AUSTRIA Law and Practice Contributed by: Philipp Scheuba, BLS Rechtsanwälte GmbH
tant aspects – especially with regard to the accounta- bility of the intermediary. All distribution channels have to comply with the applicable regulations with regard to insurance distribution – these are (i) the Industrial Code (GewO), applicable to insurance agents and brokers, and (ii) the Insurance Supervision Act 2016 (VAG 2016), applicable to insurance companies. All intermediaries need a business licence for their inter- mediary services. To obtain such licence the inter- mediary has to file a business registration with the competent administrative authority. Insurance companies are able to sell insurance con- tracts by employees (direct sales). In this scenario, employees function as direct representatives of the insurance company and are identifiable as such in all mediation activities. Co-operation is based on labour law regulations and is characterised above all by fac- tual and (in contrast to other forms of mediation) per- sonal binding instructions on the employee. Insurance Agents An insurance agent can either act exclusively for just one insurance company or as a multiple agent for several. The insurance agent as independent entre- preneur is responsible for compliance with corpo- rate, company and, above all, trade law regulations. Despite this much broader relationship between insur- ance agents and insurance companies, co-operation is characterised by a close connection. Thus, the insurance agent is often contractually obligated to follow objective (but not personal) instructions. For example, the insurance agent is usually required to use the corporate identity of the insurance company to comply with internal insurance guidelines and busi- ness processes that are intended to ensure successful economic co-operation. Consequently, when it comes to mediating contracts, an insurance agent’s responsi- bility mirrors that of a directly employed staff member engaged in direct sales. Insurance Broker An insurance broker – just like an insurance agent – is an independent entrepreneur and must therefore be strictly separated from the insurance company. In contrast to the insurance agent, the insurance broker is not affiliated with the insurance company. Instead, they represent the policyholder, to whom they are lia-
ble in the event of improper advice. Actions that the insurance broker undertakes vis-à-vis the insurance company on behalf of the policyholder are thus basi- cally attributable to the latter, as are actions undertak- en by the policyholder themselves. The profession of insurance brokerage in the form of insurance brokers and consultants in insurance matters is a regulated profession; this requires the necessity of obtaining a corresponding qualification to practise the profession. Due to their practical relevance in Austria, distribution by credit institutions (banks) should also be mentioned here. In principle, they are not subject to any particu- lar restrictions; all forms of insurance intermediation are at their disposal. However, a separate approval of the Austrian Financial Market Authority (FMA) is required, as this authority assumes the function of a trade authority in the case of insurance brokerage by a credit institution. 6. Making an Insurance Contract 6.1 Obligations of the Insured and Insurer When concluding the insurance contract, the policy- holder must disclose all circumstances to the insurer, which are known to them and could be significant for the insured risk. Circumstances that can influence the insurer’s decision to conclude the contract or to agree to the terms, are considered significant. Circumstanc- es, which the insurer asked for explicitly and in written form, are – in case of doubt – also considered signifi- cant. This duty of disclosure is a statutory obligation. Insurers do not have to proactively seek information from the policyholder, but generally use clauses in their terms and conditions stipulating certain disclosable information and circumstances. The circumstances relevant to the assessment of the risk to be insured are in practice usually requested in the application form. If the applicant answers these questions truth- fully and completely, it can usually be assumed that the applicant has fulfilled their obligation to disclose. However, based on the jurisprudence of the Austrian Supreme Court ( Oberster Gerichtshof , or OGH), cir- cumstances that are not expressly requested must be communicated additionally if an application question conclusively refers to them overall, or if their commu-
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