In the insurance industry, it’s not just products that have sounding titles, but also the people who sell them. They are called representatives, distributors, brokers or agents. What is behind these job titles has not always been clear to consumers until now. If you really wanted to be sure on whose account your counterpart was actually working and who was profiting from the conclusion of the contract, you either had to ask persistently – or trust blindly.
End of the identity crisis
Now all intermediaries must put their cards on the table from the very first contact with the customer and clearly indicate their status and their client. “What has been common practice in other sectors of the economy for a long time is now also finding its way into the insurance industry,” says lawyer Fiala happily. This transparency directly benefits the customers. “Anyone who knows they’re facing a BMW dealer won’t be surprised that the dealer won’t sell them a Fiat or VW, even though the latter might be the more sensible car. However, anyone who assumes that their car dealer has all brands on offer would rightly be dissatisfied with the advice given,” says expert Fiala. In order to prevent such scenarios from arising in the first place, intermediaries should in future analyse the wishes and needs of their customers in detail. They also have a duty to offer a “sufficient” number of different products to their customers. “Unfortunately, the legislature has refrained from defining what it considers sufficient,” complains expert Fiala. “It will therefore be for the courts to interpret the term accordingly.” Elsewhere, this saves the courts a lot of work – and the customers a lot of trouble. Insurance intermediaries must meticulously document their consultation and hand over to the customer a protocol specially prepared for them. The advantage for the customer: If his insurance agent has made a mistake, he has solid proof of the misinformation in his hands.
Burden of proof lies with the broker
“However, how detailed the protocols are in individual cases can still vary depending on the agent,” warns insurance expert Fiala. “Clearly at an advantage, therefore, is anyone who seeks advice from an insurance broker rather than a tied agent who only works for certain companies.” The reason: In this case, it is not the customer who has to prove that he was wrongly advised. Instead, the onus is on the broker. If he cannot prove that he did not make a mistake, he must compensate the customer.
Tip: The law allows insurance companies to agree with clients to waive the consultation protocol. No one should sign such a declaration, even if it is a supposedly standard product.
(Catrin Gesellensetter, focus.de (22.05.2007))
You can find the article on the focus.de website at: http://www.focus.de/finanzen/versicherungen/tid-5795/vermittlergesetz_aid_56976.html.
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About the author
PhD, MBA, MM
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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