The German insurance market contributes substantially to Germany’s prosperity and economic growth.2 In this context, the effective and cost-efficient settlement of insurance disputes is an important driver for the industry’s success. It ensures legal certainty and fosters trust in the sector. The following chapter gives an overview of the legal framework for insurance disputes in Germany and highlights the current jurisprudence of German courts.
II THE LEGAL FRAMEWORK
i Sources of insurance law
The Insurance Contract Act
The main source of insurance law in Germany is the Insurance Contract Act (VVG). It sets out the general rules for insurance contracts as well as the statutory provisions for specific insurance branches. The VVG applies to all types of insurance contracts, except for reinsurance and maritime insurance contracts (Section 209 VVG). It came into force in 1908 and remained largely unchanged until a major reform in 2008.3 The objective of the reform was to modernise German insurance law and improve the position of the insured person.4
Important changes included:
- the introduction of a right to revoke the insurance contract by the policyholder within 14 days of the conclusion of the contract (Section 8 VVG);
- the introduction of certain advisory, documentation and information duties of the insurer (Section 6 et seq. VVG);
- the abolition of the ‘all-or-nothing’ principle5 in favour of the ‘more-or-less’ principle6 (Sections 26(1), 28(2), 81(2) VVG);
- the abolition of insurance-specific limitation periods, rendering applicable the general limitation period of three years pursuant to Section 195 of the German Civil Code (BGB); and
- the introduction of a new place of jurisdiction at the place of the policyholder’s residence (Section 215(1) VVG).
The overarching purpose of the reform was to provide greater protection to the insured person by setting out restrictions to the freedom of contract. The restrictions shall, however, not apply to large risks and open policies.7 Large risks are risks of: (1) certain transportation and liability insurances (such as insurances for railway vehicles, aircrafts or the transportation of large goods); (2) certain credit and suretyship insurances; and (3) certain property, liability and other indemnity insurances where the policyholder exceeds a balance sheet total of €6.2 million, a net turnover of €12.8 million or an average of 250 employees per fiscal year.8 These insurances are typically taken out by big companies that are not in need of protection by the VVG. All other risks are deemed ‘mass risks’, to which the restrictions to the freedom of contract apply without limitation.
German Civil Code
Another source of German insurance law is the German Civil Code (BGB), which is applicable insofar as no specific provisions of the VVG apply. The area of most relevance for insurance contracts is its section on the use of standard business terms. Almost all insurance contracts contain standard business terms of the insurer, especially insurance contracts concluded with a consumer. Section 305 et seq. BGB set out the rules for the incorporation of standard business terms into the contract, the assessment of their effectiveness and the interpretation of their content. These rules apply regardless of whether the other party is a consumer or not. However, stricter requirements apply where a consumer is concerned.
Other provisions applicable to insurance law are the rules on the statute of limitations. As the special limitation periods for insurance claims were abrogated with the VVG reform in 2008, the general rules in Section 195 et seq. BGB apply. The limitation period is three years,9 commencing at the end of the year in which the claim arose and the insured party obtained knowledge of the circumstances giving rise to the claim (or would have obtained this knowledge if it had not shown gross negligence).10 An exception applies if the limitation period is suspended. For insurance contracts, Section 15 VVG provides an insurance-specific suspension rule. Where a claim arising from an insurance contract has been registered with the insurer, the limitation period shall be suspended until such time as the applicant has received the insurer’s decision in writing. All other rules for suspension are set out in Section 203 et seq. BGB.
German Code of Civil Procedure
A further source of German law that is especially relevant for insurance disputes is the German Code of Civil Procedure (ZPO). It sets out the general rules for litigation proceedings and is also applicable to insurance disputes as far as no specific rules are set out in the VVG.
One of the main principles of German civil procedural law is that each party has to present the facts and prove the case upon which its claim or defence is based. Unlike in common law jurisdictions, there is no pretrial discovery or document production. In general, no party to litigation proceedings is therefore obligated to deliver to the other party the documents or evidence necessary for its case. However, there are exceptions to this principle. One example is Section 142 ZPO, which sets out that the court may direct one of the parties or a third party to produce records or documents, as well as any other material in its possession if one of the parties made reference to it. Another example is Section 422 ZPO, which stipulates the obligation of a party to produce certain documents favourable for its opponent if its opponent is entitled to demand the surrender or production of the relevant documents pursuant to civil law stipulations.
With regard to insurance disputes, the VVG stipulates specific disclosure obligations of the insured person. According to Section 31(1), the insurer may, after the occurrence of an insured event, demand that the policyholder or the beneficiary shall disclose all the information necessary to establish the occurrence of the insured event or the extent of the insurer’s liability. In addition, the insurer may demand supporting documents to the extent that the policyholder may be reasonably expected to obtain them. The policyholder is even obligated to disclose facts unfavourable to him or her. The VVG therefore sets out more extensive disclosure obligations of the insured person than it would have under the rules of the ZPO. However, Section 31 VVG does not set out any consequences for cases of non-compliance. Therefore, the insurer will usually incorporate the policyholder’s disclosure duties in its general terms and conditions and stipulate contractual consequences for non-compliance.11
Another specific aspect of insurance disputes concerns direct claims of third parties against the insurer. This issue typically arises in relation to liability insurances that cover damage claims made by third parties against the policyholder. In general, a third party cannot make direct claims under the insurance contract against the insurer of the damaging party. Therefore, the third party may only enforce its damage claim against the policyholder (‘liability claim’) who may then raise a claim against his or her insurer (‘coverage claim’). However, there are exceptions to this rule. One is set out in Section 115 VVG, which provides a direct claim of the third party against the insurer if: (1) third-party vehicle insurance is concerned; (2) the policyholder has become insolvent; or (3) the policyholder’s whereabouts are unknown. If one of these requirements is fulfilled, the third party may directly claim payment from the insurer and initiate court proceedings against it without having to proceed against the policyholder first.
The ZPO also stipulates the place of jurisdiction for litigation proceedings regarding claims in connection with the insurance contract. Optional places of jurisdiction are the place of the insurer’s registered seat,12 the place of performance of the contract13 or the place of the insurer’s branch office.14 In general, all these venues favour the insurer. With the introduction of Section 215 VVG in 2008, the legislator established a new place of jurisdiction that favours the insured person. The policyholder can now also choose to proceed against the insurer at the court in whose district he or she has his or her place of residence. For actions brought against the policyholder, only this court shall have jurisdiction. The parties can only deviate from this place of jurisdiction to the detriment of the policyholder after the dispute has arisen or if the policyholder moves his or her domicile to a different country after signing the contract or if his or her domicile is unknown at the time the action is filed.15 The purpose of this change was to guarantee the policyholder access to a court near his or her domicile.16 This was supposed to compensate for the subject-specific and economic advantages of the insurer.
ii Insurance regulation
German Insurance Supervision Act
The main legal source for insurance regulation is the German Insurance Supervision Act (VAG), which implemented in 2015 the European Solvency II Directive.17 It enables the supervision of insurance companies in their legal and financial operations (Section 294(2) VAG) by the German Federal Financial Supervisory Authority (BaFin) and the supervisory authorities of the federal states. The BaFin is the competent supervisory authority for private insurance companies that operate in Germany and are of material economic significance as well as for public insurance companies that participate in free competition and operate across the borders of any federal state (Section 320 VAG). The supervisory authorities of the federal states are mainly responsible for overseeing public insurers whose activities are limited to the federal state in question and private insurance companies of lesser economic significance.18
Therefore, all private and public insurance companies, pension funds and reinsurers carrying out private insurance businesses within the scope of the VAG and that have their registered office in Germany are subject to supervision.19 Social insurance institutions20 are not supervised under the VAG but regulated by other government agencies.
The primary objective of the VAG is the protection of policyholders and beneficiaries (Section 294(1) VAG). To ensure that only regulated companies offer insurance services, insurance companies must acquire a licence before commencing business operations (Section 8(1) VAG). To be granted authorisation to operate, the insurance company must fulfil a number of requirements. This includes, inter alia, that the company:
- operates in the legal form of a public limited company;21
- has its legal seat in Germany;22
- engages only in insurance businesses and directly related businesses and observes the principle of business segregation (e.g., a life insurance company may not at the same time provide health or property insurance);23
- submits a detailed business plan that contains the company’s charter and sets out which insurance segments will be operated as well as the risks that are intended to be covered;24
- demonstrates that it has a sufficient amount of its own funds25 as well as sufficient resources to develop the business and sales organisation;26 and
- has at least two members of the management board that are ‘fit and proper’ persons.27
In its ongoing supervision, the BaFin monitors, among other things, whether the insurance company complies with all statutory and regulatory requirements, whether it is capable of fulfilling its insurance contracts and whether it observes the principle of good business practice (e.g., keeping proper accounting records and rendering proper accounts).28 In accordance with the Solvency II Directive, it also supervises the company’s solvency, in particular the fulfilment of certain capital requirements.
In the event of any undesirable conduct by an insurance company, especially non-compliance with legal requirements, the BaFin may take any appropriate and necessary measures to prevent or eliminate this conduct (Section 298 VVG). For consumers, it is also possible to file a complaint against an insurance company with the BaFin.29 The BaFin will review the complaint and issue a report with its legal opinion. If necessary, it may also take regulatory steps against the insurance company. However, it is not authorised to render a binding decision or give legal advice.
iii Insurable risk
German insurance law differs between two types of insurable risks: socially insured risks and privately insured risks. Socially insured risks are codified in the German Social Code (SGB), which distinguishes between health insurance, unemployment insurance, nursing care insurance, pension insurance and occupational accident insurance. They are statutory insurances that do not come into effect by agreement but are taken out by law when the insured person fulfils certain requirements.
The VVG only applies to privately insured risks. Because of the freedom of contract, the parties to an insurance contract may, in principle, insure any type of risk they chose to. They are only bound by the limitations applicable to any civil law contract (e.g., the prohibition of contracts that violate public policy or a statutory prohibition).30 The VVG regulates the most common types of private insurance in Germany by stipulating the rules applicable to the different insurance branches. The most relevant branch in Germany is the liability insurance that insures damage claims of a third party against the policyholder.31 What is special about this insurance branch is that some liability insurances are on a voluntary basis while others are compulsory insurances. This is the case where the legislator deemed it especially important to insure the risk of damages to a third party caused by the conduct of another party.32 The most prominent example of compulsory liability insurance is the third-party vehicle insurance, from which the other compulsory insurances evolved. Other insurance branches stipulated in the VVG are legal expenses insurance, transport insurance, fire insurance for buildings, life insurance, occupational disability insurance, accident insurance and private health insurance.
iv Fora and dispute resolution mechanisms
In general, arbitration and other alternative dispute resolution mechanisms (ADR) have experienced an expansion in recent years.33 In Germany, however, the popularity of arbitration and ADR rather depends on the type of insurance contract concerned. A distinction can be drawn between reinsurances, insurances for commercial and industrial risks and insurances for mass risks.
Disputes regarding reinsurances are traditionally solved amicably between the parties.34 The reason for this is a kind of ‘gentlemen’s agreement’ to solve reinsurance disputes by negotiations for amicable settlement. However, arbitration proceedings have become more and more common in the past 30 years and most reinsurance contracts now also contain arbitration clauses. This may be attributed to an increased willingness in the Anglo-American reinsurance market to refer reinsurance disputes to arbitration, which also reflects on the German market. Another reason might be the increase of disputes regarding large risks that involve higher stakes for the parties. A third factor may be that more reinsurance companies withdraw from the reinsurance market, making it less necessary to solve disputes amicably to retain ongoing business relationships.
In insurance disputes concerning commercial and industrial risks there is a rather restrictive use of alternative dispute resolution mechanisms, especially arbitration.35 This is a distinctive aspect of German insurance law in comparison to other jurisdictions. It might be owing to the still widely held perception by German insurers that German court proceedings are, when compared to other jurisdictions, more efficient, less time-consuming and less costly. Furthermore, German courts regularly have specialised chambers that will hear insurance law-related disputes. This ensures a qualified legal judgment that otherwise only specialised arbitral tribunals might be able provide. Benefits of this kind in German court proceedings apparently still outweigh the general advantages of arbitration for many insurance companies. However, there is reason to believe that the use of arbitration clauses in commercial or industrial insurance contracts will increase in the future. For contracts that are related to international law or written in a foreign language, or for contracts that contain unusual clauses or concern risks of a high technical nature, arbitration proceedings may, in principle, be deemed more favourable.36
In German insurance contracts concerning mass risks, arbitration clauses are basically non-existent.37 This is owing to the fact that they are often concluded with ‘consumers’ under German consumer protection law, which significantly raises the bar for a valid arbitration agreement. Section 1031(5) ZPO states that arbitration clauses involving consumers are only valid if they are contained in a separate record or document signed by both parties that shall not contain agreements other than those making reference to the arbitration proceedings. If the arbitration agreement is included in a contract, it is only valid if it has been recorded by a notary. Both requirements are rather difficult to fulfil in practice. In addition, arbitration clauses in insurance contracts are usually part of the insurer’s general terms and conditions and therefore have to fulfil the requirements set out in Section 305 et seq. BGB (see above under Section II(i) BGB). This leads to a high risk that an arbitration clause contained in an insurance contract for mass risks could be deemed invalid by a court.
Because of these difficulties with arbitration proceedings against consumers, the German Insurance Association formed the association Versicherungsombudsmann eV (the Insurance Ombudsman Association) in 2001 to establish a mechanism for out-of-court dispute settlement of insurance disputes with consumers before an ‘insurance ombudsman’.38 Under this mechanism, consumers may file a complaint against an insurance company (or an insurance broker) with the ombudsman.39 To be able to refer an insurance dispute to the ombudsman, the insurer needs to be a member of the Insurance Ombudsman Association,40 which almost all insurance companies in Germany are.41 The complaint is only admissible if the insured person has made a complaint with the insurance company first and if at least six weeks have passed since then.42 The ombudsman cannot decide on complaints that: (1) have a value of more than €100,000; (2) concern healthcare or nursing care insurance; (3) have already been filed with or decided by a court or another institution; or (4) are obviously unfounded.43 The proceedings shall take no longer than 90 days.44 The insured party may refer the dispute to an ordinary court at any time.45 If the complaint is admissible and the value in dispute is no more than €10,000, the ombudsman can render a decision that is binding for the insurance company; otherwise, it can make a non-binding recommendation.46 Dispute settlement before the insurance ombudsman has proven to be quite successful. In 2017, the Insurance Ombudsman Association received 18,956 complaints, of which it settled 14,329.47
III RECENT CASES
i Judgment of 19 December 2018, IV ZR 255/17, regarding the requirements for an adjustment of health insurance premiums
In a recent and highly regarded judgment of 19 December 2018, the Federal Court of Justice (BGH) had to decide on the controversial issue of whether the independence of the trustee who has consented to an adjustment of health insurance premiums is a constitutive prerequisite for the validity of the adjustment and therefore subject to review by the civil law courts.
In the case at hand, the claimant had challenged the adjustment of his private health insurance premium and based this, inter alia, on the argument that the trustee, who is required to consent to the premium adjustment according to Section 203(2) VVG, had not been financially independent from the health insurer according to Section 157(1) VAG.
The BGH denied the policyholder’s claim for repayment of the adjusted insurance premiums, holding that the independence of the trustee was not a constitutive prerequisite for the substantive validity of his consent.48 The BGH justified this with the argument that the civil courts were only able to review the calculation of the premium adjustment and the formal requirements of consent made by a duly appointed trustee.49 Whether the appointment of the trustee was lawful and valid was, because of its supervisory nature, solely subject to control by the competent supervisory authority.50 Therefore, the financial independence of the trustee was not an independent requirement to be reviewed by the civil courts when assessing the validity of the premium adjustment.51
With its judgment, the BGH had decided on a highly disputed issue in lower instance case law and legal literature.52 The BGH referred the case back to the Regional Court of Potsdam (the LG Potsdam), which now must decide on the substantive validity of the premium adjustment. However, it remains to be seen whether the lower instance courts will follow the BGH’s judgment. In view of the rising costs of health insurers, the adjustment of health insurance premiums is currently under review in numerous lawsuits brought by policyholders. In two parallel judgments of 20 March 2019, the LG Potsdam has already openly contradicted the BGH’s findings.53 According to the lower instance court, the BGH had exceeded the constitutional limits placed on a judicial development in the law. Other courts have followed this reasoning.54 Therefore, the BGH will have to make a judgment on this issue again in the near future.
ii Judgment of 12 September 2018, IV ZR 17/17, regarding the deduction of fund losses from the repayment of insurance premiums following a revocation of the insurance contract
In a recent decision of 12 September 2018, the BGH confirmed its position on the calculation of the repayment of insurance premiums for fund-based life insurances after a revocation of the contract.
Referring to an earlier judgment of 21 March 2018,55 the BGH held that when insurance premiums had to be repaid following the revocation of a fund-based insurance contract, the losses of the fund had to be deducted from the repayment in accordance with the rules of German unjust enrichment law (Section 818(3) BGB).
In the case at hand, the plaintiff – a consumer – had claimed the repayment of his life insurance premiums from the defendant – a life insurer – after the former had revoked the underlying insurance contract. The effectiveness of the revocation (in accordance with the old law) was not in dispute. The defendant argued, however, that he had lost assets because of the losses from the fund in which the savings components of the premiums were invested. The essential question was therefore whether any of the fund’s losses would have to be deducted from the repayment claim under Section 818(3) BGB. This was an issue under much discussion until the BGH affirmed this stance for fund losses that accounted for only a small portion of the savings component with its judgment of 11 November 2015.56
In its recent judgment of 21 March 2018, the BGH followed this earlier ruling, but held that a deduction applied equally to fund losses that accounted for more than just a small portion of the savings component or even for a total loss.57 According to the BGH, when a consumer enters into a fund-based insurance contract that offers a chance of making a profit, the consumer consciously takes on a risk of total loss. The BGH stated that this complete allocation of the risk to the insured consumer was also compatible with EU consumer protection law. A different view would be contrary to fair risk sharing because it would disadvantage the other policyholders. With its most recent judgment of 12 September 2018, the BGH affirmed this opinion once again.
iii Judgment of OLG Düsseldorf of 20 July 2018, I-4 U 93/16, regarding the coverage of directors and officers insurance for claims under Section 64 GmbHG
In a recent judgment of 20 July 2018, the Higher Regional Court of Düsseldorf (the OLG Düsseldorf) decided on the controversial issue of whether a directors and officers (D&O) insurance policy covers claims made by the insolvency administrator under Section 64 of the Limited Liability Companies Act (GmbHG).58
Section 64 GmbHG addresses an obligation on the director of a company to compensate the company for payments made after it has become illiquid or after it has been deemed to be over-indebted. Whether a claim of this kind is covered under a D&O insurance policy is currently under discussion in legal literature and case law.59 The main point of discussion is whether claims made under Section 64 GmbHG qualify as ‘claims for damages’ or as other compensation claims, since most D&O insurance policies only cover the former.
The OLG Düsseldorf decided against any liability on the part of the D&O insurer for a claim made under Section 64 GmbHG. In this regard, it relied on the established jurisprudence of the BGH, which qualifies the claim under Section 64 GmbHG as a compensation claim sui generis.60 According to the BGH, the aim of Section 64 GmbHG is to replenish the company’s assets to guarantee equal satisfaction for its creditors.61 Therefore, a payment in violation of Section 64 GmbHG results in damage to the company’s creditors but not to the company itself.
Following on from this, the OLG Düsseldorf stated that there was a decisive difference between a claim for damages and a claim made under Section 64 GmbHG.62 The latter existed regardless of whether the company had suffered a financial loss or not. Therefore, the OLG Düsseldorf held that an informed policyholder could not assume that it was insured against a risk arising out of payments made in violation of Section 64 GmbHG; the D&O insurer could not be expected to be held liable for a claim that existed regardless of whether any damage had occurred or not.63
This judgment has become final. The BGH has not yet decided on this issue.
iv Judgment of the OLG Düsseldorf of 19 October 2018, I-4 U 10/18, regarding the coverage of liability insurance for claims under unwritten liability principles of common law
A further judgment recently made by the OLG Düsseldorf concerned a claim for coverage under liability insurance for an insured event that took place in Scotland.64
The insurance policy covered damage claims against the policyholder under statutory private law liability provisions.65 Therefore, the court had to decide whether a liability insurance under German law grants coverage for liability claims that follow from unwritten liability principles of common law.
The court affirmed that the insurance policy was not restricted to liability claims under German law and expressly covered insured events occurring outside Germany.66 The fact that the legal consequences of the insured event arose regardless of the will of the involved parties was relevant for the qualification as a statutory liability provision. According to the OLG Düsseldorf, a liability claim made under the unwritten legal concept of a ‘breach of contract’ under common law fulfils this requirement.67
v Judgment of OLG Karlsruhe of 20 April 2018, 12 U 156/16, regarding spontaneous disclosure obligations of the policyholder before entering into the insurance contract
In a judgment of 20 April 2018, the OLG Karlsruhe affirmed the right of a policyholder not to disclose health issues about which the insurer did not ask.68
In the case at hand, the insurer had asked the policyholder before entering into the contract to declare that he had not been diagnosed with or treated for cancer, HIV, mental illness or diabetes up to that date. The policyholder confirmed this, despite the fact that he had already been diagnosed with multiple sclerosis. Two years later, he became unable to work because of multiple sclerosis and claimed insurance benefits. The insurer denied its liability and declared the contract void because of fraudulent misrepresentation. The OLG Karlsruhe rejected this and held that the policyholder had not committed fraudulent misrepresentation by not revealing that he suffered from multiple sclerosis.
In making its decision, the OLG Karlsruhe passed judgment on a question that has been disputed since the reform of the VVG in 2008. The reform had introduced a requirement for the insurer to request information in writing it deemed relevant for the conclusion of the contract from the insured person (Section 19(1) VVG). With this change to the previous provision, it became questionable whether the policyholder had a spontaneous disclosure obligation even if the insurer had not asked a specific question.
While the Higher Regional Court of Düsseldorf69 and some commentators in legal literature70 deny this, the majority of judgments made by higher regional courts, as well as the majority of commentators in legal literature, are of the opinion that the policyholder has a spontaneous disclosure obligation in certain situations. While some assert that a disclosure obligation arises when the materiality of the risk is evident,71 others say that it has to be a relevant risk according to the policyholder’s assessment.72 A third view states that there is a disclosure obligation only where a risk is so exceptional that a question regarding it cannot be expected to be asked by the insurer.73
The OLG Karlsruhe decided contrary to its established jurisprudence and denied that there was a spontaneous disclosure obligation on the part of the policyholder in the case at hand. According to the OLG, this was in line with the legal situation before changes were made to Section 19 VVG, namely if the insurer asked the policyholder specific questions before entering into the insurance contract, it had documented the facts it deemed relevant for its decision.74 As this was the case here, the insurer could not assert that the policyholder was obliged to disclose further information the insurer did not request, which nevertheless could have been relevant for the contract.
As the controversy around this question continues, it remains to be seen how the BGH will decide on this issue.
IV THE INTERNATIONAL ARENA
Cross-border insurance contracts have proliferated in recent years, putting insurance disputes increasingly into a more international context. Frequent questions that arise in cross-border insurance disputes regard the correct place of jurisdiction and the applicable law. For German courts, EU Regulation (EC) No. 593/2008 of 17 June 2008 on the law applicable to contractual obligations (Rome I) and EU Regulation (EC) No. 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) (the Recast Brussels Regulation)75 set out the relevant rules for these questions.
Rome I applies to insurance contracts concluded after 17 December 2009 and provides the rules to identify the applicable law to contractual obligations in civil and commercial matters involving a conflict of laws. Article 7 Rome I sets out specific rules for insurance contracts covering large risks as well as insurance contracts covering mass risks situated inside the territory of the Member States. To all other insurance contracts, especially regarding mass risks situated outside the territory of a Member State as well as reinsurance contracts, the general rules of Article 3–6 Rome I apply.76
Regarding the question of jurisdiction, the Recast Brussels Regulation provides the relevant rules for legal proceedings instituted on or after 10 January 2010 against a defendant that has its domicile77 in a Member State and concern a dispute that is not located solely in one Member State (e.g., one of the parties has its residence or place of business in one Member State and the other party in another Member State or a third state). It contains specific rules for insurance disputes in Articles 10–16. The rules are similar to those under German law (see Section II.i, ‘German Code of Civil Procedure’). If the defendant has its residence in Switzerland, Norway or Iceland, the Lugano Convention (2007) applies with corresponding rules.
The Recast Brussels Regulation also applies to the enforcement of judgments rendered by a court of a different Member State. In general, such judgments shall be recognised and enforceable in the other Member State without any special procedure or declaration of enforceability being required.78 However, the Recast Brussels Regulation does not apply to the enforcement of arbitral awards.79 Regarding the recognition and enforcement of foreign awards by a German court, the rules of the Convention of 10 June 1958 on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) apply.80 Regarding the recognition and enforcement of domestic awards, the rules of the ZPO apply.
V TRENDS AND OUTLOOK
Future developments in insurance disputes could arise from the introduction of the ‘model declaratory action’ in Germany, which came into force on 1 November 2018 and has the aim of facilitating collective redress for consumers in cases of mass damage caused by large companies.
Only qualified institutions (mainly consumer associations) are authorised to initiate and conduct a model declaratory action. It follows the opt-in approach, which means that concerned individuals must apply for registration in a register of action. At least 50 consumers must have registered their claims effectively within two months of the official public notice of the action for the declaratory action to be admissible.
The subject matter of the action has to be a ‘declaratory target’ (i.e. the determination of the presence or absence of factual and legal prerequisites for the existence or non-existence of a claim or (another) legal relationship between a consumer and a company). The qualified institution must show that the claims or legal relationships of at least 10 consumers depend on these declaratory targets. In the event of a positive declaratory judgment, each consumer must enforce its claim individually.
The model declaratory action could also become relevant for insurance-related disputes. Possible situations could encompass legal issues concerning a large number of policyholders; for example, claims in relation to an increase in insurance premiums, unauthorised premature terminations or the invalidity of unfavourable insurance policy terms. However, the extent to which qualified institutions will make use of the model declaratory action for insurance disputes in the future remains to be seen.
1 Marc Zimmerling is a partner and Angélique Pfeiffelmann is a senior associate at Allen & Overy LLP.
2 According to a study conducted by the association for economic research and consulting Prognos,
3 It is therefore important to consider carefully whether decisions and publications on insurance law refer to the current or the old rules of the VVG.
4 Entwurf eines Gesetzes zur Reform des Versicherungsvertragsrechts of ۲۰ December ۲۰۰۶, Bundestagsdrucksache ۱۶/۳۹۴۵, p. ۱.
5 Which allowed the insurer to refuse payment for the insured event if it was caused by the insured person, regardless of the degree of misconduct.
6 Which stipulates that the insurer may only refuse payment in full if the insured person caused the insured event intentionally; in cases of gross negligence, the insurer may refuse payment only partly depending on the degree of negligence.
7 Section 210(1) VVG; an open policy is a contract made in such a manner that, at the time when the contract is concluded, only the class of insured interest is designated and it is only specified to the insurer in detail once the contract has been concluded, Section 53 VVG.
8 Section 210 (2) VVG enumerates all large risks conclusively.
9 Section 195 BGB.
10 Section 199(1) BGB.
11 Rixecker in Römer/Langheid, VVG, 6th edition 2019, Section 31 .
12 Section 17 ZPO.
13 Section 29 ZPO.
14 Section 21(1) ZPO.
15 Section 38(3) ZPO; Section 215(3) VVG.
16 Klimke in Prölls/Martin, VVG, 30th edition 2018, Section 215 .
17 Directive 2009/138/EC of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (recast).
20 i.e., statutory health insurance funds, statutory pension insurance fund, statutory accident insurance institutions and unemployment insurance institutions.
21 This includes SEs, mutual societies or public-law institutions, Section 8(2) VAG.
22 Section 8(3) VAG.
24 Section 9(1)–(3) VAG.
25 Section 9(2) No. 4 VAG.
26 Section 9(2) No. 5 VAG.
27 Section 9(4) No. 1 Lit a) VAG.
28 Section 294 VAG.
30 Looschelders in Langheid/Wandt, Münchener Kommentar zum VVG, 2nd edition 2016, Section 1 .
31 Lücke in Prölls/Martin, VVG, 30th edition 2018, before Section 100 .
32 Klimke in Prölls/Martin, VVG, 30th edition 2018, introduction to Sections 113–124 .
33 Wolf, NJW 2015, 1656 (1659).
34 Gal in Langheid/Wandt, Münchener Kommentar zum VVG, 2nd edition 2017, chapter 130 –.
35 Gal in Langheid/Wandt, Münchener Kommentar zum VVG, 2nd edition 2017, chapter 130 –.
36 Gal in Langheid/Wandt, Münchener Kommentar zum VVG, 2nd edition 2017, chapter 130 .
37 Gal in Langheid/Wandt, Münchener Kommentar zum VVG, 2nd edition 2017, chapter 130 –.
39 Section 2(1) Code of Procedure of the Insurance Ombudsman (VomVO).
40 Section 1 VomVO.
42 Section 2(3) VomVO.
43 Section 2(4) VomVO.
44 Section 7(6) VomVO.
45 Section 11(2) VomVO.
46 Sections 10(3), 11(1) VomVO.
47 Annual report of the Insurance Ombudsman Association, p. 2, www.versicherungsombudsmann.de/wp-content/uploads/Jahresbericht2017.pdf.
48 BGH, Judgment of 19 December 2018, IV ZR 255/17 .
49 BGH, Judgment of 19 December 2018, IV ZR 255/17 .
50 BGH, Judgment of 19 December 2018, IV ZR 255/17 .
51 BGH, Judgment of 19 December 2018, IV ZR 255/17 .
52 BGH, Judgment of 19 December 2018, IV ZR 255/17 -.
53 LG Potsdam, Judgment of 20 March 2019, 6 O 192/17; LG Potsdam, Judgment of 20 March 2019, 6 O 203/17.
54 Roger, r +s 2019, 274, 277.
55 BGH, Judgment of 21 March 2018, IV ZR 353/16.
56 BGH, Judgment of 11 November 2015, IV ZR 513/14.
57 BGH, Judgment of 21 March 2018, IV ZR 353/16 .
58 OLG Düsseldorf, Judgment of 20 July 2018, I-4 U 93/16.
59 See, e.g., Lange in Veith/Gräfe/Gebert, Der Versicherungsprozess, 3rd edition 2016, Part E, Section 21 ; Seitz/Finkel/Klinke, D&OVersicherung, 2016, Section 1 AVB-AVG ; OLG Celle, Judgment of 1 April 2016, 8 W 20/16.
60 BGH, Judgment of 20 September 2010, II ZR 78/09 .
61 BGH, Judgment of 8 January 2001, II ZR 88/99.
62 OLG Düsseldorf, Judgment of 20 July 2018, I-4 U 93/16 .
63 OLG Düsseldorf, Judgment of 20 July 2018, I-4 U 93/16 .
64 OLG Düsseldorf, Judgment of 19 October 2018, I-4 U 10/18.
65 OLG Düsseldorf, Judgment of 19 October 2018, I-4 U 10/18 .
66 OLG Düsseldorf, Judgment of 19 October 2018, I-4 U 10/18 .
67 OLG Düsseldorf, Judgment of 19 October 2018, I-4 U 10/18 .
68 OLG Karlsruhe, Judgment of 20 April 2018, 12 U 156/16.
69 OLG Düsseldorf, Judgment of 29 June 2009, I-4 W 20/09 .
70 Weiberle, VuR 2008, 170.
71 Müller-Frank in Langheid/Wandt, Münchener Kommentar zum VVG, 2nd edition 2017, Section 22 .
72 Armbrüster in Prölss/Martin, VVG, 30th edition 2018, Section 22 .
73 OLG Celle, Judgment of 9 November 2015, 8 U 101/15 ; OLG Hamm, Order of 27 February 2015, 20 U 26/15 .
74 OLG Karlsruhe, Judgment of 20 April 2018, 12 U 156/16 .
75 As well as its predecessor, Council Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, which still applies to legal proceedings instituted before 10 January 2015 as well as to judgments given or court settlements concluded before that date (Article 66 of the Recast Brussels Regulation).
76 Rome I, however, does not apply to insurance contracts providing benefits for employed or self-employed persons in the event of death or survival or of discontinuance or curtailment of activity, or of sickness related to work or accidents at work, excluding life assurance according to Article 9 No. 2 of the Solvency II Directive.
77 For a company, this would be the place where it has its statutory seat, central administration or principal place of business, Article 63 of the Recast Brussels Regulation.
78 Articles 36(1), 39 of the Recast Brussels Regulation.
79 Article 1(2)(d) of the Recast Brussels Regulation.
80 Section 1061 ZPO.