Unconstitutionality of the offsetting of acquisition costs: The Federal Constitutional Court (BVerfG) determined in its decision of 15 February 2006 (Ref. 1 BvR 1317/96, NJW 2006 p. 1783 et seq.) on the calculation of the surrender value of a capital-forming life insurance policy in the event of premature termination that the offsetting of acquisition costs etc. by way of zillmerisation is unconstitutional.
The case: The constitutional complaint of a policyholder who had prematurely terminated his capital-forming life insurance policy taken out in 1990 in 1992 was successful, at least in essence. The policyholder initially paid in 16 instalments of DM 252.50 each (a total of DM 4,040), and after the contract was changed from August 1991 onwards he paid DM 17.80 per month. The retroactive remuneration after termination in May 1992 amounted to DM 559.30 plus DM 22.80 profit shares.
Prohibited zillmerisation: The basic structure of zillmerised premiums includes the fact that contract conclusion costs (in particular brokerage commission) are not invoiced separately. The basic structure of “zillmerised” premiums is that the costs of concluding the contract (in particular brokerage commission) are not invoiced separately, but are offset against the total premium payable. The premium amount is calculated in such a way that it remains the same over the entire term of the contract and that premium payments are first used to cover the acquisition costs.
Constitutional core: The policyholder must be able to recognise the amount of acquisition costs that may be offset against the premium. In the event of premature termination of the life insurance relationship, the policyholder must receive a refund the value of which is in reasonable proportion to the insurance premiums paid up to that point, even taking into account invoiced acquisition costs. If policyholders do not know the type and amount of the acquisition costs to be charged and the method of charging, it is impossible for them to make an independent decision as to whether they want to conclude a contract at the specific conditions.
Prohibited thwarting of capital formation: The objective of capital accumulation pursued by the conclusion of an insurance contract may not be partially frustrated by the fact that high acquisition costs, the concrete calculation of which is not known to the policyholders and the amount of which cannot be influenced by them, can be offset against the premium in the first few years in such a way that the surrender value during this period is disproportionately low or even tends towards zero.
Consequences for contracts already settled and contracts to be settled in the future: Insofar as contracts have already been settled, a new settlement and subsequent payment can be demanded from the insurer. The involvement of an insurance mathematician (actuary) or an insurance consultant is often economically sensible for the verification of the settlement. In the opinion of consumer protectionists, the decision of the Federal Constitutional Court extends the applicability of the BGH rulings of 12.10.2005, both to cases where the contract was concluded before 1994 and to those where the contract was terminated after 2001. There are also different opinions on the limitation period for corresponding payment claims. The view most favourable to the insurance customer is that only those payment claims of which the customer has knowledge can be time-barred. Accordingly, the statute of limitations should not begin to run before the customer has knowledge of the claims through a new invoice or, for example, through the calculation of an appointed actuary.
Valuation of a life insurance policy as collateral for a loan: Here, it is now not only the surrender value table that is decisive, but also the possibly higher value calculated from just under half of the premiums paid by the policyholder.
Consequences of the decision: Although the Federal Court of Justice (BGH), in its ruling of 12 October 2005, had set limits on the waiver of acquisition costs in the event of premature termination of the contract by way of supplementary interpretation of the contract, the legislator is still required to do so. However, the decision of the Constitutional Court can be understood as an indication that the provisional regulation by the BGH will generally also be applicable to contracts concluded longer ago. The Federal Constitutional Court had already instructed the legislature to introduce a new law by 31 December. 2007 to establish a regulation of the law on life insurance that is compatible with fundamental rights. It is to be expected that the solution to be created by the legislator will also contain safeguards for greater transparency and have an impact on the charging and allocation of acquisition costs.
Johannes Fiala, lawyer (Munich), www.fiala.de
(BankPraktiker 11/2006, 516)
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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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