AUSTRIA Law and Practice Contributed by: Philipp Scheuba, BLS Rechtsanwälte GmbH
nication appears to be self-evident. After the contract has been concluded, the insured person has to inform the insurer about any increased risk. For example, the initial public offering of a company’s shares consti- tutes a notifiable increase in risk in the D&O insurance. The insurer is also obliged to inform the policyholder about their right to withdraw from the contract within 14 days. In the case of life insurance, the policyholder may withdraw within 30 days. 6.2 Failure to Comply With Obligations of an Insurance Contract If the policyholder culpably fails to report a significant circumstance, the insurer may withdraw from the con- tract. A withdrawal is only possible within one month from the date the insurer became aware of the viola- tion of the disclosure obligation. A withdrawal is nevertheless not possible if the poli- cyholder is not to blame for the lack of notification or for the inaccuracy of their information (eg, if the poli- cyholder answers an application question incorrectly or incompletely, because the insurer formulates it in an unclear way, or if the policyholder’s notification is lost by post). The withdrawal of the insurer leads to the cancellation of the contract from the outset – in other words, the contract is cancelled retrospectively from the beginning of the contractual relationship. Any claims that have already arisen shall be voided and both contracting parties must return any benefits received under the contract. Regarding the premium, despite the withdrawal, the insurer is entitled to that part of the premium that falls between the conclusion of the contract and the effectiveness of the withdrawal. In exchange, those events are covered that occur before the withdrawal becomes effective and do not fall within the hidden risk area. If a withdrawal from the contract is not pos- sible (eg, due to lack of culpability), the insurer can adjust the premium to the increased risk or, under cer- tain circumstances, terminate the contract. In addition to these notification obligations of the poli- cyholder, there are also certain information obligations of the insurer towards the policyholder that have to be provided for the most part prior to the conclusion of
the contractual declaration of the policyholder. In the event of a breach of these pre-contractual information obligations, the law grants the policyholder the right to withdraw from the contract under certain circum- stances. 6.3 Intermediary Involvement in an Insurance Contract Please refer to 5.1 Distribution of Insurance and Reinsurance Products . 6.4 Legal Requirements and Distinguishing Features of an Insurance Contract The Austrian Insurance Contract Act does not stipu- late a special form for the conclusion of an insurance contract. Therefore, according to general civil law, only a corresponding declaration of intent of the contract- ing parties is required, which can be made not only in writing but also, for example, by conclusive conduct or even verbally. Only in a few cases is a written form required (eg, withdrawal from the contract). According to civil law rules, an insurance contract must (only) stipulate the essentialia negotii of a con- tract, meaning the insured risk, the insurance fee and the nature of the insurance. Insurance companies often use general terms and conditions for multiple contracts, which have to comply with the Austrian Civ- il Code. Thus, surprise clauses or clauses grossly dis- advantageous are prohibited. Regarding the content of an insurance contract, there are no further limits set. 6.5 Multiple Insured or Potential Beneficiaries Insurance can also be concluded for third parties. In D&O policies, the company concludes an insur- ance contract for the company, while people in man- agement functions are covered by the policies. The insured persons do not have to be named in the poli- cies by name. It is sufficient if those people can be determined by their function. The knowledge of such persons is attributed to the insured company. There- fore, coverage can be denied if the management vio- lated an obligation. 6.6 Consumer Contracts or Reinsurance Contracts Since insurance contract law is strongly influenced by the principles of general civil law, most of the rel-
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