Regulatory Alerts2024-06-25
Guidance Notice on the Prohibition on Passing On Special Allowances under Section 48b of the German Insurance Supervision Act (VAG)
BaFin issued this guidance notice to clarify Section 48b of the German Insurance Supervision Act, which prohibits insurance undertakings and intermediaries from passing on special allowances or commissions to policyholders. The document establishes a low-value threshold of up to EUR 15 or five percent of the annual premium for existing contracts and a flat EUR 15 limit for new agreements, while requiring that such inducements be realized within the current calendar year rather than advanced. It further mandates that permanent premium reductions must stem from a direct civil law agreement between the insurance undertaking and the policyholder, thereby ensuring long-term consumer protection and preventing inappropriate market incentives.
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