GER: Insurance Law and Fit Lifestyle Rebates

Jun 21, 2024 Benn-Ibler Rechtsanwälte

If you have a healthy lifestyle and keep fit you'll be rewarded with lower premiums, a German insurance company promised potential policyholders. However, the German Federal Court of Justice (Bundesgerichtshof, hereinafter BGH) has recently ruled that so-called telematics tariff clauses (a combination of telecommunications and information technology) do not stand up to scrutiny.

In the proceedings at issue, a German non-profit-making organisation for the protection of consumers had brought an action against an insurance company. For one of its occupational disability tariffs, the defendant insurance company required policyholders to participate in a so-called Vitality Programme where they accumulate bonus points through certain behaviours, in particular through sports activities or visits to the doctor. Depending on the number of points policyholders collect, they are then assigned a certain ‘vitality status’. The higher the status, the lower the insurance premium that has to be paid and the higher the discount that is offered.

The plaintiff’s opinion is that the clauses in question are invalid on the grounds of lack of transparency and unreasonable disadvantage to policyholders. The district court upheld the claim in its entirety. However, the court of appeal dismissed the defendant’s appeal against that decision. Now, the defendant is pursuing an application for dismissal of the claim (which was allowed by the court of appeal).

The BGH has now recently ruled that two of the clauses do not stand up to close scrutiny because they are not transparent and also in breach of the principle of good faith, rendering them invalid.

Specifically, one of the clauses does not adequately explain the criteria according to which the  so-called ‘surplus participation’ is awarded. Also, the contract’s clause on health-data transfer fails to withstand scrutiny. According to this clause, the policyholder’s health-related activities are not taken into account if the fitness data is submitted too late.

An interpretation of the clause shows that in the absence of notification of the otherwise healthy conduct of the policyholder, it is assumed that there was no such conduct. This presents an unfair disadvantage to the policyholder because it means that the risk of non-transmission is also to be borne by the policyholders, even if it falls within the sphere of responsibility of third parties.

BGH IV ZR 437/22 (12 June 2024)