8.8 Premium adjustment, Legal Expenses Insurance, Premium

8.8.1 Why do we adjust the premium? The premiums are your consideration for our promise of benefits. We need the premiums so that we can fulfil our obligations to pay in all insured loss cases. We therefore check annually whether the premium must be adjusted because of a change in the claims requirement. Determining the change value (see 8.8.2) may result in the premium being increased or reduced or remaining at its previous level.

8.8.2 Determining the change value as the basis for the premium adjustment The change value determined is decisive for the question whether the premium remains at its previous level.

8.8.2.1 Statistical determination by an independent trustee. An independent trustee determines a change value for the premium adjustment by 1 July of each year. In doing so, the trustee bases the determination on the data of as large a number as possible of companies offering legal expenses insurance, so that the value determined reflects the entire legal expenses insurance market as well as possible. The determination of the change value is based on the following question (calculation method): By what percentage has the requirement for payments (that is, the product of claims frequency and average claims payment) increased or decreased in the last calendar year compared with the calendar year before last (reference years)? (The claims frequency of a calendar year is the number of insured events reported in that year divided by the number of risks insured on average over the year. In other words: the claims frequency indicates for what percentage of the insured contracts a claim has been reported. To calculate the average claims payment of a calendar year, all insured events settled in that year are considered. The sum of the total payments made for these insured events is divided by their number.) Changes resulting from improvements in benefits (for example: the inclusion of a new type of cover) are taken into account by the trustee only if the improvements in benefits formed part of the benefits in both comparison years. The trustee determines the change value separately for the following contract groups:  traffic legal expenses cover,  rental and property legal expenses cover, Within each contract group, the change value is determined separately for contracts with and without a deductible. The change values so determined apply uniformly to all contracts with or without a deductible combined in the group. The trustee rounds a change value not divisible by 2.5 down to the next lower positive number divisible by 2.5 (for example, 8.4 per cent is rounded down to 7.5 per cent) or up to the next higher negative number divisible by 2.5 (for example, minus 8.4 per cent is rounded up to minus 7.5 per cent). Change values in the range from minus 5 per cent to plus 5 per cent are not rounded.

8.8.2.2 Determination on the basis of our own company figures. On the basis of our own company figures, we determine the change value individual to our company by 1 July of each year. In doing so we apply the rules applicable to the determination by the independent trustee (see 8.8.2.1) accordingly.

8.8.3 Which change value is decisive for adjusting the premium? German law applies to the contract. The German wording of the conditions alone is binding; this translation is provided for understanding only. Principle: for the premium adjustment (increase or reduction), the change value determined by the independent trustee is decisive in principle (see 8.8.2.1). Exception: we compare our company specific change value with the value determined by the trustee under 8.8.2.1. Our company specific value is decisive for the premium adjustment if this comparison shows  that our value is below the value determined by the trustee, and  that this was also the case in the last two calendar years in which a premium adjustment was permissible. The calendar years to be considered need not necessarily follow one another directly.

8.8.4 No premium adjustment No premium adjustment is made if the change value determined by the independent trustee (see 7.8.2.1) is less than plus 5 per cent and greater than minus 5 per cent. (The German original refers to 7.8.2.1 here; there is no such clause, the trustee's determination is set out in 8.8.2.1.) This change value is taken into account when determining the conditions for the next premium adjustment (this is done by retaining the reference year until the 5 per cent threshold is reached. The requirement for payments of the respective previous year is always compared with the requirement for payments of the “retained” reference year.) Irrespective of the amount of the change value, no premium adjustment is made for contracts where 12 months have not yet elapsed since inception of the insurance.

8.8.5: same wording in Legal Basis, clause 7.8

8.8.6 When does the premium adjustment take effect? The premium adjustment takes effect at the beginning of the second month following our notice of the premium adjustment. It applies to all premiums falling due after our notice from 1 October inclusive. In the notice we point out your extraordinary right of cancellation to you (see 8.8.7).

8.8.7 Your extraordinary right of cancellation If the premium increases, you may cancel the insurance contract with immediate effect. You may cancel, however, at the earliest as at the time at which the premium increase takes effect (see 8.8.5). (The German original refers to 8.8.5 here; the time at which the adjustment takes effect is set out in 8.8.6.) We must receive your cancellation within one month after you have received our notice of the premium adjustment. If the premium increases solely because of an increase in insurance tax, you have no right of extraordinary cancellation.