According to German law, there is a strict separation between brokers and agents; German intermediaries must decide whether they wish to act as brokers on the side of policyholders or as agents as representatives on the side of insurers. They cannot act as both. The Munich Higher Regional Court recently ruled on the matter and the verdict was rather surprising.
The Federal Ministry of Finance recently issued guidelines on the determination of policyholders who are persons of relevance for insurance premium tax (IPT) as their registered office in Germany might trigger IPT. These guidelines are especially relevant for vessel and aircraft insurance and English-language policies.
The Federal Court of Justice recently examined the consequences of a policyholder's insolvency under a directors' and officers' (D&O) insurance policy. The ruling has clarified that the insured person's rights under a D&O insurance policy remain the same irrespective of the policyholder's insolvency. As a policyholder's insolvency often leads to liability claims against the (former) management, such situation is one of the most important matters for D&O insurance policies to cover.
A recent Hamm Higher Regional Court decision concerning insurers' duty of advice continues the previous case law in respect of partly favourable and partly unfavourable new conditions or conditions that are merely more favourable for the policyholder. The case highlights the question of whether insurers have a duty to advise assureds of amendments made to the general terms and conditions in their insurance policies, particularly with regard to linguistic amendments.
Motor vehicle liability insurance is mandatory for vehicles admitted to travel on public roads in Germany (the same applies to non-motorised trailers and semi-trailers) and covers damages caused by the policyholder to third parties or their vehicles. However, a Federal Court of Justice decision emphasises that subsidiary clauses in mandatory insurance contracts which limit liability are void unless such exemptions are legally permitted or agreed on by the insurers.
The controversial prohibition on passing on commission forbids brokers and insurers from granting or promising special remuneration to policyholders, insured persons or beneficiaries under an insurance contract. According to the legislature, the prohibition was upheld during the implementation of the EU Insurance Distribution Directive into national law over the past three years. However, whether reinsurance remains excluded from the prohibition is unclear.
The Federal Court of Justice recently ruled that claims settlements by brokers on behalf of liability insurers constitute a violation of the Legal Service Act. The settlement of claims for insurers does not qualify as an accessory activity of the main activity of a broker, because a broker's main activity is to safeguard the assured's interests. It is not possible to represent the insurer's and the assured's interests simultaneously.
A transport insurer claimed damages from a carrier for damage to transported goods. The Federal Court of Justice decided that the damage had taken place outside the period of custody – with the consequence that transport law rules on liability did not apply. According to the court, general contract law applied and the defendant was liable due to violation of its duty of care.