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No obligation for small private mutual insurance associations to contract with non-members in the basic category
Press Release No. 78/2009 of 14 July 2009
Order of 10 June 2009
1 BvR 825/08
In a judgment of 10 June 2009, (1 BvR 706/08 - 1 BvR 814/08 - 1 BvR 819/08 -1 BvR 832/08 and 1 BvR 837/08; on this, see press release of 10 June 2009), the First Senate of the Federal Constitutional Court decided that the provisions of the GKV-WSG and the VVG-ReformG, challenged by the private insurance companies, are in principle compatible with the constitution. In addition, constitutional complaints by two small mutual insurance associations which solely insure one occupational group (priests) were pending. These were dismissed as inadmissible by the First Senate on the understanding that the obligation to enter into contracts for the basic category created by the 2007 health reform encroaches on the freedom of association (Article 9.1 of the Basic Law (Grundgesetz GG)) of these small mutual insurance associations and therefore such an obligation exists only towards applicants for insurance who satisfy the association's membership requirements as stated in its articles of association.
The complainants are small mutual insurance associations which offer their members comprehensive health insurance and specific supplementary policies. They have an obligation only to enter into their insurance contracts with persons who are members. They are prohibited by law from entering into insurance transactions without membership, which the large mutual insurance associations are permitted to enter into. The complaint of the two complainants challenges the new provisions of the Act to Strengthen Competition in Statutory Health Insurance (Gesetz zur Stärkung des Wettbewerbs in der gesetzlichen Krankenversicherung - GKV-WSG) of 26 March 2007 and the Act for the Reform of Private Insurance Law (Gesetz zur Reform des Versicherungsvertragsrechts - VVG-ReformG) of 23 November 2007. Above all, they criticised the fact that, for them, the provisions on the obligation to enter into contracts in the basic category constituted a de facto prohibition of an insurance provided solely for one profession. They also saw the absolute prohibition of termination of all comprehensive health insurance policies as an infringement of their freedom of association.
The decision is essentially based on the following considerations:
§ 193.5 sentence 1 of the Insurance Contract Act (Gesetz über den Versicherungsvertrag - VVG) and § 12.1b sentence 1 of the Insurance Supervision Act (Versicherungsaufsichtsgesetz - VAG) are to be interpreted, in conformity with the GG, to the effect that an insurer is only obliged to accept an applicant in the basic category if the applicant belongs to the group of members of the relevant small insurance association as defined in its articles of association.
Unlike in the case of the big private health insurance companies, the duty to give insurance cover in the basic category is an encroachment upon the right to freedom of association (Article 9.1 GG) of small insurance associations, which in contrast to the large mutual insurance associations may only transact members' business, but no non-member contract business. However, an interpretation in conformity with the GG in the light of this fundamental right shows that the obligation to enter into contracts in the basic category does not apply in full to small mutual insurance associations, and therefore in effect there is no infringement of the freedom of association.
In accordance with their intended purpose, the sphere of activity of the small insurance associations is restricted objectively, locally or with regard to persons accepted. The significance of the element of the persons accepted by a small insurance association is particularly apparent in the case of the complainants, who insure exclusively one professional group, united in occupation and belief. In this case, it is often not solely the business aspect that will determine the decision as to membership, but also the specific idea of the solidarity of a particular community of policyholders.
The provisions on the obligation to enter into contracts encroach upon the freedom of association because the small mutual insurance associations are no longer free to decide on the acceptance of new members solely on the basis of their articles of association, but must also accept as members persons who satisfy the requirements of § 193.5 sentence 1 VVG. The obligation to enter into contracts in the basic category would force the complainants, although their organisation is structured on the basis of the persons who are its members, to accept as members persons who do not have any relationship to the group of persons previously insured. But the legislative aim of the GKV-WSG of ensuring that all persons allocated to private health insurance have adequate insurance cover is already fulfilled by the big mutual insurance associations and joint-stock companies, which almost completely cover the market. Nor is it necessary to take a different view because the complainants would obtain an unjustified competitive advantage. For they participate in the balance of risks under § 12 g VAG in the same way as the large companies. Since a small insurance association can be licensed only if strict requirements are met, no incentive to found small insurance associations is created by the need to avoid the obligation to enter into contracts in the basic category.
Insofar as the absolute prohibition of termination of § 206.1 sentence 1 of the VVG that applies to all substitutive comprehensive health insurance policies is challenged, the provision does encroach upon the area of protection of freedom of association (Article 9.1 GG), but for reasons of public welfare this encroachment is justified. The prohibition of termination fulfils the legitimate purpose of preventing the loss of insurance cover and thus guaranteeing that private health insurance policies function in full for the group of persons allocated to them and preventing the loss of the ageing reserve associated with the termination of the insurance contract. In this case, the Senate was able to leave undecided the question as to whether it may for constitutional reasons be necessary in exceptional cases to permit a deviation from the absolute prohibition of termination.