As a general rule, insurance companies are required to provide consumers with an insurance product information document before an insurance contract is concluded. This should contain a clear summary of the most important features of the insurance protection on offer (IPID, see infobox).

As part of a market study, BaFin examined, on the basis of samples, whether insurers providing legal expenses insurance and contents insurance observed the legal requirements when preparing their product information documents. BaFin analysed 66 product information documents issued by 26 legal expenses insurers and 58 IPIDs issued by 31 home contents insurers. The results showed that the majority of IPIDs analysed meet the requirements in terms of both their form and their content.

Insurers must remedy shortcomings

In the course of its study, BaFin identified a total of 32 shortcomings. These primarily related to the following issues:
• No information regarding the means of payment of premiums (annual, biannually, quarterly, monthly)
• No information regarding the method of premium payment (transfer, direct debit)
• No information regarding the insured sum
• No information regarding the manufacturer of the insurance product
• Headings that deviate from the legal guidelines

The companies concerned have already announced that they will revise their information documents accordingly. BaFin will follow up on this.

Tips for consumers

At one to three pages in length, IPIDs are useful for providing an overview of the most important features of an insurance product. However, more detailed information is contained in the insurance terms and conditions and the insurance policy. Policyholders should therefore carefully review these documents as soon as they receive them, and should contact their insurer or insurance intermediary if anything is unclear or if they have any questions. Only the main exclusions and restrictions on cover are stated in the IPID, which means that consumers will have to carefully read the insurance terms and conditions in order to check whether the insurance policy provides the cover they want. IPIDs also do not contain comprehensive information about terminating the insurance contract. Policyholders should be aware that insurers can also terminate policies, for example by making use of an extraordinary right of termination following a claim. Such details are also contained in the insurance terms and conditions.

Furthermore, some IPIDs relate to several products or premium rates, which is not always immediately clear. In such cases, policyholders should request a document that provides an overview of the differences between products or premium rates in a format that is clear and easy to understand.