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What general rules, requirements and procedures govern the conclusion of (re)insurance contracts in your jurisdiction?
The Insurance Contract Act contains no provisions regarding the conclusion of (re)insurance contracts. Thus, their conclusion is governed by the general principles of the Civil Code, pursuant to which a contract is entered into by way of a mutual agreement between the contract parties.
Given that the law provides no formal requirements, (re)insurance contracts may be validly entered into orally, in writing or conclusively.
Are (re)insurance contracts subject to any mandatory/prohibited provisions?
Mandatory and prohibited provisions regarding insurance contracts can be found in, among other things:
- the Insurance Contract Act;
- the Civil Code;
- the Consumer Protection Act; and
- the Act on Distance Selling of Financial Services.
These provisions typically deal with, among other things:
- the policyholder's rights to withdraw from the insurance contract;
- the policyholder’s obligation to pay the premium;
- the communication between the insurer and the policyholder;
- the duration of the insurance contract’s binding effect;
- the policyholder's obligation to mitigate damage; and
- the maturity of the insurer's performance under the insurance contract.
Reinsurance contracts are always business to business. Thus, there are hardly any mandatory or prohibited provisions. However, a reinsurance contract must not violate good morals or any statutory prohibitions.
Can any terms by implied into (re)insurance contracts (eg, a duty of good faith)?
In Austria, the good-faith duty is generally implied in all contracts, including (re)insurance contracts. The Supreme Court has based the interpretation of (re)insurance contracts on this general principle.
What standard or common contractual terms are in use?
The Association of Austrian Insurance Undertakings publishes insurance terms and conditions for various insurance products online. They are not mandatory and may be deviated from.
No standard or common contractual terms are in use. All Austrian (re)insurers use terms and conditions which are incorporated into the (re)insurance contract, usually by reference. These vary substantially between not only the different kinds of insurance product, but also the different (re)insurers.
What is the state of development in your jurisdiction with regard to the use of ‘smart’ contracts (ie, blockchain based) for (re)insurance purposes? Are any other types of financial technology commonly used in the conclusion of (re)insurance contracts?
No blockchain-based (re)insurance contracts are sold in Austria at present. The Austrian insurance market is still rather conservative. In general, insurance product sales are largely agency and broker driven. The main financial technology used for the conclusion of (re)insurance contracts is the online sale of insurance products, and price comparison websites have gained popularity since entering the market. In any case, there is still capacity for growth in this respect.
(Re)insurers offer various smart products as side products to a (re)insurance contract, such as a storm, bad weather or hail early warning system informing customers via text message about said upcoming weather conditions. Further, the development of wearable technology is affecting the health insurance market. For example, a customer may collect bonus points for certain health protection measures that it has taken (eg, running, climbing stairs or undergoing a regular health examination), all of which is tracked over the Internet. At the end of a certain period, the customer may cash in the accumulated bonus points at selected shops or service providers.
What rules and procedures govern breach of contract (for both (re)insurer and insured)?
This depends on the contract provision that has been violated and can be answered only on a case-by-case basis. For example, if the policyholder has infringed its main contractual obligation (ie, to duly pay the premium in full), the Insurance Contract Act explicitly provides that the insurer may, under certain circumstances:
- withdraw from the contract; or
- terminate the contract (in case of failure to pay a subsequent premium).
Further, under said Act, the violation of obligations by the policyholder or the insured may, under certain circumstances, release the insurer from its obligations under the insurance contract if the parties have previously agreed on this legal consequence. Conversely, if the insurer denies coverage, the policyholder or the insured may challenge this decision by bringing the insurance claim to court.
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