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In its decision C-633/20 of 29 September 2022, the European Court of Justice (ECJ) recognised that the concept of an insurance intermediary or insurance distributor also includes a legal person who offers voluntary membership in a group insurance policy that it previously concluded with an insurance company, for which it receives remuneration from its customers who in return are entitled to claim insurance benefits.
In the case in the main proceedings, the defendant commissioned advertising companies to offer consumers the possibility of joining a group insurance policy in return for payment by way of door-to-door advertising. For this purpose, the defendant itself concluded a group insurance contract with an insurance company covering illness and accident during foreign travel, including repatriation costs. The defendant, itself a policyholder, pays the premiums owed to the insurance company. The defendant's activity was not aimed at concluding insurance contracts, but rather at offering consumers the possibility of membership in the group insurance policy it had concluded.
The plaintiff believed the defendant's activity was insurance mediation, for which a licence under trade law was required, and sued for an injunction against the activity. The action was upheld at first instance but dismissed at second instance.
Is a company – which as a policyholder maintains foreign travel health insurance as well as foreign and domestic repatriation costs insurance as group insurance for its customers with an insurance company, sells memberships to consumers that entitle them to claim insurance benefits and receives remuneration from the recruited members for the acquired insurance coverage – an insurance intermediary within the meaning of Art. 2 Nos. 3 and 5 of Directive 2002/92 (IMD Directive) and Art. 2 para. 1 Nos. 1, 3 and 8 of Directive 2016/97 (IDD Directive)?
The German Federal Court of Justice thus wanted to know whether the term "insurance intermediary" (IMD-RL) and therefore the term "insurance distributor" (IDD-RL) covers a legal entity whose activity consists in offering voluntary membership in a group insurance policy previously concluded by it with an insurance company, for which it receives remuneration from its customers, and which entitles the customers to claim insurance benefits.
The prerequisite for qualification as an insurance intermediary or as an insurance distributor is that insurance mediation or insurance distribution is carried out in return for remuneration.
Insurance mediation or insurance distribution consists of advising, offering, proposing or carrying out other preparatory work for the conclusion of insurance contracts, concluding insurance contracts or assisting in their administration and performance, in particular in the event of a claim (margin no. 31 et seq.). Offering voluntary membership in a group insurance contract is comparable to these activities, which are aimed at having policyholders conclude insurance contracts with an insurer. Whether the legal entity offering to join the group insurance contract is itself a party to the group insurance contract as a policyholder is irrelevant (paras. 45-46).
According to Art. 1(1)(9) of the IDD, the concept of remuneration includes all types of commissions, fees, charges or other payments, including economic advantages of any kind, or financial or non-financial benefits or incentives offered or granted in relation to insurance distribution activities. Accordingly, it is irrelevant that the payment is made by the joining members to the legal entity (as the insured party) each time they join the group insurance contract and not by the insurer in the form of, for example, a commission. Therefore, the criterion of remuneration is considered to be fulfilled if each membership of a customer of the legal entity that has concluded the group insurance contract with the insurance company and pays insurance premiums to it in this context leads to a payment to this legal entity. The prospect of this payment constitutes an economic interest of its own, which is distinct from the interest of the members in obtaining the insurance coverage resulting from the contract in question and is likely to induce them to work towards a large number of contract entries (paras. 41-42).
For these reasons, the group policyholder in the initial proceedings was to be qualified as an insurance intermediary or insurance distributor.
Finally, the ECJ also explicitly referred to the corresponding licensing and registration requirements for the above-mentioned activities of group policyholders.
If a group insurance policyholder receives remuneration for offering group insurance premiums to third parties, it must therefore be classified as an insurance intermediary. This classification may result in the policyholder not only needing a commercial licence to engage in insurance mediation, but also being required to fulfil all information and disclosure obligations as well as continuing education necessary for an insurance intermediary.
authors: Marguerita Sedrati-Müller, Daniel Höhnl