Ineffectiveness of a policyholder’s withdrawal due to his inconsistent behaviour

The claimant (an individual) took legal action against the defendant (an insurance company), one of the aims being to seek a refund of premiums paid into a unit-linked life insurance policy. The defendant had issued the insurance certificate to the claimant in April 2007. In July 2009, the claimant gave notice on the policy and asked for the “accumulated value” to be paid out to him. In September 2009, the defendant confirmed the notice of termination, at the same time informing the claimant that a surrender value did not exist yet at the time notice was given. The claimant subsequently tried to revoke the conclusion of the contract in September 2013. To justify this, the claimant pointed out among other things the lack of sufficient clarity in the information on rights of withdrawal and the incompatibility of section 5a subsection 2 sentence 4 German Insurance Contracts Act with European law, which resulted in a non-expiring right to withdraw.

Nuremberg Higher Regional Court started by making clear that the claimant had been properly informed about its cancellation rights. As far as the incompatibility of section 5a subsection 2 sentence 4 German Insurance Contracts Act with European law is concerned, the court explained that the question whether the policy model under which T&C are only received together with the insurance certificate, i.e. after the policy has already been signed (Policenmodell), was compatible with European law is not relevant. The court held that even if this model was assumed to be incompatible with European law, under the principle of good faith (section 242 German Civil Code) the claimant was precluded from invoking that the contract was allegedly ineffective after it had been carried out for years. The court said that it was in bad faith for the claimant to continue the policy for years, paying regular premiums, after having received proper information on his rights of withdrawal. Thus it reasoned that the total length of time between conclusion of the insurance policy and assertion of the claims (over 6 years) should be taken as a basis, and not the length of time premiums had been paid (2 years and 4 months).

The court continued that by waiting for years the claimant had created a special degree of reliance on the part of the defendant because, as the surrender value had not been paid out, the claimant typically must have had a particularly strong interest in the insurance relationship being wound up in a different way.