Fund police: Zurich responds to allegations by the SAAM

2.6.2021 – Following a ruling by the Vienna Commercial Court on the subject of guarantee fund loss in fund policies, the consumer protection association recently announced further proceedings against Zurich. As Zurich has now told us, from their point of view, the proceedings have not yet been concluded: they have taken an appeal and the court’s decision is still pending.

Short flashback: a few days ago he had Association for the protection of consumer interests (VSV) a “wave of lawsuits” against the Zurich Insurance Company announced (Insurance Journal May 26, 2021).

The SAAM relies on a judgment of the Vienna Commercial Court. The matter concerned a unit-linked life insurance policy, in which a guarantee fund failed, and a clause which, as a result, provided for the lapse of the capital guarantee.

Zurich had not appealed to the Supreme Court against this judgment, it was therefore final, declared the SAAM. He accused the insurer of not being ready to “enter into orderly settlement talks” – hence the “lawsuit”.

The SAAM started a collection campaign months ago, which deals with unit-linked life insurances whose originally agreed guarantee fund expired before the end of the contract period (VersicherungsJournal 28.1.2021).

100 percent guarantee fund “no longer made sense”

What does Zurich say about it? “Funds with a 100 percent capital guarantee had to be terminated by fund companies after 2018 because they no longer made sense in the ongoing phase of low interest rates,” the company wrote to us. “The customers would not have been able to generate any more income.”

Funds with a 100 percent capital guarantee are therefore no longer available on the market due to the lack of earnings prospects. “We informed all of our customers about the fund closings and offered them alternatives,” said Zurich.

Zurich did not give a number of how many contracts there are in which guarantee funds have defaulted prematurely. “So far, only a few customers have contacted us regarding this topic.”

Four percent interest rate: “no legal basis”

“The reversal of contracts with 4 percent interest now demanded by the consumer protection association has in our opinion no legal basis,” the insurer explained to the VersicherungsJournal. It is also “counterproductive in many customer situations”.

Direct discussions with customers are “of course still open to find the best possible solution for our customers”.

Reversal of the disputed contract?

In a questionnaire, we wanted to know in which customer situations a four percent interest rate would be counterproductive.

“If the transaction is reversed, the insurance cover requested by the customer expires, regardless of the interest,” replied Zurich.

For the specific product, there are “all types of survival benefits from 5 percent to 200 percent of the contractually agreed net premium amount. It is also possible to change the desired protection against death. “

Proceedings could still go on

And how is the specific case that the Commercial Court of Vienna dealt with? “From our point of view, the aforementioned procedure has not yet been completed,” said Zurich. Therefore, she does not want to comment on it any further.

It is therefore not closed, explained the Zurich, “since we have still taken an appeal and the decision of the court is still pending”.

The SAAM said to the VersicherungsJournal that the judgment in question was “currently” legally binding, but at the same time it confirmed the possibility that the case – for procedural reasons – will come before the first court again.

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