The Higher Regional Court (OLG) of Oldenburg decided in its ruling of 19.12.2013 (Case No. 1 U 67/13) that an insurer (VR) cannot invoke the statute of limitations after years in the case of long-term claims if it had previously given a qualified acknowledgement.
Statute of limitations regularly after three years at the end of the year
As long as the policyholder (UN) corresponds with the BoD regarding the settlement of claims, the limitation period is suspended at best, which is equivalent to stopping a clock. However, the insurer had also stated: “As regards the explanations requested by you concerning the material and non-material damage suffered by your client, we acknowledge this, and this acknowledgement has the effect of a declaratory judgment”. This is not a simple acknowledgement. After the insurer unjustly refused its benefits after 13 years because of the statute of limitations, the UN’s action for a declaratory judgment was successful simply because of the qualified acknowledgement.
Decisive content of the acknowledgement
Under no circumstances should the policyholder be satisfied with a simple acknowledgement in the event of a claim. In addition, the content should not be limited to the insured benefit. Otherwise, cost increases and inflation would put you in danger of the service being increasingly devalued. It is better to oblige the liable party itself and not only its insurer. The insured person is liable for an unlimited period of time, so that a promise only by the insurer to provide only the benefits agreed between the policyholder and the insurer is not equivalent.
Furthermore, the insurer could become insolvent: Provisions must be made for future losses, but inflation must not be taken into account for tax purposes, and the discount rate that would have to be earned on the provisions also leads to shortfalls in the case of low interest rates. In view of the high risks often assumed by property insurers, insolvency is even more likely than with health or life insurers – and there is no catch-all solution of the kind found there.
Only in the case of pension obligations is there a separate cover pool, but even this may not be sufficient due to a lack of actual interest and inflation, even if it is separated in insolvency. For example, if pensions are intended to compensate for a loss of income or expenditure on long-term care, they would have to increase over the years, and this may not be adequately reflected in the provisions. The policyholder causing the damage will then have to check whether his insurer is obliged to indemnify him and, for example, must provide suitable security for this purpose, which may have to be increased later.
the need for acknowledgement by the injuring party and his insurer
Therefore, one should demand an unlimited obligation from the insurer as in the case of a declaratory judgment against the injuring party itself, not only up to the sum insured. If the latter refuses, one should, simply because of the risk of insolvency, or rather on the grounds that one has such an unlimited obligation, demand such an obligation from the injuring party himself in addition, with the threat of a declaratory action against him. The safest way to do this would be if the acknowledgement is made in notarial form and, in appropriate cases, at best with submission to execution, thus reversing the risk of litigation. With the acknowledgement, the limitation period begins anew. By appropriate form and appropriate content with a limitation period of later also up to more than 30 years.
Determination of damages, including permanent and consequential damages
For example, in the case of fire damage, occupational disability, water damage, private health insurance and liability claims, insurance brokers and consultants sometimes try to settle the claims of affected policyholders. While some brokers see this as a free service, the fee consultant may charge x times the usual fees. Time and again, missed deadlines lead to the loss of legal claims, or to the loss of evidence due to the passage of time.
This is the case, for example, if the insurer releases the place of loss according to his own findings. Such a release is in no way an acknowledgement that the insurer will provide. Neither the more or less accurate expert opinion of a claims adjuster of the BoD nor the private expert opinion without the involvement of a court will really help the policyholder in the best possible way. It would often be advisable to have an independent court procedure for taking evidence in good time, before the evidence is lost, for example through repair work.
Injured parties often want a high severance payment, while the insurer only wants to pay a pension and future obligations. It is precisely for this purpose that the demand for qualified acknowledgement is suitable for building up considerable pressure on the insurer and its policyholder with regard to a severance payment provision. The exact wording is important here, because, for example, “the statute of limitations” cannot be waived because this option is indispensably laid down by law. It is conceivable, however, to waive the raising of this objection.
Acknowledgement on the merits
Insofar as a causal damage – possibly only in the future – cannot yet be quantified, an acknowledgement is possible on the merits. Especially after accidents, it becomes important to have a medical examination before comparing oneself with an insurer out of court to see whether the case has healed, because otherwise one will have to bear later costs, for example of the social insurance carrier or one’s own private health insurance for rehabilitation or follow-up treatment, because according to the law or insurance conditions one must not cut off the possibilities of recourse by waiving oneself. With a bit of luck, the insurance broker or consultant who is always trying to be on the safe side.
In terms of content, the acknowledgement should also include the fact that it replaces a declaratory judgement. The corresponding findings on the case of damage can also be made, or reference can be made to a corresponding expert opinion as binding. Of course, such notarial acknowledgement as a replacement for a declaratory judgement can also, for example, regulate that the insurer cannot later invoke other objections that only come to his mind at some point on the basis of later findings, for example that he would not be obliged to pay on account of intent and the like. Ultimately, the insurer’s acknowledgement must bear as much responsibility as an acknowledgement by the policyholder causing the damage.
Risk of recourse with insurance brokers and insurance consultants
The fear of mistakes in the settlement of claims is apparently quite common among insurance consultants and brokers, so that they like to use freelance lawyers at their own expense. The latter come into collision at the latest when they then have themselves appointed and mandated by the policyholder with a power of attorney because they then want to serve two masters at the same time. In case of doubt, the contracts are thus null and void and there is then no longer a claim to remuneration.
Some commercial and industrial brokers came up with the idea of selling their claims to insurance consultants, similar to a tipster. As soon as the insurance consultant then pays the tip commission, the insurance agent or broker is a kick-back, which he would have to settle and hand over to the customer in full without being asked, §§ 675, 667 BGB.
Extent of liability with the insurance broker and insurance consultant
The majority of agents or consultants maintain at best a statutory minimum cover in their liability insurance for a good one million euros. In the case of liability risks, already through the recommendation of an insurance consultant or broker or own efforts to settle the claim, this can often only cover a fraction of the responsibility. At the insurance broker, the liability insurer would find that the settlement of claims was not even in his policy and therefore might not be insured at all.
For accident victims, for example, the aim of claims settlement could be to encourage the insurer’s willingness to pay a high indemnity instead of dragging a claim forward for decades, with the risk that the policyholder will continue to pay after the insurer.
As an example from an actuarial loss report, the following result for illustration purposes: The result is a capitalised present value of the lifelong lost net income in the amount of EUR 2,215,476 as of 01.03.2014.
For the total nursing care costs, the capitalized present value of the lifelong nursing care costs (personal plus material costs) amounts to EUR 2,460,260 as of March 1, 2014. This amount can increase to up to approx. EUR 4,689,280 if the above comments on increased maintenance expenditure of up to approx. 12 hours per day are followed in total.
It will hardly be possible to determine this without fully qualified lawyers and actuarial experts, especially since in many cases there are also ancillary claims which are to be found in the insurance conditions or in the law, but which merchants like to overlook out of ignorance. The settlement of claims does not only become complex if a participant or insurer becomes insolvent, but already by the different situations of a legal subrogation, so that an acknowledgement cannot be fully enforced without further ado, if the claim for reimbursement is legally already in the hands of a health or care insurance.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.experten.de (published on 18.11.2015)
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About the author
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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