29.08.2007 12:33:05 (PA) With every second life insurance customer claim for damages possible – new billion liability for the insurance industry ? * Capital life insurance – legal fraud ?: Already since the judgement of 03.06.1983 (Az. 74 O 47/83) of the regional court Hamburg the evaluation of the capital life insurance was judicially blessed as “legal fraud”. Professor Michael Adams (Univ. Cologne) followed up in 1997 with his essay “Die Kapitallebensversicherung als Anlegerschädigung. Insurance intermediary liability according to the principles of the BOND judgement: Another five years later, a dissertation proved that also in the case of life insurance as an investment, the intermediary must observe the BOND ruling (Ref. XI ZR 12/93) of the BGH on the obligation to advise investors and the object. After only approximately each fourth long-term life insurance contract was kept up to the end by the investor, the suspicion was close, which was mediated to capital investors massively not suitable contracts. New power word of the Federal High Court! This takes up the BGH in its new decision (judgement of 14.06.2007 (Az. III ZR 269/06) contentwise, in which it refers to the fact that an insurance broker is obligated to the payment of damages, if it mediates a life insurance to a customer, who did not correspond “to its need and its financial ability”. If the “savings contract” in the form of a life insurance policy runs for only one year, the investor does not even get back two percent of his payments on average, according to a study by Prof. Adams – a negative return of over 98%. Damages rarely barred by the statute of limitations? While numerous customers hope for a new account with terminated life insurances, with on the average only comparatively minimum additional payments from contract-legal requirements against the insurer, the weightier requirement lies within the range of the wrong consultation: Investors can require here apart from the paid in contributions also an or-dentliche capital market interest as escaped profit. Still investors have the possibility of demanding the payment of damages from requirements of the last 30 years: Because after since 1.1.2002 valid Verj?hrungsregeln mediators are responsible (calculated starting from 1.1.2002) for at the longest still 10 years. This does not only include contracts where it was questionable from the outset whether the customer would be able to pay the fixed premiums at all in the long term. Often a shorter contract term (12 to 15 years instead of 25 to 40 years) would have been less disadvantageous for the customer in case of early termination, whereas the long term would not have brought any advantages even if the customer had held out until the end. It is not uncommon for insurers to present their customers with “non-binding sample calculations” showing high returns when they conclude a contract – several rulings or notices from the supervisory authority and statements from rating firms show that such forecasts have sometimes shown unrealistically high returns, maturity benefits, lump-sum settlements or annuity payments on an erroneous basis. According to some rulings, this can lead to the insurer not being allowed to reduce the surpluses later (claim for fulfilment) or to the contract having to be reversed with repayment of premiums including interest. Or a wrong yield was indicated, because it was not related to the paid-in premiums, but only to the savings portion after costs and risk contributions – often then still to the confusion as “net” yield designated. Annuity policies were not infrequently sold as return products, especially if their lump-sum payment was increased due to a lack of death benefits. The fact that the “return” came partly from the “bet” on survival and was paid for by the fact that there was no benefit at all in the event of death was then concealed in the advice given. Conversely, policies often contain unnecessarily high risk protection, which further reduces the return. Allegedly, the customer did not want an investment, but a risk protection. Popular to the commission maximization and by the high conclusion costs and risk contributions particularly disadvantageous are also the so-called Methusalem policies with premium payment durations up to age 85. In example calculations then in prospect was placed that in the age 60 to 65 over the achievement without deductions can be disposed, because then cover capital and surplus together reach the insured sum. The risk of decreasing surpluses and the ever increasing (up to age 75!) postponement of payments to retirement age was usually not explained. What is to be done? So that the customer knows which kind of contract – with costs, risk contributions, surplus model and other actuarial “conditions” – he has concluded, an actuarial appraisal should first be carried out. This will reveal the discrepancies with the client’s original “needs”, i.e. the extent to which the advice given was not in line with the client’s needs. At the same time, the damage can be determined actuarially – as the difference to the result when taking out a product that meets the customer’s needs – if not the complete cancellation of the contract with repayment of all premiums plus interest is more sensible. This requires – also because of the question of the Verjährung – and also because of the legal chances of success of an examination by a lawyer experienced thereby. Side effect of this examination: not at all so rare errors with the computation of surplus, expiration achievements, surrender values or earlier contract changes become recognizable. *by Dr. Johannes Fiala, lawyer (Munich), MBA financial services (Univ. Wales), MM (Univ.), certified financial and investment advisor (A.F.A.), lecturer in civil and insurance law (Univ. of Cooperative Education), banker (https://www.fiala.de) and Dipl.-Math. Peter A. Schramm, expert for actuarial mathematics (Diethardt), actuary DAV, publicly appointed and sworn by the IHK Frankfurt am Main for actuarial mathematics in private health insurance (http://www.pkv-gutachter.de).
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PhD, MBA, MM
Dr. Johannes Fiala ist seit mehr als 25 Jahren als Jurist und Rechtsanwalt mit eigener Kanzlei in München tätig. Er beschäftigt sich unter anderem intensiv mit den Themen Immobilienwirtschaft, Finanzrecht sowie Steuer- und Versicherungsrecht. Die zahlreichen Stationen seines beruflichen Werdegangs ermöglichen es ihm, für seine Mandanten ganzheitlich beratend und im Streitfall juristisch tätig zu werden.
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