By the judgement of 06.03.2015 the regional court (LG Mannheim, Az. 1 S 74/14) dismissed the claim of a net policy broker for his remuneration: “However, a reference in bold type on the pre-formulated remuneration agreement, according to which the insurance broker’s claim for remuneration arises with the conclusion of the insurance contract and the customer is obliged to pay the remuneration even in the event of premature termination of the insurance contract due to the legal independence of the remuneration agreement from the insurance contract, does not constitute sufficient information about the independent fate of both contracts.
Without documentation of the instruction no bold print in the form helps
The court argues that the broker must prove that he has informed the customer of the independent fate of the insurance contract on the one hand and the remuneration agreement on the other. The minutes did not contain any clear reference to this – the insurance broker had only brought the contract documents to the appointment on the day of signature. The lack of documentation is the best evidence of failure to provide information or instruction. The lack of documentation reverses the burden of proof – at the expense of the insurance broker, §§ 6, 60, 61 VVG. The Regional Court allowed the customer to offset damages for breach of the obligation to provide advice – in the amount of the brokerage fee, which was thus not (no longer) owed.
The brokerage fee is owed by the client as the principal to the broker in any case
In 2014, the book “Die Nettopolice” by Aline Icha was published by Verlag Versicherungswirtschaft as Volume 43 in , of the Berlin series (ISBN 978-3-89952-822-0). In it, the author explains the different types of brokerage fees, including the fact that these are always owed by the client, i.e. first of all the policyholder (UN), as is the case with real estate agents.
Except in the case of a net policy, the insurer always includes the remuneration of the intermediary in the premium. The customer then not only concludes an insurance policy with the insurer, but at the same time (implied, i.e. tacitly) concludes a contract in favour of third parties, i.e. in favour of the broker or agent, according to which the insurer uses the premium proportionately to pay the brokerage fee (owed by the customer, UN); analogous to §§ 354, 99 HGB, § 653 BGB (cf. BGH, judgement of 28.01.1993, Az I ZR 292/90). Reference is made in this technical book (also) for insurance brokers to the prevailing case law in this sense. Although the UN does not know the whole background, it is aware that it only escapes its own (implied) promise of brokerage fees by the BoD paying them – in case of doubt, the usual brokerage fee is deemed to have been agreed, so that the amount of this fee does not have to be negotiated or expressly agreed, but only the brokerage fee, § 653 BGB.
In the case of the Evidence Broker, the brokerage fee does not share the fate of the premium
Whether and what the broker receives, and when, depends on what the insurer (VR) or VN promises. This may not be a brokerage fee at all – alternatively a time fee from the UN, or brokerage only after 5 years of contributions have been paid, or depending on the fact that the broker’s portfolio does not decrease or even increase.
Even the mere proof can be sufficient if the broker allows himself to be promised a brokerage fee by the UN for the fact that he can prove that the private health insurance can change tariffs with savings without any restrictions on benefits (except for the deductible which was offset against the savings). This was then – provided these conditions were proven by expert opinions – also awarded to him in court, although the possible change in tariff did not take place at all. If the customer first goes to the proof broker, gets advice, and then to the cheap broker without advice, he will in case of doubt – as with the real estate agent – be allowed to pay twice. A brokerage fee commitment may then leave little room for trading practices.
Duty to act in the case of broker’s power of attorney beyond death?
If the brokerage agreement or the (transmorally designed) power of attorney continues to exist with the heirs beyond death in case of doubt, the broker may be required to quickly revoke a revocable subscription right (BR) of a life insurance policy with the board of directors in their interest, so that the estate remains as unencumbered as possible in the interest of the heirs, §§ 672, 1922 BGB. It becomes particularly tricky if the brokerage agreement continues to apply (§ 672 BGB) but the power of attorney is only valid during the lifetime of the person concerned and therefore the revocation of the BR is rejected by the BoD after he has not submitted a new power of attorney.
Perhaps up to more than 15 percent of the insurance brokers have any consulting documentation at all on the insurance policies they brokered – so the chances of wanting to prove to the heirs that the testator had irrevocably instructed the broker not to revoke the BR in the event of death are also poor. Perhaps the estate agent should have advised that this should have been additionally secured in the will if the BR were to continue to exist economically beyond death? Many a testator changes his BR more often in the manner of the Eumolpos in Croton, depending on who helps him more often personally by his presence to kill time in a wheelchair in a more entertaining way.
If the brokerage contract is designed as a permanent connection, the broker cannot terminate the contract in the event of death until the court has determined after months or years who has now become the heir. He can also not really return his broker’s power of attorney to anyone as long as this is not the case, § 175 BGB.
As an heir, you can come to a good brokerage contract without any action on your part and claim liability from the broker if he has not fulfilled his new obligations as a result of the inheritance. Insurance brokers with appropriate contract contents, sometimes recommended by specialist publishers or associations, are regularly not allowed to wait for instructions, but must take care of the new customer immediately. The bad news for the UN is to have to reckon with the fact that his subscription right, which may still be desired, will be revoked by the broker immediately after his death in order to prevent a liability for damages to the heirs.
Violation of brokerage obligations will later cost the broker the brokerage fee, § 654 BGB
The UN can demand the brokerage fee from the broker – despite original payment by the BoD. The prerequisite is a gross breach of fiduciary duty, regardless of whether there is also a claim for damages against the broker for breach(es) of the duty to advise. The simplest entry point is double brokerage, i.e. if the broker had committed himself to activities towards both parties when brokering real estate or insurance, which regularly leads to a conflict of interests contrary to the contract. This also applies to the brokerage of loans, financing of other types, and capital investments. However, only an effectively agreed waiver of consultation by the customer does not constitute forfeiture.
Sufficient can be however already the incorrect consultation or information (NJW-RR 97, 1278;86, 601), so with the net tariff broker. However, poor performance in itself is not a reason to reduce the brokerage fee, but only for rectification or compensation. For example, it would be contrary to duty to drive up prices – in order to receive a higher brokerage fee despite lower risk. Some brokers procure liability covers according to the motto “I spare myself the BGH-Sachwalter-Kernpflichten of the risk examination and object investigation”, to leave it to the customer by questionnaire “to mark the desired amount of cover”, in order to then add with the remark “for reasons of our business policy we do not give any information, disclosure and account what we have negotiated with insurers in your case”. If the documentation required by law since 22.05.2007 is still missing, it could become uncomfortable.
by Dr. Johannes Fiala and Dipl.-Math, Peter A. Schramm
with friendly permission of www.experten.de (published on 04.04.2016)
Our office in Munich
You will find our office at Fasolt-Strasse 7 in Munich, very close to Schloss Nymphenburg. Our team consists of highly motivated attorneys who are available for all the needs of our clients. In special cases, our law firm cooperates with selected experts to represent your interests in the best possible way.
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.
»More about Dr. Johannes Fiala
On these pages, Dr. Fiala provides information on current legal and economic topics as well as on current political changes that are of social and/or corporate relevance.
Arrange your personal appointment with us.
You are already receiving legal advice and would like a second opinion? In this case please contact Dr. Fiala directly via the following link.
The first telephone call about your request is free of charge.