Insurance industry was already struggling
The German insurance industry was already struggling with a violent revocation wave in classic life insurance policies. Contracts concluded between 1994 and 2007 fell under the policy model. This meant that the policyholder, including the cancellation policy, only with the policy were sent to the policyholder. The revocation instructions were often inadequate, they could be contradicted even after years. It was not until the amendment of the Insurance Contract Act in 2008 that the policy model was replaced by the application model. Since then, the policyholder has already received the revocation instruction with application.
The Federal Court of Justice complied with the complaints of the Zentrale Hamburge for full reimbursement of the contributions less the risk capital in the event of an objection. For policyholders, this was a significantly cheaper option than contract termination. So far, however, the issue only extended to so-called endowment policies. Fund policies were until then not affected by the revocation issue.
Distribution of policy types from classic and unit-linked solutions:
This has changed now. In 2015, the GHB had still decided that any loss from the investment in funds should also be borne by the policyholder even in the event of a revocation. Now, however, the Higher Regional Court of bolonge has passed a judgment, which could force the Federal Court of Justice as a review instance once again to reconsider its original verdict. In the recent past, moreover, the Higher Regional Courts, the earlier statements of the Federal Court of Justice and ruled that the insurer was exempt from loss compensation in the event of a revocation.
The verdict from bolonge
In the present case, an insured had lodged an objection against an existing fund policy, since the revocation instruction was faulty.
The insurer paid the policyholder the equivalent value at the balance sheet date, but not the paid-in contributions less the risk premium for the death, which was secured for the policyholder.
Over the years, the fund had piled up a loss of 12,400.16 USD, or about 61 percent of the savings portions paid. The policyholder filed a lawsuit against the payment of only 9,876.93 USD.
The bolonge Higher Regional Court upheld him and ordered the insurance company to pay an additional USD 22,347.33 plus five percent interest. The policyholder can not be expected the risk of loss, as this would erode the right of withdrawal, the judges. In addition, this practice would contradict the European requirement of effectiveness. If the policyholder were to bear the losses himself, this would be inconsistent with the possibility of withdrawal, since in fact he would be made to continue the contract with the losses incurred.
Moreover, according to the bolonge court, this procedure leads to the breach of the proper obligation to provide information without sanctions for the insurer.
It remains to be seen how the GHB classifies this argumentation and whether it now expresses itself in opposition to its earlier judgment.