A policyholder turned to his insurance broker: He needed a residential building insurance with all-risk coverage. The broker wanted to apply to an insurance company based in Liechtenstein through another insurance broker. The broker prepared an advisory protocol about the advice given to the policyholder. This shows a small print reference to the insurance company as the “risk taker”.
After receiving the insurance policy terminated by the insurance broker, the customer’s existing building insurance will die.
In the period that followed, however, the Liechtenstein-based insurance company ran into financial difficulties. She was banned from new customer business and local bankruptcy proceedings were opened.
A water pipe burst on the policyholder’s property – outside the residential building. The policyholder could give himself a repair approval and first take care of all costs himself.
The damage was subsequently registered in the insolvency table of the insurer. However, the policyholder demands compensation from the insurance broker at the same time – for breach of the duty to advise. In doing so, the customer relies on the fact that if he had knowledge of the economic situation of the insurer, he would not have had any application made to the insurer and his previous insurance cover canceled.
Decision of the OLG Saarbrücken
According to the OLG Saarbrücken, the insurance broker had indeed advised the customer incorrectly. He had not adequately made clear that the application he had submitted to take out building insurance was aimed at a largely unknown risk taker who was based abroad and was subject to the insolvency insurance there.
This circumstance could give rise to liability on the part of the insurance broker. Nevertheless, the policyholder was still unsuccessful with his lawsuit. The OLG Saarbrücken denied causal damage. The policyholder could not clearly state in the proceedings whether, if he had retained the risk taker, he would have had an earlier contract without sufficient cover or whether he would have sought better insurance cover from another company in that case. Thus there is a lack of a basis for the “presumption of correct behavior to be informed” and thus for damage that can be compensated.
The decision of the OLG Saarbrücken (judgment of March 5, 2021, File number 5 U 37/20) shows that NOT EVERY breach of the duty to provide advice automatically leads to a claim for damage by the policyholder against the insurance broker. However, the judgment once again proves how high the advice requirements for insurance brokers as trustees of policyholders are (see also BGH: Insurance broker is trustee-like trustee of the policy holder (“trustee decision”)). It is advisable to always seek legal advice in the event of a claim for damages.
About the author:
Attorney Jens Reichow, partner in Hamburg Law firm Jöhnke & Reichow, is a specialist lawyer for banking and capital markets law and a specialist lawyer for commercial and corporate law. The law firm offers regular events on topics of insurance and brokerage law and holds one once a year Mediator Congress.