Liability trap for insurance brokers

Private health insurance intermediaries must prepare themselves for the fact that a market shakeout is imminent. This adjustment ranges from the ageing and discontinuation of certain tariffs to the withdrawal of individual private health insurance companies from the market. It was not without reason that the PKV association denounced the economically expropriating effect of the current new legal situation before the reform of the statutory health insurance funds (GKV). Whoever wants to be in the basic tariff can be poached – without benefit restrictions and without risk surcharges. Anyone wishing to switch from statutory health insurance to private health insurance must now have an income above the assessment threshold for three years. For the changeover of existing customers from private health insurance to private health insurance, the legislator has set 1 July 2009 as the date for termination. The effective date of this termination is irrelevant. According to § 178 h (1) VVG, it can even be up to three years in the future. The law states: „If the private health insurance contract within the meaning of paragraph 5 was concluded before 1 January 2009, in the event of a change or termination of the contract, the conclusion of a contract in the basic tariff with one’s own or another insurance company may only be requested until 30 June 2009, taking along the ageing provisions in accordance with § 178 f para. 1. The request must already be accepted if, in the event of termination of a contract with another insurer, the termination has not yet taken effect in accordance with the first sentence of section 178 h(1).“
Bills of exchange and old stocks
The basis for this is § 178 a (7) No. 4 VVG and § 178 f (1) No. 2 a) VVG (for new business as of 2009, permanent as of 2009) as well as No. 2 b. Important: The ageing provision must be included. The new insurer must accept everyone – including sick people – on the basic tariff only. However, he is of course allowed to include anyone, especially healthy people, in any other rate. The last insurer must pass on the pro rata ageing provision at the level of the basic tariff. The new insurer receives this capital and uses it by insuring the transferor in the chosen new modern tariff with a discount corresponding to his pre-insurance period (transferred ageing reserve as real money in euros transferred from the old to the new insurer). Formally, § 178 f (1) 2 states. b) that the change for the „old portfolio“ must be made to the basic tariff if the notice of termination is given in the time window of the first half of 2009. But the new insurer can already offer the change from the basic tariff with further transfer of the ageing reserve to the modern target tariff which is actually interesting for healthy persons when the contract is concluded.
Existential danger for PKV insurers
The way via the basic tariff turns out to be a mere formality for the transfer of the ageing provision. Of course, no one can demand to be included in the modern target rate. However, this further exacerbates the problem that poaching health insurers will seek out the healthy ones. The sick people can stay with the old company or – which hardly brings them anything – change to the basic tariff. For the new insurer, it is therefore worthwhile without restriction to include healthy switchers in modern tariffs together with their ageing provision. It is not burdened again by the industry-wide risk equalisation because of the insurance of these good risks. The danger for the insurers results from the fact that the insured can take their ageing provisions (at the level of the basic tariff, and this is often the entire ageing provision) with them. In this case, up to more than 20 million euros would then flow from the previous insurer to the bank account of the new insurer for every 1,000 policyholders who switched. Some private health insurers have already indicated that they will be well prepared to hunt down all the healthy ones by the first half of 2009. The consequence would be significant cancellation losses in the annual financial statements. The insurer who has already suffered damage as a result will have to bear the entire overhead costs with its remaining insureds. If rating companies and insurance brokers are unable to answer the question of which companies could be affected by this and how, it will hardly be possible to meet the obligations of the trustees in private health insurance brokerage. The insured who did not change insurers in time may then only be left with the basic tariff with maximum premium guarantee and risk equalisation in the industry. In such cases, broker liability should be safe.
Premium increases foreseeable
Overall, higher private health insurance premiums are expected, in the double-digit percentage range. Experts expect that a premium adjustment could be avoided in the time window of the first six months of 2009, which means that legally the insured should then only have the option of ordinary termination. Targeted recruitment of healthy people is normal day-to-day business for a private health insurance company. The opportunity for brokers is to reassign dissatisfied customers with conversion in the first half of 2009 to other health insurance companies by giving notice without losing their ageing provision. However, anyone who covers a customer until then without informing him that he could lose his ageing provision if he does not wait until 1 January 2009 may be liable for damages. After 30 June 2009, hardly anyone from the old portfolios will change private health insurance companies. Those who wanted to do so already did so in the first half of 2009 because the ageing provision will not be added later. Only in the case of new insured persons as of 1 January 2009 must the ageing provisions be permanently included. Thus, further cancellation losses are then added. Unless the premiums of the old portfolios were to include the reduced lapse in good time. This would, however, have to lead to a considerable additional premium adjustment. Consequently, the private health insurance companies have an interest in concealing these facts for as long as possible. The intermediary or broker who is liable for incorrect advice may suffer the consequences later.
Peter A. Schramm and Johannes Fiala About the authors: Peter A. Schramm: Graduate mathematician, actuary DAV, expert for actuarial mathematics. Contact: Dr. Johannes Fiala: Lawyer in Munich, banker (IHK), certified financial and investment advisor (A.F.A.). Contact: info@fi
(PERFORMANCE 5/2007, 56)

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Dr. Johannes Fiala Dr. Johannes Fiala

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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