occupational pension schemes: gaps in insurance cover for intermediaries, initiators and trustees

By Ralf W. Barth, Property Damage Liability Broker (www.rwbfinanz. de) and Johannes Fiala, lawyer (www.fiala.de)
Practical gaps in the intermediary’s VSH protection:
A short story starts with the statement of an insurer that only the advice of the employer in the occupational pension scheme is insured in the scope of coverage ? but not the provision of advice to employees. The insurer’s offer is: Just take out an additional VSH policy for management consultancy, then employee consultancy is also covered.
The offer seemed tempting ? But then came the further question: Does the intermediary then also have protection with regard to product advice and resulting damages? The answer was: No, because the management consultant policy only covers fee-based consulting but not brokerage.
The solution was, as so often, a very practical approach: the insurer was informed that it was agreed with the employees that they should only sue the employer in the event of a claim (since the intermediary was classified by the insurer as an agent or vicarious agent of the employer). The employer can then in turn sue the intermediary ? and thus there is no need for an additional policy, because now again the insurer has to provide coverage.
Based on these discussions and after some consultation time, the insurer eventually included employee counseling in its VSH terms and conditions.
VSH gaps by concepts and products:
Intermediaries must also note that not all forms of BAV are automatically insured in every VSH policy. VSH offers and VSH policies must be reviewed, especially with regard to special solutions such as lump-sum U-funds, pension allowances and also time value accounts. A professional VSH insurance broker will specifically ask about these things with risk assessment forms and in personal conversations with agents. By the way, not all products are insured in the various VSH offers of different providers ? Examples of common exclusions include hedge funds, leverage transactions, participation rights, and often entrepreneurial investments.
VSH Gaps at Initiator:
Some initiators declare that they are well insured and may even exempt the intermediaries from liability to a certain extent. Without a disclosure of the current VSH policy and confirmed payment to the insurer (e.g., on your own website), this assurance may be deceptive.
This is also likely to play a role if the concepts are offered without a so-called IDW-S4-WPG expert opinion. Heinz Gerlach informs on the increased clearing-up and examination obligations of the mediator on its CDROM and/or in the Internet underwww.direkteranlegerschutz.de by a comprehensive collection of judgements.
VSH gaps at the trustee:
Now one might think that honorary professionals ? like tax consultants and lawyers ? are always fully covered by VSH insurance. But even these appearances can be deceptive, especially if the aforementioned group takes on additional fiduciary duties.
In the case of occupational pension schemes or the processing of time value accounts, this regularly involves so-called “managing trusteeship”. This is regularly not covered by the VSH insurance protection. If the honorary professional (if he is aware of the gap at all!) inquires at the insurer, he will answer “we refer to the above mentioned inquiry and inform you that the activities listed there are not covered by the pecuniary loss liability insurance. Insurance protection can be offered for this within the scope of a so-called object cover. For a more precise risk assessment, we require the completed risk questionnaire enclosed as an attachment to be returned to us, together with meaningful information and documents relating to the risk. ??
Uninsurable VSH gap:
Whenever a contract or activity violates penal laws, there is almost never insurance coverage by condition. VSH cover is not usually available for such cases either.
An example from Phantasialand:
Professor Listig registers a business as an initiator and designs a working time account model. A first trust agreement is concluded ? so that the intermediaries get their money ?safely? As a trustee a tax adviser is assigned. The Clou with this construction is not only that the tax counsellor has naturally only its ?normal? VSH, thus without insurance protection. VSH has, thus without insurance protection as trustee works. In recent years, the Federal Supreme Court has repeatedly had the opportunity (among other things, in connection with the purchase of junk real estate) to state that certain fiduciary activities of tax advisors regularly violate the Legal Advice Act, insofar as § 57 III StBG does not intervene. Thus, the ?safe? Thus, in case of doubt, the “safe” trust agreement is null and void and therefore not insurable.
The conclusion is that there are numerous risks that are not automatically covered by VSH. Agents working on such special cases as time value accounts would do well to have the attorney or tax advisor acting as trustee show them proof of VSH.

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About the author

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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