February 10, 2021 – Due to the long period of low interest rates, guarantee funds are no longer available. After such a fund was closed, Zurich revoked the guarantee, which in such a case was covered by a contractual clause. The Commercial Court of Vienna has ruled that the clause is partially ineffective, but the decision is not yet legally binding. VVO lawyer Konwitschka and consumer advocate Kolba discussed the case in the ORF public prosecutor.
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Around 15 years ago a Viennese bought a semi-detached house in Maria Ellend, Lower Austria; for this he needed financing from his bank. He took out a bullet loan and took out life insurance.
Two years later, his financial advisor suggested he switch to another insurance policy. This was the unit-linked life insurance “Zurich Safe Invest” with a maximum level and capital guarantee.
This was advertised in a folder as follows: “You can lean back and relax, because the amount of the guarantee can only go up and never go down. Your invested capital is always secured at the end of the term. “
In 2006 the contract was signed for a term of 23 years. The policyholder paid in just under 76,000 euros.
A letter from the insurance company
In 2019 the policyholder received a letter informing them that the original fund had been closed. He was offered three other funds to choose from, none of which, however, included a capital or maximum guarantee.
The insurance conditions contained a clause according to which the capital guarantee would lapse “if the guarantee funds provided under this product, for whatever reason, for the Zurich Insurance Corporation are no longer available. “
Because he did not make a selection, the policyholder was assigned a fund; at the same time, Zurich unilaterally revoked its guarantee. Thereupon he turned to his lawyer Robert Haupt. The ORF took on the case on the program “Bürgeranwalt”.
Right to change services too far
Lawyer Haupt told the ORF that he had thirty clients who were similarly affected; half of the cases are pending in court.
According to Haupt, an identical clause had been judged by the Supreme Court in another proceeding against a different insurance company as a right to change benefits that went too far. It can be assumed that the courts will orientate themselves on this case law.
For Haupt, the contract is impracticable and void: The old fund no longer exists, the insurer is not allowed to switch to the new one, which is why the contract must be reversed.
According to Haupt, there have been several insurance companies that have all acquired these funds from a certain fund company. So it is not a typical Zurich problem: “Of course all other insurance companies have that too.”
Zurich comments in writing
In the ORF study, Peter Kolba, chairman of the Consumer protection association, and Peter Konwitschka, lawyer at Insurance association (VVO), the case with moderator Peter Resetarits. A written statement was available from Zurich, from which Resetarits quoted:
“In the insurance conditions it was stated that the guarantee comes from the fund company and is not applicable if the guarantee fund is no longer available. The fund has kept the guarantee until its termination. “
The fund company had to end the fund in 2019 because it no longer made sense in the ongoing low interest rate phase, according to Zurich. You had no influence on it. The fund was liquidated at the highest price.
Funds with a 100 percent capital guarantee are no longer available on the market due to a lack of earnings prospects. From the point of view of Zurich, there is no legal basis for the reversal of the contract with four percent interest demanded by the consumer protection association.
Result of the low interest rate phase
In the discussion, Kolba referred to the contradiction between the aforementioned clause and the promises in the prospectus. Konwitschka, however, emphasized that the following sentence in the clause should also be taken into account:
“If a guarantee fund is dissolved or it is no longer possible to invest additional contributions in this guarantee fund, we will inform you immediately and determine a replacement fund that corresponds as closely as possible to the previous guarantee fund in terms of its risk-reward profile.”
This clause was not only contained in the 2006 contract, but also made available to the policyholder in the information prior to the contract, according to Konwitschka.
From the insurance company’s point of view, this is a description of what can happen at some point. In the wake of the financial crisis in 2008 and the period of low interest rates that has continued since then, it no longer made sense to invest in this fund.
Similar clause ineffective
Already in 2007 the Supreme Court declared a similar clause of the Skandia Insurance to be illegal in a collective action by the VKI, said Kolba. It is “unfair today to invoke clauses that are known to be said by the Supreme Court to be ineffective”.
In addition, the Vienna Commercial Court, as the court of appeal, recently ruled that this clause was ineffective in proceedings against Zurich Insurance, citing the 2007 Supreme Court decision.
The question is whether a policyholder gets his premium back minus the risk portion plus four percent interest if the contract is void. Kolba believes that one will still argue about this: “The Supreme Court must make a final and clear decision.”
The judgment is not yet final, the Commercial Court of Vienna has allowed the ordinary appeal, so Kolba. The VersicherungsJournal asked Zurich if it wanted to take this route; we received the following answer:
“With regard to the present case, we can inform you that it is pending again in the first instance and therefore not yet concluded. The question of legal remedies therefore does not currently arise in our proceedings. We do not provide any further comments on the ongoing proceedings. “
Surrender value upon termination of the contract
The Vienna Commercial Court only dealt with the first part of the clause, Konwitschka emphasized. The question arises, if the guarantee fund can no longer be saved, whether it would then still apply that another fund would have to be found.
And if the provision no longer applies, it is still not decided what should be included in the contract by way of a supplementary contract interpretation. The “crucial point” is that the guarantee has been met, but it is not clear what to do with it in the future.
In the event of the termination of the contract, which the customer can bring about himself at any time, the insurer has to § 176 VersVG to reimburse the surrender value, so Konwitschka. As for the demand for four percent interest, an enrichment claim is being asserted here.
Kolba collects
Kolba, on the other hand, argues that in 2006 the insurance company was “properly” wrong. It is “completely untruthful, what is in the prospectus”.
The question is whether it is wiser to invoke it and get the premium plus four percent, or to wait and see what comes out with life insurance.
His association is now collecting cases, said Kolba. Talk to the insurers will be sought; should it not be possible to complete this successfully, one wants to clarify the matter in court.
Further information
The program is still available for a few days in the ORF TVthek. The section with the described case is below directly accessible via this link.
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