From the series of newsletters of the DHBW (Baden-Wuerttemberg Cooperative State University) Heidenheim on the topic “Mediation Law in Practice”:
At this point, lawyer Dr. Johannes Fiala, https://fiala4instalive.instawp.xyz, lecturer for insurance law at the DHBW Heidenheim, will answer your questions. Questions can be asked by emailing ott@dhbw-heidenheim.de.
In the case of tied sales – in former times one said agent, today representative – such a duty does not exist unless the “need for advice” more or less imposes itself.
It can be an advantage for customers to be advised by the “exclusivity”, because the mostly bonide insurer is liable for their mistakes. Whether the broker has a duty to review the risk on an ongoing basis depends on the specific agreements he has made with the client. Brokerage agreements distributed “as a model” by some brokerage associations hardly take this into account. The consequence is that, in case of doubt, the broker is liable for things that he is in fact unable to provide.
It is important for the broker to understand that his or her custodial liability is the practical maximum liability. The administrator is liable solely because he has his own interest (e.g. commission, fee) in the transaction. Appearing as a financial expert, financial professional or “financial broker” is particularly fraught with liability. Professional supervision and professional licensing also argue for personal liability. It follows from the case law of the Federal Court of Justice that liability towards an unlimited number of “third parties” exists, but is also unlimited in terms of amount. It follows from this that every insurance or financial broker must necessarily operate a quality and risk management system.
Whoever spares himself this effort can suddenly lose business and private assets. By the way: A “usual” VSH coverage is by no means sufficient to have the risks adequately insured. Good brokers know this because they are experts in insurable and, above all, uninsurable risks.
Dr. Johannes Fiala
(DHBW Newsletter 11/2009)
Courtesy of www.dhbw-heidenheim.de.
