existence.


Guaranteed profit participation after “Money back! order”

Another model works by having the customer pay a service fee – and then hopes that the “buyer” will sue the VR. The Federal Court of Justice (BGH, judgments of 11.01.2017, file no. IV ZR 340/13; of 11.12.2013, file no. IV ZR 46/13, IV ZR 131/13) also rejected this model if, more often than not, there was no approval as a collection company pursuant to § 10 RDG at the time of assignment to the initiator. Apart from that, some agents have never heard anything after the canvassing and document transmission – not even the customer. Everything could be statute-barred, some mediators fear and hope for a statute of limitations for themselves as well.


Legal counsel on a razor’s edge?

The reason for such buyers are, for example, surrender values specified by the BoD on termination – the initiator then promises more, for example because he can invest this money better immediately. Or a model for (legal?) tax avoidance is offered via foreign countries – even credit officers at banks support this without a professional examination, because in the end the only thing that counts for the bonus is whether the money comes in? He’s not thinking about money laundering.

Further reasons are excessive sample calculations or ineffective acquisition costs and other clauses which can lead to a subsequent claim. Or also the “eternal” possible revocation due to lack of proper or not given revocation instruction. The prospect of up to more than “double the surrender value” seems tempting for the policyholder (UN).

The initiators like to defend themselves by saying that they would have commissioned the renowned law firm “Prof. Dr. mult.” after all – on closer examination, one wonders whether or what was actually commissioned and really examined. The gullible intermediary usually has the concept tested himself only after the public prosecutor’s office takes an interest in him and his business. The complaints against consultants, disappointed clients are rarely reported, and certainly not publicly.


Double liabilities of insurers

Where the BoD had already made a payment due to the void assignment of claims, this payment was made to the (collection) company without a licence (pursuant to § 10 RDG), but then without legal grounds. A fulfilment effect has not occurred with it. The policyholder could therefore again demand payment directly from the insurance company to himself, as the BGH rightly indicates. The double payment will often end up in court. The same applies if the claim is time-barred in the case of the “buyer of life insurance policies” simply by inactivity. The customer might file a complaint and then collect his money from the BoD himself.


Ineffective comprehensive brokerage

Such problems are also faced by “tariff change brokers” and other insurance intermediaries if their contract with the customer and/or power of attorney is too comprehensive – or, in the case of a mere tariff change, is simply null and void due to a violation of the Legal Services Act. In case of doubt, these transactions are then invalid, §§ 134, 139 BGB.

In the case of a change of tariff to emaciated private health insurance tariffs, the ineffective broker’s order means that the policyholder (VN) can therefore claim the benefits of the (terminated or higher-value changed) tariff, at any later date, because limitation periods only begin in each case from the time of the individual claim for benefits. The BoD has not demanded additional contributions for the part of the contributions that is statute-barred. The insurer would have to legally examine the powers of attorney of the broker customers, which are too extensive because they are inadmissible legal services, and reject them.


Refusal to perform by the BoD due to invalid brokerage authority

In the event of a claim, e.g. in the case of new (or extended) contracts, BoDs could also invoke the fact that such contracts – even entirely new ones – are null and void, thus refusing to pay benefits and only returning the unlawful premium components. This is usually considerably cheaper than, for example, paying the (null and void) agreed compensation payment in property insurance, a death benefit or an occupational disability pension. This is a steep draft for the BoD in the “strategic settlement of claims” – even if a broker “jumps over the blade” once again, who in his unfortunately now null and void power of attorney also “accidentally” provided illegal legal services and thus presumed too much.


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


by courtesy of (published in the Expert Report 03/2017, pages 58 and 59)

and (published on 10.04.2017)





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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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