The devil is in the details

Again and again, the topic of “stock security for pools” is questioned and initiated. “Ask three lawyers and you get three answers.” There are many points of view on the subject – in short, as with any contractual agreement, the devil is in the details and it all depends on the small print. The experten-netzwerk has asked Oliver Pradetto, managing director and limited partner of the broker pool blau direkt, for a statement.


Stock security means first of all security of subsequent brokerage. The Kiritkers focus primarily on the risk of pool insolvency. This is probably mainly due to the fact that this risk scares brokers the most. However, fear is not a good advisor, because those who act motivated by fear do not fly from Hamburg to Munich, but prefer to complete the route in their own car – a disastrous decision from a safety perspective.

The fact that the pool insolvency of all things is to be used as an example of the advantage of a direct agreement over pool management seems to me illogical and unfounded. This is for a simple reason: in the last ten years, only two pools have gone into insolvency, but more than 20 insurers have been placed under receivership during the same period due to economic difficulties.

While affected pool holdings could be easily retrieved by the broker himself upon presentation of the broker’s powers of attorney, direct holdings could often only be saved by the intervention of pools. So those who are seen as a danger by some critics, in reality saved a lot of brokerage stocks here. Pools organised the targeted new cover and quickly found a new risk carrier who assumed the risks for the customers at the same conditions. The power of the community is superior to that of the lone warrior.

So if you are afraid of losing your subsequent brokerage fees, you should not entrust them to a direct agreement, if only because of their statistical significance.


But what about the legal arguments?

Well, that depends on what is in the contracts and every pool knits them differently. A general statement is therefore hardly possible. However, the caution that has been called for is certainly appropriate here. Many pools not only maintain broker portfolios under their own links with the insurer, but also claim ownership of the managed portfolios under contract law. However, there are positive examples where pools offer brokers concrete guarantees and portfolio protection systems. These include Fondsfinanz and blau direkt, two pools with a market share of almost 50 percent *.

Lawyers of the industry such as Hans-Ludger Sandkühler, Prof. Dr. Helmut Schirmer and Norman Wirth have meanwhile examined the systems of the two protagonists and certify that they provide effective protection of the brokerage portfolio against insolvency. So it is naturally irritating when the Munich lawyer Dr. Johannes Fiala warns that corresponding safeguards under insolvency law are contestable.

However, anyone who follows the source references of the critic will quickly find out that contestability is only given if the security was established within a 3-month period prior to the insolvency (section 130 InsO). However, all guarantees currently given by pools and insurers are considerably older. Why the resourceful lawyer overlooked this fact remains a mystery.

It’s just a pity that this has once again fuelled the “phantom discussion” about threats to the existence of the company due to pool insolvencies, because elsewhere the subsequent brokerage fees are in serious danger – and these are almost completely overlooked by brokers in the public discussion.

If brokers lose subsequent commissions, in almost 95 percent of cases this is due to causes for which the broker himself is responsible. For example, 80 percent of all brokers in Germany are still sole proprietors. If they die or lose their registration or the ability to provide customer care as a result of occupational disability, need for care, financial difficulties or other causes, they immediately lose their entitlement to subsequent commissions, without the possibility of at least selling their own portfolio. While in the direct agreement everything is then gone, the pool can certainly conclude contracts with the broker who accepts his succession arrangements or passes on subsequent commissions. The pool is superior to any direct agreement in terms of its possibilities.

Whether it is a sale, a change of agent status (for example, taking over an exclusive agency), retirement: the pool makes it easier to secure the agent’s income.

Incidentally, this applies not only to lone wolves, but also to brokers, who have already solved some of the problems by founding a GmbH. Just one example: While the sale of a partial portfolio (e.g. when a partner leaves the company or the brokerage business is restructured) via the pool is to be presented without further ado, an insurer must insist on a new brokerage power of attorney from the buyer, unless the buyer wishes to make himself liable to prosecution (§203 StGB). This makes a sale considerably more difficult – almost impossible.

From a legal point of view, pools thus have considerably more possibilities to offer brokers security of existence than insurers regulated by the Insurance Contract Act, the Insurance Supervision Act and the Criminal Code have in direct agreements. However, just because the possibility exists does not mean that a pool actually provides such collateral. Whether the pool offers not only potential, but also actual security of existence, therefore depends on the contractual agreements which the broker concludes with the pool.

It’s worth reading carefully.


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


by courtesy of (published on 30.07.2015)



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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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