The Higher Regional Court of Cologne (OLG Köln, judgement of 02.09.2016, file no. 20 U 201/15) forbade a life insurer to charge Riester customers double acquisition costs – once costs with a maximum rate of 2.5 percent (previously 4.0 percent) of the premium volume spread over five years, and in addition further costs over the entire term. Double acquisition costs in life insurance and pension insurance are therefore illegal in the first 5 years of the contract.
Decades of practice lead to the claim for new billing
In the 2015 publication of an insurance association, the actuary Kleinlein found acquisition costs of 7.2 billion euros, which would correspond to 4.9 percent of the contractual premium sum – however, according to the maximum rate of interest it should have been only 2.5 percent (since 2015). According to the report, insurers would thus have calculated up to more than 3 billion euros too much and in their own favour by 2015 alone. However, the association would still like to charge distribution costs in this case – and believes that only the one-off acquisition costs have been limited, but that ongoing acquisition costs of any amount could be charged to customers additionally.
OLG Cologne corrects the calculation methods of life insurance
The OLG Cologne also knows no limit for the amount of the continuously charged acquisition costs. However, it does not permit this in the first 5 years of the contract, so that the surrender values of those cancelling early are only burdened by the acquisition costs spread over 5 years up to the statutory maximum limit of the zillmerisation. This is what the legislator had wanted to do to protect the insured from a loss of assets in the first 5 years. From the 6th year until the end, life insurers can then charge as many acquisition costs as they wish. Hardly an actuary has ever seen this as the judge now tells him.
Customer deception with up to more than 15 million Riester contracts?
Intermediaries, especially insurance brokers, are usually liable in addition to the insurer if they did not properly educate, inform and advise the customer – including the documentation that the customer must have received before the contract was concluded. Paragraphs 60 et seq. of the German Insurance Contract Act (VVG) provide for this. The Federal Minister of Justice had already had the practice scientifically examined years ago: In up to more than 85 percent of cases, consultations were not even documented, so that higher courts have since then mostly reversed the burden of proof in the case of incorrect consultation.
In case of doubt, the burden of proof lies with the broker (BGH, judgement of 10.03.2016, file no. I ZR 147/14), who can hardly prove his comprehensive advice in individual cases by using the usual forms from the insurance sales and brokerage. If the mediation was carried out by an agent, the agent is also liable from his office, § 63 VVG.
Customers must be informed, for example, about the limited inheritability, the fact that this may be offset in full against the basic provision and that only full premium payment – often in different amounts per calendar year – leads to the full Riester bonus. Anyone who, from 2030 onwards, falls under the then up to more than 52 percent of new pensioners with the right to top-up payments under the basic provision can look back and see his Riester savings benefit as economically viable and even as a total loss. Perhaps you are not among the top earners with up to more than 10 years of additional life expectancy and would have been better off with a savings and payout plan? Or a return was simulated by allowances that remain with the insurer with only average life expectancy or subsidise the pensions of higher earners – as a mortality gain. And finally, could the customer argue that he was not informed about the unethical investment (e.g. in climate sinners, arms manufacturers, profit from child labour or human rights violations – Der Spiegel, 47/2016, p. 78 f.) of some providers or investment funds?
Any type of life insurance can be affected
A distribution of the acquisition costs exceeding the maximum rate over the entire term and from the outset occurs with many Riester contracts from a wide variety of providers. It can be seen from the argumentation of the OLG Cologne that in comparable circumstances not only this one insurer would be affected. If life insurers in run-off cannot rely on this form of two-part distribution of acquisition costs, this ultimately means that they must pay out higher surrender values at least in the first five years. If the life insurance contract is in force for less than five years, the customer credit balance will be proportionally higher in the case of new settlements.
However, it even emerges from the argumentation of the Higher Regional Court of Cologne regarding the actuarial reserve regulation and § 169 of the Insurance Contract Act (VVG) that life insurance as a whole is affected by this problem beyond Riester. Customers of such terminated life and annuity insurance policies would thus have the possibility, with reference to the judgment of the Cologne Higher Regional Court, to demand from the insurer a new calculation of the surrender value and payment of the inadmissibly additionally deducted acquisition costs.
Certification by the Federal Financial Supervisory Authority (BaFin)?
However, one might also ask what is actually examined by the German financial supervisory authority BaFin if Riester pension insurance policies are certified by it? Is it incomprehensible when the BaFin complains about excessive acquisition costs on the one hand, but on the other hand, despite the calculation method for Riester pension insurance policies now prohibited by the Cologne Higher Regional Court, grants certification without further ado? Not everything that BaFin permits or even expressly requires is legally permissible. However, if there is no supreme court ruling, BaFin has no means of refusing certification.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.versicherungsbote.de (published on 06.02.2017)
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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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