Why insurers are not advocates for their clients?

Bavarian solution for business closures (BSV) of innkeepers is mostly unappealable

“Panic Professor: the virus needs a host. So let’s close down all the economies: Basta!”

“One person – one problem! No man – no problem!” (Stalin)


Settlement with insurer (VR) on business closure insurance (BSV) invalid?

A prestigious insurance law firm and a professional professor opined 03/2021:

“The VR acts in breach of trust if it exploits its superior knowledge of the facts and the law to the disadvantage of the policyholder (BGH v. 07.02.2007 – IV ZR 244/03).

Consequently, the BoD is acting in bad faith if it does not point out the completely unclear legal situation and the disputed points with regard to coverage in the case of a BSV. So also LG Flensburg v. 17.12.2008 – 4 O 143/20Rn. 15

Merchants did point out that, in their opinion, there was no insurance cover for several reasons.

However, they did not point out that this finding was by no means objectively established.

In other words, they gave policyholders the impression that there was objectively no insurance cover, even though they knew full well that this question had not been and still had not been definitively clarified either in case law or in the literature.

It would have been in the best interest of the customers to offer them a genuine goodwill payment rather than a settlement.

The insurance companies would have acted in the best possible interest if they had paid 15% without any ifs and buts and given the customers the opportunity to enforce a higher payment in the context of legal disputes.

In the case of faulty advice, compensation for damages arises in accordance with § 6 para. 5 VVG. In the event of defective cooperation in the processing of the claim – as here – the

Claim for damages from § 280 para. 1 BGB. There is also a lack of fault on the part of the broker, who in any case cannot be wiser than the cumulative competence of the state government and the associations involved”.





https://kanzlei-michaelis.de/wp-content/uploads/2021/03/2021_Kanzlei_Michaelis_LIVE_zur_Bayerischen_Loesung_mit_Pro f_Schwintowski_2.03.2021-Final.pdf.


Comparisons with VR of a BSV are usually not contestable

If a VR submits a settlement proposal – without advising the policyholder himself and without “influencing the actual processing of the claim” – corresponding (settlement) contracts are regularly not contestable. In economic life, as a rule, everyone is allowed to express his own legal opinion, without any indication that the truth or legal reality can also be seen differently. The insurer is also in its camp, not the individual policyholder’s.

The VR’s best interest action is overstated here. This could be seen “collectively”, in the sense of the insurance community – to benefit individuals by making the others who arrive too late bear the disadvantages is certainly not what is meant.

It is generally clear to every insured person that if he has doubts because he cannot judge the question himself, as is the case here, he will ask a lawyer – and surely he would have noticed that the matter can also be seen differently?

In practice, attorneys and brokers already have to call in appraisers or expert witnesses to determine the amount of damages – settlements with VR flying blind just destroy the advisor.


Recognizability of a legal position when “settlement” rather than “goodwill” was offered

The very fact that no goodwill was offered here, but rather a settlement, should actually make this apparent to everyone.

However, brokers could be liable if they themselves have adopted this unchecked.

At the very least, however, it would have been obvious to hold the insurer to account by requiring him to provide genuine advice, which he is legally obliged to do if the broker is unable to do so, including documentation. In that case, the BoD would be liable for misadvice. Or the broker should have referred to the use of a lawyer (RA). If he has omitted to do so, he is liable for this reason alone. No broker will be able to retreat to the fact that he is not smarter than the insurer, and therefore may believe this everything first of all.

That a goodwill payment rather than a settlement payment would have been better for the CC is admittedly clear. However, VR cannot be forced to make a goodwill payment with the subsequent risk of litigation if they do not want to do so and prefer to offer a final settlement. If a goodwill payment is therefore not possible, then of course it cannot be considered as “acting in the best interests” of the insured.


The advice of the broker without documentation leads to his disadvantage up to the reversal of the burden of proof

The BGH (BGH, judgment of 05.06.2014, III ZR 557/13) requires insurance intermediaries of all kinds to document their consultations – failing which the burden of proof is reversed. When you refer to supposed government experts (as we know there is no qualification to become a politician, you don’t even have to have been a kitchen maid before) this is ineffectual. Some political solutions are compromises to avoid litigation with uncertain outcomes. So everyone gets something quickly, instead of much later in the end some get more and some get nothing – this shows political competence. A legal examination of the individual case is not involved at all – and is also not attempted by the insurer when he offers this compromise.


Rare recognition by the VR of the need to advise the policyholder

Moreover, the BoD probably did not have to recognize that the contracting officer needed advice – not in the case of broker clients anyway. And in the case of others, the requested advice might have consisted of asking an attorney in case of doubt – but anyone could have come up with this idea on their own without this advice. Which then shows that such a need for advice “unasked” is not exactly imposing itself on the BoD.

That VR may only represent a legal claim if they point out that it could be otherwise appears to be an illusion. Even the Ombudsman once said, when reproached for representing legal views as established which some Higher Regional Courts see differently, that as long as the Federal Supreme Court has not ruled on the matter, he would not tell the policyholder that it could also be seen differently and thus tempt him into dubious litigation. And he meant this in the best interest of those insured.


Settlement agreement for economic reasons?

And that’s how some brokers saw it too: Better to get the 15% right away (i.e. accept the settlement offer) than to get nothing or only very uncertainly maybe more after a long expensive process. The brokers were aware – also demonstrably – that the question of the obligation to pay benefits could also be decided differently, from the beginning of the “Bavarian solution”. If the professor thinks they relied on the superior knowledge of the state government and associations, that is simply a distortion of the facts – they were far better informed, and may be liable as a result (I wonder if there is a consultation protocol on this?).

But not if, in the end, for purely economic reasons, they have nevertheless advised the 15% as a bird in the hand instead of a pigeon on the roof. In any event, they were unable to assess the prospects of success in the individual case. However, it was clear that the insured person would not receive anything for years and would have to advance the costs of the proceedings.

Looking at the regulatory behavior, the manager may still face personal liability in bankruptcy for years to come, one way or another. The future insolvency administrator will say, for example, that risk management was deficient – pandemic plans had been publicly known for up to more than 10 years, and how governments then had to deal with them in concrete terms.


Questionable negation of a broker’s liability?

If, in addition, an attorney here invites brokers who may be liable to bring him clients and has them explain that they are not liable, that is questionable. He’ll spare her then, despite the likelihood of success? Or maybe not after the broker brought them their own litigant? The introduction of clients by (co-)guilty parties has a tradition, in a few law firms, and sometimes with the agreement of a non-aggression pact – then it is a so-called collision.


Open outcome of lawsuits against the BSV-VR ?

After the conclusion of a settlement agreement, often with the assistance of a lawyer, the door is closed for the time being. It would then be obvious to check whether one’s own advisors – lawyers or brokers – had previously provided correct information. The American talks about BATNA and WATMA, that is, the best and worst case of how the matter could turn out in court.

In 2020, a law firm for insurance law, which traditionally only represents VR, also attracted attention by claiming against the insured that the order to close the company was unlawful or (unconstitutional or) null and void.

This point of view is officially held by slightly more than one per thousand of the professional lawyers – an argument that is worth listening to. If this legal opinion is correct, no one would have had to close their hotel and inn. Even for an “only cancelled but not forbidden Oktoberfest” there would be no compensation from the VR.

There is no reason to let any BSV-VR “bleed” for the fact that affected persons shy away from taking legal action; if necessary with the support of whatever allies? Even Lieschen Müller in Bavaria has successfully asserted within a few days at the administrative court that the restriction of her liberties is unlawful – except for hospital visits and restaurant closures, because here she could not prove any legal interest, because she was neither a restaurant owner, nor wanted to visit someone in the hospital.


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


by courtesy of

www.adeba.de (published on 14.03.2021)

Link: https://magazin.adeba.de/versicherer-keine-anwalte-ihrer-kunden/


www.architekturenexklusiv-premium.de(published 10/03/2021)

Link: https://architekturexklusiv-premium.de/warum-versicherer-keine-anwaelte-ihrer-kunden-sind/


www.kulturexpress.de (published 11.03.2021)



www.submission.de (published in SubmissionsAnzeiger, No. 55 of 19.03.2021)


www.nfh-online.de (published in Nfh New Facts hotelintern, 03/21 of 19.03.2021)


www.handwerke.de (published in Computers in the Trades, April 2021 issue, page 5-7.

Link: CIH_04-21.pdf (handwerke.de)


www.experten.de (published in ExpertenReport 04_2021; page 52 – 55)

Link: expertenReport 04/21 | experten Report


www.hm-infinity.de (published in Infinity magazine, March 2021, pages 14-15, under the headline: Bavarian Solution to Business Closures (BSV) of Innkeepers Is Mostly Unappealable).











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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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