Germany

OPPENHOFF & PARTNER

Peter Etzbach
peter.etzbach@oppenhoff.eu

1.

Insurance intermediation activities

1.1

Is the distribution of insurance products (hereinafter referred to as insurance

intermediation activities or insurance intermediation) limited to insurance
intermediaries in your country?
The German laws regulating insurance intermediation activities were significantly
amended in 2007. The amendments were driven by the EU Insurance Mediation Directive
(2002/92/EG) which was implemented by introducing respective definitions and regulations
in sections 59 et seq. of the German Insurance Contract Act (Versicherungsvertragsgesetz
(VVG)) as well as stipulating a new licence requirement for insurance intermediaries in
the German Trade, Commerce and Industry Regulation Act (Gewerbeordnung (GewO))
accompanied
by
a
Regulation
on
Insurance
Mediation
and
Advice
(Versicherungsvermittlungsverordnung (VersVermV)).
Furthermore, commercial agents and brokers are regulated by the Commercial Code
(Handelsgesetzbuch (HGB)). In addition, specific rules for insurance companies in their
dealings with insurance intermediaries have been included in the German Insurance
Supervision Act (Versicherungsaufsichtsgesetz (VAG)).
According to these rules, anyone who professionally acts as insurance broker or insurance
intermediary requires a licence. For details and exceptions please see the answers to the
respective questions below.

1.2

What does the term insurance intermediation include? Is there any definition set
forth by statutory or case law? In any case, please indicate which activities/services
are included in the above definition, for example, presentation or proposal of
insurance products, assistance or consultancy aimed at drafting the agreement?
Are collaboration activities that relate to the administration or execution of the
contracts drafted, even in the case of accidents, included in the definition? Does the
drafting of contracts or insurance agreements in a collective form on behalf of
insured individuals also form part of insurance intermediation activities?

Section 59 of the VVG indirectly describes insurance intermediation by distinguishing and

defining the different intermediaries and their activities. Insurance intermediaries within
the meaning of the VVG are insurance agents and insurance brokers.

An Insurance agent is anyone contracted by an insurer or another insurance

agent to arrange or conclude insurance agreements on a commercial basis.

An Insurance broker is anyone who contracts to arrange or conclude insurance

agreements for a client on a commercial basis without having being contracted to
do so by an insurer or an insurance agent. Anyone giving the person wishing to
take out insurance the impression that he is providing the services of an insurance
broker within the meaning of the preceding sentence, will be deemed an insurance
broker.

On the other hand insurance advisers advise third parties on a commercial basis in
respect of agreeing, amending or examining insurance products/agreements or in respect
of making claims arising under insurance agreements upon the occurrence of an insured
event or represent the policyholder out of court vis--vis the insurer without receiving an
economic benefit from an insurer or without being dependent on him in any other manner.
Insurance advisers are not considered insurance intermediaries, but are subject to some
of the same rules.
1.3

Are insurance intermediation activities allowed as ancillary activities to other

professional activities (eg, travel or rent-a-car services, etc) and to what extent?
Furthermore, are there exceptions that allow actors, other than insurance
intermediaries, to carry out insurance intermediation activities? Is it a matter
related, for example, to the risk covered, the duration or the cost of the policy
premium, etc?
German law provides for several exemptions from the requirement of an insurance
intermediary to obtain a licence. In the context of ancillary activities, two exemptions are
available.
According to section 34(d), paragraph 3 of the GewO, the authorities waive upon
application the requirements of a licence in the event that the applicant mediates
insurance agreements as a supplement to the goods delivered or services rendered in the
context of its primary activity. In such a case, the applicant would need to provide evidence
that (i) he mediates insurance agreements as a contractor of an insurance intermediary
holding a licence or as a contractor of an insurance company; (ii) he is covered by a
professional indemnity insurance; and (iii) he is reliable as well as appropriately qualified
and does not live in disorderly financial conditions.
More generally, insurance mediation does not require any licence in the context of
ancillary activities if these are carried out in small scale. According to section 34(d),
paragraph 9 of the GewO none of the licence requirements apply if:

a) the intermediary does not mediate insurance agreements as their main activity;
b) it solely mediates insurance agreements for which a knowledge of the offered
insurance cover is required;
c) it does not mediate life assurance or liability cover;
d) the insurance is an additional service to the delivery of goods or the rendering of
services and covers either the risk of defects, loss or damage of goods or the
damage or loss of luggage or other risks in relation to any travel arrangements
made by the intermediary, including liability or accident insurance to the extent
such cover comes in addition to the principal insurance of risks relating to such
travel arrangements;
e) the annual premium does not exceed 500; and
f)

the term of the insurance does not exceed five years.

Further exemptions are available for (i) people who mediate insurance agreements
covering credit risks associated with home loans from building societies within the
framework of a collective agreement; and (ii) mediating residual debt insurance as an

additional service accompanying the delivery of goods or the rendering of services in the
context of loan or leasing agreements if the annual premium does not exceed 500.
One additional noteworthy exemption from the licence requirement is available for
insurance agents who exclusively act for one insurer (or for several insurers if the
mediated products do not compete) and the insurer assumes the unrestricted liability for
the agents mediation activity.
2.

Insurance intermediaries requirements

2.1

In order to act as an insurance intermediary, is there need for an authorisation

and/or to be enrolled in a register? If yes, what are the requirements to be
authorised/enrolled in the register as an insurance intermediary (individual or legal
entities, integrity and/or professional requirements, etc)? Briefly explain how it
works.
Anyone who acts as an insurance agent or insurance broker on a professional basis
requires a licence (subject to the exemptions described above and below). A licence will
be granted by the Chamber of Industry and Commerce upon application. In principle, a
licence has to be granted unless:

a) facts justify the assumption that the applicant is not sufficiently reliable;
b) the applicants financial situation is in disorder, for example, if insolvency
proceedings are taking place with respect to the applicants assets;
c) the applicant cannot provide proof of a professional liability insurance; or
d) the applicant has not demonstrated (by passing a respective examination
conducted by the Chamber of Industry and Commerce) that he has sufficient
professional knowledge of insurance matters, in particular regarding the
requirements, offerings and scopes of different insurances as well as of the legal
foundations and of the rendering of advice to customers.
The licensed intermediaries will be enrolled in the respective register (section 11(a),
GewO).
2.2

In what form can anyone access and verify the registration/authorisation or verify
the fact that the insurance intermediary is a professional (eg via the web)?
Anyone licenced as an insurance intermediary will be registered in a public register which
can be accessed online at www.vermittlerregister.info.

2.3

Are insurance intermediaries with a registered office in another country allowed to

operate in your country and how (eg, under the right of establishment or freedom to
provide services in your country, as in the EU)? If yes, under what conditions? In
such a case, are they bound by the same obligations of the insurance intermediaries
with a registered office in your country? Please describe.
By virtue of the Insurance Mediation Directive, anyone who is registered as an insurance
intermediary in another Member State of the European Union does not require an
additional licence in Germany.

3.

Different types of insurance intermediaries

3.1

Please list the different types of insurance intermediaries acting in your country
such as agents, brokers, banks, financial intermediaries or financial advisers.
The types of insurance intermediaries acknowledged by law are insurance agents and
insurance brokers (see 1.2 above). Save for exempt activities, anyone engaging in
activities within the defined scope of the respective professions will be classified as one of
the two types of insurance intermediaries. This is irrespective of whether that particular
person or company is a financial services provider, a bank or any other kind of financial
intermediary or not.

3.2

Do insurance intermediaries need to enter into a written contract with the insurers
(or receive a mandate from the insurers)?
Insurance intermediaries do not need to enter into a written agreement regarding their
services with the insurance companies; however, it would be wise to do so for the purpose
of evidence. The type and scope of such contracts or mandates varies depending on the
type of insurance intermediary.

3.3

Can an insurance intermediary enter into a contract with the insurers (or receive a
mandate from the insurer) and in turn enter into one or more agreements with other
insurance intermediaries (the so-called horizontal distribution)?
Generally, insurance intermediaries are free to enter into sub-mediation agreements. In
particular, the sub-insurance intermediary may not require a licence if the principal
mediator is sufficiently licenced.

3.4

The insurance intermediaries more in detail:

3.4.1

The agent

3.4.1.1

Does the role of insurance agent exist in your country? If yes, describe the
agents functions.
Yes, the role of insurance agent exists in Germany. An insurance agent is anyone
contracted by an insurer or another insurance agent to arrange or conclude insurance
agreements on a commercial basis (section 59, paragraph 2, VVG).

3.4.1.2

In particular, does an agent act on behalf of the insurer or the insured? Who
pays the agents remuneration? To what kind of remuneration is the agent
entitled?
An insurance agent is typically a party to an agency agreement with, usually, one
insurer. However, so-called multiple agents exist who have contractual relationships
with several insurance companies as opposed to single agents who only act for one
particular insurer. Multiple agents can, in turn, be split into true multiple agents acting
for several insurance companies in the same line of insurance and into mock multiple
agents who act for different insurers but only in different lines of insurance.

3.4.1.3

If he acts on behalf of the insurer, describe the type of work relationship with
the insurer (eg, subordinate, para-subordinate or freelance, self-employed etc.).
Does the principal-agent model exist, that is, is one appointed by the insurer to
manage a particular branch or subsidiary?
An insurance agent who is a party to an agency agreement is independent from the
insurer, that is, typically self-employed if it is not a legal entity. Also, an insurance
agent may be furnished with far reaching powers enabling him to basically handle the
whole legal and business relationship with the insured.
Anyone distributing insurance products on the basis of an employment agreement with
an insurer would be acting directly for the insurer but not as an insurance agent within
the meaning of the law. These individuals are subject to certain rules of the HGB but
not to the specific rules applicable to insurance mediation.

3.4.1.4

What type of organisation does the agent have? Can he have staff working for
him (eg, sub-agents)?
An insurance agent may be an individual or a legal entity and may entertain a full
business organisation including employed or independent sub-agents.

3.4.1.5

Is the relationship between the insurer and the agent regulated by a collective
bargaining agreement? If yes, what does it mainly cover? Can the relationship
be exclusive to a particular area? Is the remuneration established by the
collective bargaining agreement? Can the provisions be waived by the parties
mutual agreement?
While an employee of an insurance company may act as an insurance agent within
the scope of a side job, his work within the context of the employment relationship
would not be considered to be an agency relationship. Thus, an insurance agent
would not be part of a collective bargaining agreement governing the employment
relationship with an insurer.

3.4.1.6

Does the termination of the work relationship between the agent and insurer
provide for the agents obligation to return the portfolio of contracts? In such a
case, would the agent be entitled to an indemnity?
An insurance agent only mediates insurance agreements. Thus, the insurance
relationship exists between the insurer and the policyholder but not between the
policyholder and the insurance agent. Therefore, any portfolio of insurance
agreements acquired by such an agent would not be his portfolio within the meaning
of the law. However, when the agency agreement ends, the agent would be entitled to
an adequate compensation if the insurer continues to receive benefits from insurance
agreements mediated by this agent. Such compensation would, however, not be
payable in the event that the agent has terminated the agency agreement without
cause.

3.4.2

The broker

3.4.2.1

Describe the brokers services? In general terms, do the services consist of

intermediation or are they similar to consultancy/advisory activities? Is the
broker an independent actor?

The insurance broker is obligated to base his advice on a sufficient number of

insurance products and insurers available on the market so that he is in a position to
make his recommendation, based on professional criteria, regarding which contract of
insurance is suited to meet the needs of the person wishing to take out insurance. This
would not apply in the individual case if the insurance broker explicitly informs the
client prior to contractual acceptance that he only offers a limited selection of insurers
and insurance products.
3.4.2.2

Who pays for the brokers remuneration (please specify case by case for the
different services, if any)? Is the broker allowed to retrocede a portion of his
remuneration to the insurer or to the insured?
Under the legal rules applicable to broker services in general, the remuneration would
be payable by the party mandating the services, which would be the policyholder. In
such a case, the broker would mediate an insurance agreement with a premium net of
commission. However, in practice the insurance broker does not receive his
compensation from the policyholder but from the insurer based on a commission.
An insurance broker (like the insurance agent) may not share his commission with the
policyholder if such a sharing would be considered to be a granting of an extraordinary
benefit. The reason for this is that such benefits should not induce the policyholder to
accept an insurance product which would be otherwise unfavourable. While the
pertaining regulation has been upheld by German and European High Courts, a Lower
Court ruling in 2012 has regarded the regulation to be partially invalid due to
insufficient clarity. Since then, the legal situation has been unclear. The Federal
Financial Supervision Authority (Bundesanstalt fr Finanzdienstleistungsaufsicht
(BaFin)) proposed to keep limitations in place but to amend these in order to have a
sufficiently clear scope of the regulation.

3.4.3

Banks, financial intermediaries, financial advisers and others allowed to act as

insurance intermediaries

3.4.3.1

Can banks, financial intermediaries and/or financial advisers act as insurance

intermediaries?
Yes. Banks, financial intermediaries and other financial advisers may also act as
insurance intermediaries but, however, would require a licence as insurance
intermediary unless exemptions are available (see above). These financial
intermediaries are not per se licensed to do insurance intermediation and must apply
to be enrolled in the register as an insurance broker or agent and would need to fulfil
the respective requirements.

3.4.3.2

Please define a financial intermediary. Are there particular requisites for the
profession of financial intermediary? Does the financial intermediary have to be
enrolled in another register (eg, a register of financial intermediaries)?
The brokering of business involving the purchase and sale of financial instruments is
considered investment brokerage. Generally, this is an activity which requires a
licence as a financial services institution, which requires a much higher standard. Yet,

such a banking licence is not required for brokerage services between customers on
the one side and licensed financial institutions on the other side.
Recently, financial intermediaries, which include the brokers exempt from a banking
licence, have been regulated by licence requirements which resemble the ones for
insurance intermediaries. Likewise, a register was established in which the licenced
financial intermediaries have to be enrolled.
3.4.3.3

Please define a financial adviser. Are there particular requisites for the
profession of financial adviser? Does the financial adviser have to be enrolled in
another register (eg, a register of financial advisers)?
Investment advice involves providing customers with personal recommendations in
respect of transactions relating to certain financial instruments where the
recommendation is based on an evaluation of the investors personal circumstances or
is presented as being suitable for the investor and is not provided exclusively via
information distribution channels or for the general public. It is governed by the same
rules as investment brokerage. Thus, the licence requirement applies to both financial
brokers as well as financial advisers.

3.4.3.4

Can financial intermediaries and/or financial advisers distribute any insurance

and/or financial products? If yes, under what conditions or with what
limitations?
If a financial intermediary or a financial adviser sought to distribute insurance products,
he would require a separate licence as an insurance intermediary. They may not claim
that insurance products are generally ancillary to financial services, however, they can
make use of the same exemptions, for example, in the case of residual debt
insurance.

3.4.3.5

With reference to insurance intermediaries other than agents, brokers, banks,

financial intermediaries and financial advisers, as indicated under question 2.1
above (if any), please describe what kind of products they can distribute and
under what conditions.
The only intermediaries other than agents and brokers allowed to distribute insurance
products are the ones which fall under one of the exemptions described in 1.3 above.

4.

Rules of conduct and responsibilities

4.1

Are there rules of conduct that insurance intermediaries should comply with (eg,
duties in relation to the obligation of utmost care, correctness, utmost good faith,
information, adequacy, transparency, conflict of interests, filing of documentation,
separate accounting or other accounting obligations)?
Please describe the above duties, specifying if they apply to all the different
insurance intermediaries (eg, agents, brokers, banks, financial intermediaries,
financial advisers, etc) and whether the content differs with particular reference to
responsibility according to the type of actor/activity and person (insurer or
insured) receiving the activity.
There is no general level of care applicable to insurance meditation services deviating
from the common standards for contractual relationships of this kind. While the insurance

agent acts on behalf of the insurer, the insurance broker owes fiduciary obligations to the
customer. However, both insurance intermediaries have to obey specific obligations vis-vis the customer.
a) As said above, the insurance broker has to base his advice on a sufficient
number of insurance products and insurers available on the market so that he
is in a position to make his recommendation, based on professional criteria,
regarding which insurance product is suited to meeting the needs of the
person wishing to take out insurance. An insurance agent must inform the
customer on which market and information basis he is providing his services,
and must state the names of the insurers on the basis of which he is giving
advice and the name the insurer on behalf of whom he is working, and
whether he is working exclusively for him.
b) The scope of the duty to advise and document any advice varies depending
on the level of the customers experience. To the extent the difficulty of
assessing the insurance product being offered or the customer himself and his
situation gives rise thereto, an insurance intermediary must ask the customer
about his wishes and needs and, also bearing in mind the relations between
the time and effort spent providing the advice and the premium to be paid by
the policyholder, must advise the customer and state reasons for each piece
of advice given in respect of a particular insurance product. He must
document this taking account of the complexity of the contract of insurance
being offered.
Unless waived, the policyholder has to be provided in a clear and comprehensible written
form with the information described in (a) above before submitting his contractual
acceptance, and the information described in (b) above before the contract is concluded.
Any such information comes in addition to the information the insurer has to provide to the
policyholder, which is closely defined in a respective regulation. The insurance
intermediary has to provide further specific details in accordance with section 11 of the
VerVemV, in particular he must disclose any shareholdings exceeding ten per cent that he
holds in an insurer or that an insurer holds in the intermediary.
Further, the insurance intermediary must compensate damages incurred by the customer
on account of a breach of one of the duties described above and bears the burden of proof
for not being responsible for the damage.
These specific obligations to advice and document do not apply in case of large risks.
A separate accounting (or more generally a separation of assets) would be required if the
intermediary also handles the payment streams.
4.2

Does the insurance intermediary represent the insurer? By way of example, is the
agent also the insurers representative vis--vis the customer, and if so, does this
also apply during trial before a court? Is there a matter of imputation of knowledge?
What happens when a broker has information on matters relevant to the insurers
decision to insure which the broker fails to disclose to the insurer? Is the insured
deemed to have breached its duty of disclosure in such circumstances? In which
cases? Can the insurance intermediary be accountable for the contracts he
executed on behalf of the insurer?

Unlike insurance brokers, insurance agents are representatives of the insurer within the
scope of the agency agreement. Generally, any acts or omissions as well as any
knowledge of the insurance agent will be imputed to the insurer.
This is different in the case of an insurance broker, who primarily acts on behalf of the
customer. Any knowledge of the insurance broker would not be imputed to the insurer,
unless the insurer has granted powers of attorney to the insurance broker with respect to
the receiving and making of declarations in the context of the mediating insurance
products. Such powers of attorney are frequently granted under cooperation agreements
between the insurance broker and the insurer. The insurance broker, however, has to take
care that such cooperation agreements do not interfere with his duties owed to the
customer.
If the broker has no powers to accept declarations on behalf of the insurer, his knowledge
will be not imputed, so that he would be liable towards the customer if he fails to forward
relevant information received from the customer to the insurer, which permits the insurer to
deny or reduce cover.
4.3

Is the insurer jointly liable for damages caused by the insurance intermediary,
appointed by the same, when executing intermediary activities? Who is liable vis-vis the insured person? Is it always the intermediary or the insurer?
Whether the insurer is liable for the fault or misconduct of the insurance intermediary
depends on whether the intermediary is an agent or a broker. An insurance agent acts on
behalf of the insurer, so that his fault would trigger the insurers liability. In addition, the
insurance agent will incur a personal liability based on a liability statute (section 63, VVG)
in the case of negligence or intent with respect to the specific duties to advise and
document. Where a liability of the insurance agent and the insurer is based on the same
misconduct, it would be considered a joint liability.
Since the insurance broker, on the other hand, acts in the interests of the customer, the
insurer would generally not be liable for the brokers misconduct or fault, unless the broker
acted on behalf of the insurer within the scope of a cooperation agreement. Therefore, a
joint liability will usually not be the case, but depends on the given set of facts.

4.4

Are there particular regulations or specific forms of compensation for damages

caused to the insured person?
In addition to the general rules on damage compensation under the laws of contract or tort,
a specific basis for damage claims in case of the intermediarys negligence or intent is
established in section 63 of the VVG. It is noteworthy that the burden of proof is shifted to
the insurance intermediary with regard to the question of negligence or intent. In particular,
with respect to insurance agents, this grants an additional basis for damage claims.

5.

Supervision and sanctions

5.1

Regardless of the requirement of an authorisation and/or enrolment, are insurance

intermediaries subject to the control of supervisory bodies? Does the supervisory
body have powers/duties of prudential supervision on the insurance intermediarys
activities, and if so, in what way does it act?

Insurance intermediaries are not directly subject to supervision by insurance regulatory

authorities, which would usually be the BaFin. However, the BaFin may exercise some
indirect supervision because of the rules on the cooperation of insurers with insurance
intermediaries. BaFin, however, would impose any sanctions based on these
competencies on the insurer, but not on the intermediary, following the usual
administrative proceedings.
Insurers are required to cooperate only with professional insurance intermediaries who are
licensed under section 34(d), paragraph 1 of the GewO, exempted from the licence
requirement or who are not subject to this requirement and who are entitled to receive
assets from, or for the benefit of, the policyholder or can provide proof of a financial
guarantee covering any assets accepted from the policyholder.
Any cooperation with professional insurance intermediaries who are not subject to the
licence requirement, or who are exempted from it, and carry out their insurance mediation
activities on behalf of one or more insurers is permissible only if the intermediaries are
reliable and have well-ordered finances, and if the insurance undertakings ensure that the
intermediaries are sufficiently qualified to mediate the specific insurance product.
Insurers must respond to complaints about insurance intermediaries who mediate their
insurance products. They must inform the competent authority of repeated complaints that
can be of significant importance for assessing the reliability of an intermediary.
The BaFin may also prohibit insurance intermediaries from granting policyholders any
special allowances in any form. It may also prohibit intermediaries from referring or
concluding insurance agreements in Germany on behalf of an undertaking that does not
hold the necessary authorisation to carry on the relevant class of insurance business.
5.2

Are there fines for violations of the insurance intermediaries obligations? If yes,
please describe.
Acting intentionally or negligently as an insurance intermediary without the required licence
is an administrative offence punishable by a fine of up to 5,000.
Further, it constitutes an administrative offence if an insurer cooperates intentionally or
negligently, in violation of the rules set out above with an insurance intermediary
punishable by a fine of up to 150,000. Also, an administrative offence punishable by a
fine of up to 50,000 is deemed to be committed by any person who wilfully or negligently
intermediates insurance contracts on a commercial basis for an undertaking that does not
have the authorisation required to carry on such insurance business.

5.3

Do sanctions also apply to foreign intermediaries who operate in your country?

With respect to sanctions for insurance mediation activity without a proper licence any
foreign intermediary would be subject to these sanctions. However, if the foreign
intermediary is registered as an insurance intermediary in another EU Member State
based on the Insurance Mediation Directive this would be regarded as a sufficient licence.
Regarding the (limited) further specific sanctions for actual misconduct, the sanctions
would also be imposed on foreign intermediaries.

5.4

Is there a consultation procedure with the insurance intermediary before the fine is
applied?

Yes, the application of fines requires a hearing of the charged person in line with the
customary legal procedures.
5.5

Could the application of more fines, or the breach of particular regulations, result in
the revocation of the authorisation, or in the intermediary being struck off the
register (if any), or in the prohibition to act as an insurance intermediary? If yes,
what are the most relevant circumstances?
The application of fines and the breach of particular duties and regulations would indicate
to the respective authorities that the person in question may not be sufficiently reliable to
be permitted to act as an insurance intermediary (see 2.1 above). This would result in the
revocation of the licence and the deletion of the person from the register. Very significant
circumstances in this context are fraud or embezzlement.