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Business as (Un-) Usual

The Evolution of German Insurance Law and Especially Insurance Supervisory Law in the Time of COVID-19

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Covid-19 and Insurance

Part of the book series: AIDA Europe Research Series on Insurance Law and Regulation ((ERSILR,volume 7))

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Abstract

The advent of COVID-19 had tremendous effects in Germany, as elsewhere if not probably everywhere. However, the COVID crisis brought to light problems and solutions which may aid in the betterment of insurance in the future, and increased preparedness for future crises. The German discussions pertaining to the pandemic was much focussed—as was the case in many other countries—on the question of cover by business closure and business interruption insurance. While this question was especially salient, it was far from being the only legal problem raised by the crisis in insurance law. Additionally, the crisis brought to mind an ancient legal instrument: the clausula rebus sic stantibus, or in the particular German iteration the Wegfall der Geschäftsgrundlage. In Germany this was not given a brought field of application, since the legislator passed statutes that would alleviate certain policyholders and insurers in a very particular way. Beyond the question of timely performance, relayed time limits regarding court procedures, etc., several other insurance products were touched. While this was rather neglected in Germany and elsewhere, the Corona crisis also had significant effects for insurers in the realm of insurance supervisory law.

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Notes

  1. 1.

    See Schreier (2020), pp. 514 et seq.

  2. 2.

    For a very encompassing overview see Günter (2021), pp. 1141 et seqq.

  3. 3.

    OLG Naumburg Versicherungsrecht 2001:454 seems to be the only recent decision by a higher court; cp. Teichler (2022), p. 517.

  4. 4.

    Cp. Fortmann (2020), p. 1073.

  5. 5.

    Cp. The agreement between several insurers tendering business closure insurance and lobby organisations of hotel and restaurant businesses, as it was mediated by the Bavarian Ministry of Trade and Economy (2020).

  6. 6.

    Gesetz zur Verhütung und Bekämpfung von Infektionskrankheiten beim Menschen – Infektionsschutzgesetz (2020).

  7. 7.

    See, e.g., OLG Karlsruhe Versicherungsrecht 2021:1085; LG Bochum recht + schaden 2020:503; Armbrüster in Prölss and Martin (fdrs.) (2021), AVB BS 2002 para. 9.

  8. 8.

    A very common clause would provide: “Meldepflichtige Krankheiten und Krankheitserreger im Sinne dieser Bedingungen sind die folgenden, im Infektionsschutzgesetz in den §§ 6 und 7 namentlich genannten Krankheiten und Krankheitserreger:”.

  9. 9.

    Though this is not impossible; see, e.g., Werber (2020), p. 664.

  10. 10.

    Cp. Fortmann (2020), p. 1074.

  11. 11.

    E.g., Schreier (2020), p. 515; Günther and Piontek (2020), p. 243; most scholars propose a more differentiated solution.

  12. 12.

    Günther (2021), p. 1142 (there fn. 13 and 14) points to the decisions of 12 Courts of Appeal and of 72 different Regional Courts which all held comparable clauses to be lawful and Corona not covered.

  13. 13.

    See in detail and with further references Armbrüster in Prölss and Martin (fdrs.) (2021), AVB BS 2002 paras. 10 et seqq.

  14. 14.

    See for the German original supra fn. 8.

  15. 15.

    See esp. Lüttringhaus (2022), pp. 74 et seqq.

  16. 16.

    See fns. 8 and 14.

  17. 17.

    BGH, dec. of 26 January 2022 – docket no IV ZR 144/21 (unpublished).

  18. 18.

    With some voices, however, again questioning the transparency of such clauses, see Lüttringhaus (2022), pp. 74 et seqq. The later opinion would not create a different solution, though, since the nullity of the clause would also mean that Corona events were covered under the primary risk description.

  19. 19.

    Cp. Armbrüster in Prölss and Martin (fdrs.) (2021), AVB BS 2002 paras. 9.

  20. 20.

    Cp. supra fn. 5.

  21. 21.

    See for an introduction to the problems involved Michl (2020), pp. 507 et seqq.

  22. 22.

    Cp. Günther (2020), p. 83.

  23. 23.

    To clarify: Corona restrictions that were not directly aimed at businesses but only affected them indirectly, such as orders for people to remain in lockdown, which resulted in decreased business opportunities are not akin to a closure order; see Korff (2020), p. 247.

  24. 24.

    Cp. Günther (2020), p. 83; there were, however, voices that considered such orders as a factual (or analogous) closure; see, e.g., LG Mannheim, dec. of 29 April 2020 (docket no 11 O 66/20; unpublished).

  25. 25.

    Günther (2020), pp. 84 et seq.

  26. 26.

    Cp. the sources cited by Fortmann (2020), p. 1079 who disagrees with the majority of scholars.

  27. 27.

    E.g., OLG Schleswig BeckRS 2021:10892; OLG Dresden BeckRS 2021:21604; OLG Hamburg BeckRS 2021: 21090; idem BeckRS 2021:21551; cp. in detail Günther (2021) p. 1145.

  28. 28.

    BGH, dec. of 26 January 2022 – docket no IV ZR 144/21 (unpublished).

  29. 29.

    See for an introduction, e.g., Finkenauer in Münchener Kommentar zum BGB (2019), sec. 313 BGB paras. 1 et seqq.; for a rough overview in relation to COVID-19 see Grüneberg in idem (ed.) (2022), sec. 313 BGB para. 37a.

  30. 30.

    Gesetz zur Abmilderung der Folgen der COVID-19-Pandemie im Zivil-, Insolvenz- und Strafverfahrensrecht (2020).

  31. 31.

    See in much more detail Reusch (2020), pp. 259–278 and Rixecker (2021) paras. 24 et seqq.

  32. 32.

    Another interesting and very problematic line would have been credit insurance, since credit insurers would have been either forced to drastically reduce its tendering of contracts or assuming enormous incalculable risks; this situation was turned unproblematic by an agreement with government, which offered a guarantee of 30 billion euros; see in detail Schradin (2022), pp. 437 et seq.

  33. 33.

    Cp. Rixecker (2021) paras. 43 et seq.

  34. 34.

    Cp. Seitz and Thiel (2020), pp. 110 et seqq.; contrarily, however, one must consider that in event cancellation insurance the increase of risk is already an element of the manifestation of risk see Lüttringhaus and Genz (2020), p. 258.

  35. 35.

    Rixecker (2021) para. 44.

  36. 36.

    See Schreier (2022), p. 462 with references to diverging opinions.

  37. 37.

    Seitz and Thiel (2020) pp. 114 et seq.

  38. 38.

    Here, the problems as they exist as under business closure insurance attach mutatis mutandis, cp. supra under sec. 2.

  39. 39.

    See supra under sec. 4.2.

  40. 40.

    See very detailed Genz (2020), pp. 1481 et seqq.

  41. 41.

    What is more, at least under general liability insurance contracts, there applies a risk limitation, the so-called infection clause, which excludes from cover cases, to be proven by the policyholder that such was not the case, where the infection was caused intentionally or grossly negligently; see Rixecker (2021) para. 84.

  42. 42.

    Here, there was actually a discussion if a Corona infection would amount to a serious disease if the insured person suffered a mild form; cp. Eckes (2020), p. 189. There is, however, little chance, at least in relation to travel cancellation insurance that courts would follow such rational.

  43. 43.

    Rixecker (2021) para. 48.

  44. 44.

    Matters are different where the insured persons are put into lockdown at the travel destination, in a way that they cannot return with their booked carrier and incur additional costs for stay and return. Yet, average travel insurance will only cover these costs, where they are caused by contracting a serious disease, since a pre-defined insured event has otherwise not occurred; cp. for a potential teleological widening of cover, both with a different understanding, Eckes (2020), p. 189; Günther and Piontek (2020), p. 242.

  45. 45.

    Schradin (2022), p. 446.

  46. 46.

    WHO (2020).

  47. 47.

    Cp. Schumm and Klumb (2021) para. 22 who view the pandemic in the legal sense to have occurred earlier.

  48. 48.

    Cp. for transparency concerns, e.g., Dörner in Prölss and Martin (fdrs.) (2021), VB Reiserücktritt no2 para. 8.

  49. 49.

    Grote and Beyer (2020), pp. 200 et seqq.

  50. 50.

    Cp. in detail on the crisis of life insurance and occupational pension Winter, Broichhausen and Schelo (2020), pp. 654 et seqq.

  51. 51.

    See in detail Neuhaus (2021), pp. 205 et seqq.

  52. 52.

    See, e.g., Rhein (2022), pp. 385 et seqq.; Stahl (2022), pp. 501 et seqq.; but also Grote and Triesch (2020), pp. 219 et seqq.

  53. 53.

    To remedy this situation, an academic project has set out to turn the oft century-old reinsurance customs into an optional legal instrument: the Principles of Reinsurance Contract Law (PRICL) (2019); for an overview see Bork and Wandt (2019), pp. 1468 et seqq.

  54. 54.

    Cp. in much more detail Arts. 2.4.2 and 2.4.3 PRICL.

  55. 55.

    See supra fn. 5.

  56. 56.

    See Grote and Triesch (2020), p. 227.

  57. 57.

    Grote and Schaaf (2020), pp. 237 et seqq. This part of the article is in large parts based on the previously mentioned work, which, however, needed actualisation.

  58. 58.

    Anonymous (2020), p. 16.

  59. 59.

    BaFin (2020a).

  60. 60.

    This was not a unilateral move of BaFin but was rather intended to put into practice EIOPA’s position that time limits should be extended if necessary; cp. EIOPA (2020e) paras. 22 et seqq.; Grote and Schaaf (2020), p. 238 (there fn. 12).

  61. 61.

    Grote and Schaaf (2020) p. 238 (there fn. 9—though the information of the quoted source is no longer active).

  62. 62.

    See BaFin (2020c).

  63. 63.

    Grote and Schaaf (2020), p. 238 (there fn. 13).

  64. 64.

    Frank Grund, the executive director of BaFin, in BaFin (2020b): “Es gibt eindeutig klare Fälle, die gedeckt sind, und eindeutig ungerechtfertigte Schadensmeldungen, die man nicht zu Lasten des Kollektivs decken kann. Bei der Vielzahl unklarer Fälle wäre es wünschenswert, wenn beide Seiten zu einer einvernehmlichen Lösung kämen”.

  65. 65.

    See IAIS (2020).

  66. 66.

    See BaFin (2017) paras. 57 et seqq.

  67. 67.

    Grote and Schaaf (2020), p. 239 rightfully point out that such a detailed contingency planning was not called for since sec. 23 subsec. 4 VAG (Art. 41 (4) Solvency II-Directive) only obligates insurers to guarantee emergency operations.

  68. 68.

    In this sense the BaFin (2018), much maligned at the time, proved rather advantages.

  69. 69.

    See for a quick overview Schradin (2022), pp. 446 et seq.

  70. 70.

    See supra under sec. 3.

  71. 71.

    In this sense Kittner (2021), p. 1409.

  72. 72.

    EIOPA (2020b).

  73. 73.

    BaFin (2020a).

  74. 74.

    Gal in Prölss and Dreher (2018) Art. 2 EIOPA Reg. para. 7; cp. in more detail Gal (2013), pp. 346 et seqq.

  75. 75.

    This can be especially seen in Art. 29 EIOPA Reg.; cp. on the functioning Gal in Prölss and Dreher (2018) Art. 29 EIOPA Reg. paras. 1 et seqq.

  76. 76.

    Reg. (EU) no 1094/2010; cp. for the (named) instruments, e.g., Gal in Prölss and Dreher (2018) art. 8 EIOPA Reg. paras. 4 et seq.

  77. 77.

    Cp. Report of The High-Level Group (2009) p. 13; see also Gal in Prölss and Dreher (2018) Art. 2 EIOPA Reg. para. 1.

  78. 78.

    Grote and Schaaf (2020), p. 246 (there fn. 48).

  79. 79.

    See EIOPA (2020e) para. 18.

  80. 80.

    Cp. EIOPA (2020e) paras. 9 et seqq. and 22 et seqq.

  81. 81.

    EIOPA (2020c).

  82. 82.

    EIOPA (2020d).

  83. 83.

    EIOPA (2020a) para. 6.

  84. 84.

    EIOPA (2020f) para. 6; regarding the Solvency II 2020 review see EIOPA (2020a) para. 4.

  85. 85.

    See EIOPA (2020f) paras. 7 et seqq. This was e.g., the discussion notes on value-chain/Insurtech, the second discussion paper on the methodological principles of insurance stress testing, the LTG review, the climate risk sensitivity analysis 2020 and the ultra-low yields impact project.

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    Jens Gal

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    María Luisa Muñoz Paredes

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    Anna Tarasiuk

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Gal, J. (2023). Business as (Un-) Usual. In: Muñoz Paredes, M.L., Tarasiuk, A. (eds) Covid-19 and Insurance. AIDA Europe Research Series on Insurance Law and Regulation, vol 7. Springer, Cham. https://doi.org/10.1007/978-3-031-13753-2_6

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