In the beginning of this year, we posted a blog concerning the duty of disclosure of information of insurers regarding profiteering policies. Our conclusion: discords between several judicial authorities bring uncertainty to the position of insurers in the profiteering policy conflicts. We anticipated that the coming judgements might eliminate this uncertainty. What happened in the meantime?
Several (sometimes contradictory) rulings of district courts and a court of appeal were published. Furthermore – and more importantly – the Rotterdam district court published its ruling on the longstanding dispute between insurer Nationale-Nederlanden Levensverzekering Maatschappij N.V. (“NN”) and interest group Woekerpolis.nl. In this dispute, Woekerpolis.nl represents hundreds of thousands profiteering policy holders.
NN: the KiFiD rulings
As stated in our previous blog, NN is involved in disputes concerning the duty of disclosure of information in the pre-contractual phase of NN towards several policy holders with regard to profiteering policies.
In March 2016, the Dutch Financial Services Complaints Board (Klachteninstituut Financiële Dienstverlening, “KiFiD”) – to the extent relevant – ruled that:
i. information concerning the premiums and the costs deducted from the premiums are necessary for a proper understanding of the essential elements of the investment-linked insurance contract by the consumer; and
ii. an insurance company is required to – in the pre-contractual phase – at least inform consumers regarding the costs that will be deducted from the premiums and the possible consequences thereof.
NN subsequently brought an appeal against the KiFiD ruling before the KiFiD appeals board. In June 2017, the KiFiD appeals board – briefly put – confirmed the KiFiD ruling.
NN: the Rotterdam district court ruling
In July 2017, the Rotterdam district court published a ruling with regard to a similar dispute between NN and Woekerpolis.nl. Woekerpolis.nl represents hundreds of thousands profiteering policy holders. Contrary to the KiFiD rulings, the Rotterdam district court decided fully in favour of NN.
According to the Rotterdam district court, NN – briefly put – met its duty of disclosure of information based on the general accepted views and the law that were applicable at the time of the conclusion of the contracts.
The general accepted views entailed freedom of contracts as a general principle. The acceptability of the relation between the price and value of investment-linked insurance contracts was subject to the free consideration of the parties involved. Furthermore, with respect to the applicable law, for example between 1994 and 1996, NN met the requirements with regard to its duty of disclosure of information, based on the – then applicable – regulation (the “RIAV 1994”). The RIAV 1994 entailed that NN needed to pre-contractually inform its client on the gross premiums and on the obligated payments by the insurer to the policy holder. The Rotterdam district court ruled that NN, between 1994 and 1996, met both the duty of disclosure of information following from the general accepted views and the duty of disclosure of information following from the then applicable law.
The Rotterdam district court emphasized that the general accepted views and the law are subject to alteration. Therefore, the current general accepted views and applicable law do not need to be similar to the general accepted views and law that were applicable at the time of the conclusion of the contracts.
In conclusion, the Rotterdam district court ruled that NN sufficiently informed its clients with regard to the costs and investment risks of the investment-linked insurance contracts. The court rejected all claims of Woekerpolis.nl.
What is next?
Woekerpolis.nl announced that it will appeal against the decision of the Rotterdam district court at the court of appeal. Furthermore, Woekerpolis.nl stated that it expects this legal proceeding to be continued all the way up to the Supreme Court (de Hoge Raad).
The ruling of the Rotterdam district court does not bring full certainty with regard to the position of insurers in the profiteering policy disputes: still many other district courts and even a court of appeal decide differently on similar cases. However, the dispute concerned involves the largest profiteering policy dispute up till now, as it related to the interests of hundreds of thousands single profiteering policy holders. Therefore, the decision might entail an indication on what the new prevailed direction in the profiteering policy disputes is.
Linda van Hal focuses on financial regulatory law. She advises on national, international and European regulatory matters affecting banks, insurers, investment firms, investment funds and other financial entities.