Frankfurt Administrative Court – 7 L 3307/18.F – 28 September 2018 (“GoNetto”): sharing commissions with insureds: what rights for digital brokers?
In Germany, the law does not allow insurers and insurance intermediaries to promise or pay financial benefits (i.e. direct or indirect benefits) to insureds in excess of €15 per insurance contract and per year. There is one exception to this rule: such benefits may be provided if they result in a permanent reduction in the premium paid by the insured or an increase – also permanent – in the services provided.
Facts
In this case, it was the practice of an online insurance broker to share its commission with clients and to charge net rates. The German Supervisory Authority contended that this practice violated the prohibition against sharing commissions and sought to ban this practice. In addition, it argued that the intermediary could not rely on the exception established by the law because it only applied to the insurer-insured relationship and not the intermediary-insured relationship. The broker initiated suit on the grounds that its practice arguably fell within the scope of the exception created by the German law.
Decision
The purpose of this provision is to prevent clients from being induced to take out insurance policies on purely financial grounds, to the detriment of the quality of the cover obtained. The exception provided by the law is applicable only to contracts between the insurer and the insured, and the benefits provided must be permanent and described in the policy.
CGPA comments
The purpose of this provision is to prevent clients from being induced to take out insurance policies on purely financial grounds, to the detriment of the quality of the cover obtained. The exception provided by the law is applicable only to contracts between the insurer and the insured, and the benefits provided must be permanent and described in the policy.