In a 22 September 2021 judgment, the Higher Regional Court of Karlsruhe ruled on transparency requirements for an insurance broker that uses a comparison platform.(1)
The Federation of German Consumer Organizations (the claimant) sued the defendant for injunctive relief against unfair business practices. The defendant was a licensed broker and operated an online comparison platform. On its website, the defendant offers, among other things, a comparison for private liability insurance policies. Users of the comparison platform can directly view the insurance policies listed there via the defendant's platform. At the end of the search engine on the website, there is a linked reference that opens a pop-up window to a list of the "participating insurance companies" that are on the platform. Approximately half of the insurers in the German private liability insurance market are included in the comparison that is offered by the defendant's platform.
At first instance, the Heidelberg Regional Court allowed the claim and ordered the defendant to refrain from offering insurance policies for comparison without expressly informing visitors that the comparison was based on a limited selection of insurance policies and contracts before they submit their contract declaration, and informing them of the market and information basis for the insurance.
The Higher Regional Court of Karlsruhe dismissed the defendant's appeal.
The Court held that the defendant acted unfairly within the meaning of sections 3(a) of the Act Against Unfair Competition (UWG) because the defendant did not clearly indicate that their comparison represented only a selection of insurers and insurance policies.
Section 3(1) of the UWG forbids unfair business acts. The Court decided that the offer of the non-binding insurance comparison constituted a "business act" within the meaning of section 3 of the UWG. The Court argued that with the offer of the non‑binding insurance comparison, the defendant aimed at preparing a business transaction because comparison platform users were shown the possibility of a subsequent insurance brokerage by the defendant.
A business act is considered unfair according to section 3(a) of the UWG if it violates legal regulations. The Court held that the defendant had violated the provisions of sections 60(1) and 60(2) of the Insurance Contract Act (VVG). According to this regulation, insurance brokers are obliged to base their advice on a "sufficient number" of insurers and insurance contracts offered on the market, so that they can make a recommendation based on professional criteria as to which insurance contract is suitable for the needs of the policyholder.
First, the Court decided that the defendant by making the online application available to the customer was acting as an insurance broker.
Second, in the opinion of the Court, the defendant did not provide a sufficient basis for advice since its comparison portal shows only approximately half of the insurers in the market. The defendant as a broker had a basic obligation to consider all insurers in the market in its advice (section 60(1) of the VVG). A broker is exempted from this obligation only if they clearly point out the fact that the selection of insurers is limited (section 60(1), second sentence).
However, it was not sufficiently transparent and clear to place such a notice only behind a hyperlink with a pop-up window. Further, a reference to "consumer information", which in turn contained a link to "participating" and "non-participating insurers", could not be an express reference to a limited insurer number. In addition, if a broker decides to base their advice on only a limited number of insurers and contracts, they must indicate – before the submission of the contract declaration by the policyholder – on which market and information basis they are providing their service, as well as the names of the insurers on which their advice is based. This would require more than listing the participating insurers; it would require the market share and relative importance of the participating companies in relation to the other insurers. If the broker cannot provide this information, they should estimate and mark this as an estimate.
Finally, the information as regards the advice by the broker must be provided in text form; if disclosure via a website were sufficient at all for this purpose, it would at least have to be ensured that it could not be changed at will by the website operator. Also, if the consumer is offered the option of saving to their own computer, elements should be included that also encourage the consumer to save – only copying the information would not be sufficient.
Due to the fundamental importance of the case, the Court allowed an appeal to the Federal Court of Justice.
The Court's judgment confirms that of the Regional Court of Frankfurt am Main, dated 6 May 2021,(2) which found the comparison platform of another broker to be insufficiently transparent. In addition, the Court still specified obligations regarding market information in the case of only a limited selection of brokers.
The requirements for the advisory and information duties of intermediaries, especially brokers, are constantly increasing. This ruling once again calls for more comprehensive disclosure with regard to the market and information base for brokers that use only a limited selection of insurers and insurance contracts.
In principle, however, it must be considered whether such a high volume of information is actually in the consumer's interest, as it can be assumed that with too much information, simply not everything is read or can be read.
It now remains to be seen whether the Federal Court of Justice will follow the view of the Higher Regional Court of Karlsruhe.
For further information on this topic please contact Carolin Schilling-Schulz or Franziska Scheifler at Arnecke Sibeth Dabelstein by telephone (+49 40 31 779 70) or email ([email protected] or [email protected]). The Arnecke Sibeth Dabelstein website can be accessed at www.asd-law.com.