Leeway in insurers’ policy conditions

Advice traps in occupational disability, basic disability and dread disease insurance – Part II

Many people who are unable to work do not have an insured illness

No insurer will want to pay an occupational disability pension just because the insured is unable to work. Nevertheless, some insured persons believe that they can obtain a benefit on the basis of some symptoms described to the doctor, which cannot be objectively verified by the doctor, simply because they subjectively feel that they are no longer able to perform. In order to put a stop to this, insurers restrict the concept of an insured illness in a variety of ways – e.g. by using formulations such as “generally medically recognised illness” or the express requirement of “objectifiability of the health impairment”. However, detectable organic changes are often not present at all. In addition, many conditions have not even reached the status of a recognised disease and cannot really be objectified, because they are based on unverifiable, subjective symptom descriptions – such as pain conditions – which cannot yet be assigned to a disease. They then fall, for example, under terms such as “syndrome” – expressing the fact that it is precisely not a recognized disease.

Leave due to sick leave

Subjectively, the insured person with “burn-out syndrome” is completely unable to work, but with a bit of luck he is not insured for this. If employees sometimes still made good experiences by the guidance of “illness celebration brochures”, rarely a embarrassment diagnosis, as for example the Vegetative Dystonie, is sufficient, if it concerns achievements of the insurers with (alleged) occupational disability. If necessary, some insurers also hire detectives to clarify the situation. Thus, probably every third claim ends up in court – and for the most part, nothing is paid.

Avoidance of disputes through obligations in the event of a claim

Either already according to the conditions or via an obligation in the application for benefits, the insurer can request a medical certificate.
about the alleged illness. This has the great advantage that the insured person can already recognise the hopelessness of his claim for benefits himself if his own doctor does not want to exceed the conditional threshold with regard to the diagnosis. The fact that the insurer itself does not then have to enter into a protracted benefit review helps the insured at least to the extent that he can save himself a lengthy dispute with the insurer. However, a liability claim against the broker is inevitable if the broker could have arranged a tariff under which the benefit would have been easier to obtain.

Dread disease: deceptive hope for a clear definition of benefits

In contrast, the advantage of dread disease insurance is that it includes very clear definitions of the insured diseases. The fact that this can avoid many disputes is already clear because, for example, the mental illnesses that lead particularly frequently to occupational disability – but also to disputes – are usually completely excluded. But on closer inspection, even the definitions of the otherwise insured diseases, initially regarded as clear and unambiguous, slip between the fingers, and all the more so the more differentiated they are and the closer one looks. This is an effect of the Heisenberg uncertainty principle for insurance conditions.

Clear benefit definitions in dread disease tend to be highly restrictive

That a restriction to “Surgical intervention on the thoracic or abdominal aorta due to a life-threatening vascular disease. Excluded are the insertion of minimally invasive stents and interventions on the lateral branches of the aorta” is already a severe restriction, which should be clear even to any medical layman. Only the most serious cases should be insured, the corpses on call, so to speak.

Or only seemingly clear

On the other hand, what is supposed to be a “claim for benefits for bypass surgery / angioplasty on the coronary arteries” is completely unclear on closer inspection. The medical layman will want to find out from the Internet and will then come to Wikipedia, medical encyclopedias, pages of heart clinics, among others. If you want to find out for fun whether the draining veins also belong to the coronary vessels (as the University Hospital of Heidelberg, among others, believes), you will find different information on this. When asking an insurer, it may depend on whether you ask the first or second time. The first time, the heart veins may not be coronary vessels, the second time – confronted with the opinions on the Internet – the insurer refuses to comment. One can then at best vaguely hope that he will at least take one side or the other in the event of a claim and not simply leave the clarification to the BGH.

Disagreement is inevitable

While the insurer will tend to choose an interpretation of its contractual clauses that is favourable to it, the courts will naturally interpret them to the detriment of the user in case of doubt. Insurers, however, not infrequently take legal action, also because a court can judge much better and in the last instance with binding effect what the insurer must have meant by its terms and conditions. Whether the broker is then also taken into the liability, depends of course also on which statements he has made during the mediation. Problematic if he only mistakenly thought he knew something at the time. Under no circumstances may the insurer rely on a non-binding “declaration of knowledge” as to what the insurer means by its clause. Typically, information provided by insurers to clarify clauses is not reflected in the policy or in a side letter. Thus, the insurer can later say that this has just not become part of the contract, or a non-binding (and unfortunately false) declaration of knowledge without any intention to bind.

Plagiarism without thinking

Do insurers occasionally act on the motto “Why think about what I mean when I read what I write?” In the best case, a medical layman with at best half knowledge has attempted to express his diffuse and in part misguided ideas in the insurance conditions within the framework of his weak means of expression. The result is then a purely random matter of luck, the interpretation of which is left to the skill of the subsequent benefits administrator and, in the event of a dispute, to the courts. It is, of course, hopeless to expect that the author of such conditions could still say what is meant. The broker is well advised to abandon any hope that he can obtain ultimate certainty as to the meaning of insurance terms. In practice, however, it is even worse: The insurer has simply copied the clause without deeper thought from another insurer, who also did not know any better, because the ghostwriter at the insurer was only a marketing expert. With a bit of additional luck, he then also changed a clause that was not understood in its meaning anyway, without knowing exactly what he was doing with it.

Broker liability for selection of conditions

Any broker who claims to know what is meant in the insurance terms and conditions is treading on a slippery slope fraught with liability. Insurance terms and conditions should be seen as an extremely poor indication of what the insurer might presumably have meant and – possibly deviating from this – how it will then also pay. Providing liability-proof advice is thus naturally problematic. The brokerage profession is by no means without its dangers – for it is quite possible to be confronted with untruths by customers, product partners and training managers, and thus to encounter signs of incompetence. It has not been uncommon for former detective superintendents to be particularly successful in the profession.

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

by courtesy of

www.experten.de (published in Expert Report 3/2011, pages 42-43)

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About the author

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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