Austrian Law Blog:


Is it possible to cancel a life insurance contract at any time?

Following a judgement of the European Court of Justice (C-209/12), the Austrian Supreme Court (“OGH”) decided in 2015 (7 Ob 107/15h) that an insured can cancel a life insurance contract at any time and for an indefinite period, if the insurer did not inform the insured about his statutory right properly, i.e. right to cancel the contract within a time limit of 30 days after the contract was concluded.

As a consequence insureds were able to fully recover the premiums that they had paid over the time plus statutory interest of 4% p.a. as from the time of payment of the premiums. Financially, this option was in particularly attractive where the investment in the life insurance did not develop as well.

The court’s conclusions were criticized by legal commentaries and in reaction to the court’s judgement Austrian legislation  introduced new provisions (in force since 2019) limiting the maximum recovery an insured could claim if on the date of the cancellation of the life insurance contract the policy was already in operation for at least one year.

The obligation to inform in particular consumers timely about their right of withdrawal from a B2C contract derives from EU Directives and these rights were, quite confusingly, implemented in several laws: e.g. in section 5 c of the Austrian Insurance Contract Act (for insurance contracts), section  3 (for off-premises contracts), section 3a (for non-fulfilment of essential assumptions) and section 30a (for real estate contracts) of the Austrian Act on Consumer Protection, section 8 of the Austrian Act on Distance Marketing of Financial Services and section 11 of the Austrian Act on Off-Premises and Distant Contracts (generally covering e-commerce contracts).

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