Reversal of life insurance and pension insurance policies under the law on unjust enrichment

The claimants requested additional payments under life insurance and pension insurance policies from the defendant, an insurance company. The policies were taken out in 1999 and 2003 in accordance with the “policy model” specified in section 5a of the old version of the German Insurance Contract Act. After several years, the claimants gave notice on the policies, upon which the insurance company paid out the repayment values. The claimants then objected under section 5a German Insurance Contract Act (old version) and demanded that all the contributions paid plus interest should be paid back minus the repayment values. Local Court Aachen dismissed the claimants’ requests, but Higher Regional Court Cologne allowed them in part.

Due to the effective objection in accordance with section 5a German Insurance Contract Act (old version), which was not limited and had not expired as a result of incorrect advice regarding the right of cancellation, the insurance policies had to be reversed under the law on unjust enrichment. In the opinion of the Federal Court of Justice, the court of appeal had correctly assumed that the claimants were able to demand the repayment of premiums under section 812 subsection 1 sentence 1 alternative 1 German Civil Code. These rights to reimbursement cover the value of all premiums paid subject to limitations, because at least the value of the insurance protection enjoyed by the claimants until they gave notice on the policies has to be offset when they are reversed due to the law on unjust enrichment. The value of the insurance protection can be measured taking into account the premium calculations; in life insurance policies the risk element may also be significant. Moreover, in the opinion of the Federal Court of Justice, the withholding tax and the solidarity surcharge (to cover the costs of German reunification) remitted to the tax office by the insurance company on the policyholder’s behalf when the repayment value is paid out have to be deducted as a pecuniary benefit. However, the costs of taking out the policy and the administrative costs do not have to be deducted.