Private health insurers (PKV) cannot reduce the daily sickness allowance

How the Federal Court of Justice (BGH) has put an end to mass litigation –


The Federal Court of Justice (BGH) ruled (judgment of 06.07.2016, Case No. IV ZR 44/15) that a reduction of the daily sickness allowance as well as of the insurance premium pursuant to Section 4 IV of the Model Conditions for Daily Sickness Allowance Insurance (MB/KT) is invalid due to lack of transparency.


Frequent disputes with medium-sized companies and intermediaries

Self-employed persons, and the insurance agents or brokers who look after them, often experience a reduction in benefits in the event of illness and associated incapacity for work (AU) in their private daily sickness benefits insurance in line with their reduced income. The BGH has now ruled for the MB/KT 2009 that a reduction of the daily sickness allowance (KT) is out of the question due to the lack of transparency of the insurance conditions, § 307 I sentences 1 and 2 BGB.


Numerous points of dispute about the calculation of the amount of daily sickness benefits

There are regular problems with the self-employed over the reduction of the daily allowance in the event of an incapacity for work (rarely before), and brokers are very much involved in this. So because of dispute on how to calculate net income and what prior 12 month period to use for calculation. Moreover, it is questionable whether, in the case of self-employed persons, income should then be determined with or without depreciation or other operating costs.

In addition, the income may also have fallen, at best perhaps only due to illness, before the total AU then occurred. Self-employed persons also experience fluctuations in their income, which may only have led to a lower income by chance during the period in question. The invalidity of the clause elegantly resolves these disputes. In principle, employees are also affected, because the same invalid clause applied to them.


Questionable asymmetric adjustment clauses

The decision of the BGH also affects the issue of asymmetrical adjustment clauses, in that the court reaffirms its assessment of their invalidity. For example, there are often so-called 5%-can-adjust-premium clauses in private health insurance. The BGH tends to consider such clauses invalid, for example, in the case of gas price adjustments and interest rate adjustments – thus the premium adjustment made on the basis of the clause is invalid.


According to its wording, § 4 IV MB/KT permitted the unilateral reduction of the daily sickness allowance by the insurer for the future even in the case of incapacity for work which was still ongoing – even down to zero due to the fact that the income of self-employed persons often fell over time. Due to the unclear regulation, the insured can hardly recognize the expected benefits of the insurer. It is also unclear what the PKV understands by “(net) income”, i.e. how it would be calculated and which reference date is decisive as the assessment date.


Strategic premium maximisation and claims settlement by the insurer

Such court decisions are along the lines of insurers having courts explain to them how their policy terms are to be understood. It is also detrimental, for example, if the insurer initially accepts excessively high daily sickness benefit cover with a correspondingly high premium – despite an income that has already fallen in healthy days. In the event of a claim, it is sometimes not only the case that the insured person first has to wait many weeks for payment of the daily allowance because the doctor’s certificate of incapacity for work in no way proves that the insured person is on sick leave. Some self-employed persons receive a home visit from the PKV in order to check whether they are not actually working – for example, for only a few minutes – which then eliminates the entitlement to KT (on a daily basis).


If, in the case of a prolonged incapacity to work, the doctor is unable to state when this is likely to end, the PKV is happy to assume occupational incapacity – this means that the daily sickness allowance insurance ends immediately (§ 15 MB/KT).


Additional claims up to more than 5-digit amounts possible

If the daily sickness allowance was reduced at some point in the past due to the ineffective reduction clause, the policyholder can now demand a retroactive reinstatement and claim the underpaid daily sickness allowance up to the limitation limit. The contributions must then also be paid in arrears – but only insofar as they are not yet time-barred. The claim is based on the originally insured sum, because the amount of an actual loss of earnings is not relevant for a sum insurance like the KTG instead of a damage insurance.


Reductions often miscalculated

If the daily sickness allowance has been compulsorily reduced since 1995 as a result of a comparable clause, the new premium has also very often been calculated to the disadvantage of the policyholder. Quite often the ageing provision was also reduced, although it has to be fully taken into account according to section 13 II of the Calculation Regulation if the reduction was not voluntary. The inadmissible reduction is easily recognizable – exceptionally without an actuarial expert – by the fact that the premium for a longer insured person was only reduced in approximately the same proportion as the daily sickness allowance. If the ageing provision were fully taken into account as required by law, however, the premium would have to decrease relatively more than the daily sickness allowance. Insured persons can then still demand a corresponding reduction of the premium and repayment of the premium overpayments not yet time-barred.


by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm

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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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