A significant amendment to the German Act Against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb (the UWG)) came into force on 29 December 2008. This amendment implements the Unfair Commercial Practices Directive (2005/29/EC). The main feature of the amendment is a non-comprehensive blacklist of around 30 misleading or aggressive market practices - some of which refer to the distribution and handling of insurance products. Following the implementation these practices are no longer permitted under any circumstances. In addition, the scope of the UWG extends beyond pre-contractual practices to any business practice, whether before, during or after the term of the contract.
While most of the blacklist provides examples of practices seen in the retail sector and in the sweepstake industry, also included are practices which relate to the distribution and handling of insurance products. These blacklisted practices include: insurers leaving customer claims systematically and repeatedly unanswered; imposing unnecessary information disclosure obligations on policyholders; the advertising of statutory rights or requirements as a special feature or advantage of products; marketing products by sponsoring articles in the press which are disguised as objective information; giving incorrect descriptions of current market conditions or citing sources in order to leave the impression that the product cannot be bought cheaper anywhere else.
The blacklist is not comprehensive, and the courts have the right to extend the list in the course of proceedings relating to the infringement of consumer or competition rights under the act. It remains to be seen how many proceedings will be started by consumers and competitors relating to practices during and after the contract term. The German Association of Insurers (GDV) has stressed that it believes that no insurer acts in breach of the new rules.
Government bodies are currently discussing further legislative action against cold-calling which will complement the new set of rules to facilitate and strengthen consumer rights in Germany following a number of widely discussed cases of bad and illicit selling practices in various industries in 2008.