GER: Bundesgerichtshof on Cancellation of Insurance Contracts

Jul 19, 2024 Benn-Ibler Rechtsanwälte

Consumers do not have the right to cancel insurance contracts concluded away from business premises. According to the German Federal Court of Justice (Bundesgerichtshof, hereinafter BGH), there is no obligation for Germany under EU law to provide for such a right on a national level.

The plaintiff is a member of a health insurance scheme and had signed an agreement in her shop. The contract was titled ‘Commission Agreement’ according to which the insurance broker was supposed to arrange a health insurance policy for her at a more favourable rate. In accordance with the contract, the defendant broker arranged a favourable monthly rate for the plaintiff. The parties later disputed whether the broker was already acting as the plaintiff's account manager at the time when he provided the services, and whether the commission paid also covered advising on possible contract changes.

The policyholder cancelled the contract and demanded a refund of the insurance premium.

The BGH now held that the lower courts had wrongly granted the plaintiff a repayment claim as a result of her withdrawal. In the view of the BGH, the plaintiff had not been able to effectively terminate the brokerage agreement in accordance with Section 312g of the German Civil Code (Bürgerliches Gesetzbuch, hereinafter BGB). This is because Section 312g of the BGB does not apply to insurance contracts under the exceptions listed in Section 312(6) of the BGB. Therefore, there is no right of cancellation, nor is the exemption stated in Section 312(6) of the BGB for insurance mediation contracts concluded away from business premises to be interpreted in accordance with EU law as meaning that consumers have a right of cancellation under Section 312g(1) of the BGB.

Pursuant to Directive 2002/65/EC on distance marketing of consumer financial services, member states are obliged under EU law to provide for a right of cancellation for insurance mediation contracts concluded at a distance. German law has implemented this obligation in the German Insurance Contract Act (Versicherungsvertragsgesetz).

However, there is no provision under EU law that stipulates provision of a right of cancellation of insurance mediation contracts that were concluded outside business premises.

BGH I ZR 137/23 (4 April 2024)