13.07.2024. / 11:08
– Instead of insurance companies, banks “chase” the heirs after the client’s death.
– Tešić: In one case, the insurance company claimed that the credit beneficiary had caused his own heart attack.
– Courts dismiss lawsuits against heirs.
BANJALUKA – Some insurance companies and banks have adopted the practice of marketing loans with life insurance in case of the borrower’s death, but without any real intention of fulfilling their obligations when it actually happens, the portal’s sources claim CAPITAL.
According to our sources, who support their claims with court rulings and lawsuits, if the beneficiary of the loan dies before the final installment is paid, banks and insurance companies will do everything in their power to collect the claims from the heirs instead of settling on the basis of the insurance policy that the beneficiary was initially required to accept and pay for to secure the loan.
They argue that credit insurance has become a powerful tool for selling insurance products, which are often owned by the banks themselves and from which they make significant profits, while borrowers derive little benefit.
According to our sources, banks stopped requiring guarantors several years ago and instead introduced the practice of life insurance for loans, especially for people over 40, along with salary and mortgage. This shift was prompted by the difficulty of finding guarantors and the salaries of many citizens are already heavily taxed.
“Many banks have contracts for business and technical cooperation with insurance companies, and some of these insurance companies are even owned by banks. They aggressively promote their products, such as life insurance for loans, often without any real intention of providing coverage if something happens to the borrower. In addition, borrowers are forced to accept the insurance company imposed by the bank and are charged fees ranging from a few hundred to a few thousand marks, despite their supposed right to choose their insurance company”said our conversation partner.
Banks and insurance companies in joint business
When someone dies, says our interlocutor, insurance companies look for ways and reasons not to have to pay out. Banks accept their reasoning and immediately approach the heirs, sue them and demand repayment.
“It is clear that there is an agreement that is recognized by the courts, which consistently rule in favor of the heirs. However, often unaware of this, heirs become involved in lawsuits, and some even settle with the bank to avoid legal proceedings”said our conversation partner.
His claims are supported by the ruling of the Banja Luka District Court, which dismissed a claim filed twice by UniCredit Bank Banja Luka to collect 5,000 marks from the heirs. The bank was obliged to seek payment from Croatia Osiguranje, which had issued the loan insurance policy. The court ruled that since a life insurance policy had been taken out, the heirs were not liable.
According to the ruling that CAPITAL reviewed, the loan was completed on December 24, 2015, worth 7,000 marks with a repayment period of 60 months. In order to secure the loan, the borrower had to take out a policy that covered, among other things, death and illness resulting from an accident.
the outstanding loan debt three years later, on the date of the borrower’s death, was BAM 5,008. In addition to this amount, the bank also claimed statutory default interest totaling BAM 2,038 on the principal amount, together with additional statutory default interest totaling BAM 4,871 until the date of payment. Furthermore, the bank requested reimbursement of procedural costs totaling 600 marks. These additional costs significantly exceeded the original loan amount owed by the borrower when the loan was granted, and had to be paid by the insurance company.
“With their signatures, both the bank and the beneficiary of the loan confirmed their agreement that the client would be insured by Croatia Osiguranje. In the event of the beneficiary’s death, the insurance company would pay the bank the remaining principal amount and accrued interest on the day the insured event occurred. However, the insurance company claimed that the client had been undergoing treatment for mental disorders for years and argued that they were not obliged to pay under these circumstances. The court of first instance considered this claim as a general assessment and stated that the insurer could have assessed the relevant state of health of the insured at the time of concluding the contract“, is the verdict.
Heirs are often unaware that they are not obliged to pay the debt
The court ruling clarifies that heirs are not liable for the debts of the deceased if a life insurance policy was taken out. In situations where the beneficiary of the loan secures the repayment of the loan during his lifetime, as in this case, his rights and obligations under the loan agreement are not transferred to his heirs.
“Based on this understanding, the debt arising from the loan should be covered by the insurance company, namely Croatia Osiguranje. The insurance company, which has a technical cooperation agreement with the bank, had the opportunity to assess the health status of the insured, as clearly and decisively explained by the court of first instance”the district court in Banjaluka decided.
Attorney Din Tešić claims that he has handled multiple lawsuits where banks explicitly forced loan beneficiaries to pay insurance. However, when death occurred due to unforeseen circumstances, the banks immediately sued the heirs to recover the entire loan amount, instead of limiting their claim to the inherited portion as provided by law, which is illegal.
He claims that insurance companies often come up with trivial reasons to deny claims, such as citing the deceased’s smoking habits, unhealthy diet or alcohol consumption. These reasons are often cited after the insurance policy and loan have been finalized. The insurance companies overlook the fact that before entering into the contract, they could have worked with medical professionals to verify these factors which they later use as grounds for denial.
“Insurance companies and banks work together to offer loan insurance in the event of the death of the loan beneficiary, but often without any real intention to fulfill their obligations by paying off the remaining loan amounts after the person’s death. They wrongly reject claims to the bank, citing bogus reasons. For example, that the loan beneficiary knew he was seriously ill or that he was endangering his life with habits he had. In one of the cases I heard the insurance company claim that the borrower had caused his own heart attack by drinking alcohol, even though drinking alcohol usually leads to liver disease, not cardiac arrest.”Tešić explained.
They focus on unimportant details
He further explains that insurance companies often cite irrelevant reasons for denying policy payments, thereby evading their contractual obligation to repay the loan to the bank. He alleges that banks cooperate with insurance companies, formally request insurance policies, and when claims are denied, they fail to sue the insurance companies as required by law. Instead, they take legal action against the heirs.
“The situation worsens when heirs are asked to pay the entire debt instead of just the amount of the inherited portion. My office has repeatedly requested Raiffeisen Bank and Uniqa Insurance to submit their business and technical cooperation contracts for review. This is to determine whether the bank has an interest in the insurance company not fulfilling its obligations. Finally, the court ordered Raiffeisen Bank to submit their business and technical cooperation contract”said Tešić.
He explains that the bank is required by law to sue the insurance company first. Only if the insurance company proves that it is not obliged to pay the loan, the bank may take legal action against the heirs. However, this did not happen.
“This is a biased trial. It is not a coincidence; it is clearly a phenomenon and it exists”said Tešić.
And this is not an isolated incident.
Recently, Uniqa Insurance asked the heirs of JN to settle the remaining balance of the deceased’s loan, totaling more than 17,000 marks. The deceased had taken out a loan of 25,000 marks from UniCredit Bank and had a life insurance policy. However, this insurance company refused to cover the policy after the beneficiary’s death, because the deceased knew or should have known about her illness.
“The insurance contract is null and void if, at the time of its conclusion, the insured event had already occurred, was in progress or was certain to occur. According to the findings and opinion of the attending physician, as well as our assessment, the diseases from which the beneficiary had suffered had a significant impact on her life expectancy and could lead to serious and permanent illnesses”read the answer from Uniqa Insurance. They state that the beneficiary of the loan should have been aware of the possibility of illness, even if their doctor did not detect or diagnose it based on the medical records at the time the policy was taken out.
This case also came before the court.
The Office of the RS Insurance Ombudsman emphasises that the law provides for out-of-court settlement of disputes and disagreements relating to insurance contracts.
“Citizens (heirs) did not turn to the Insurance Ombudsman because of the refusal of insurance companies to settle loans for which the beneficiaries, now inherited, had life insurance policies and died before the loan was fully repaid. Instead, citizens filed complaints about cash loan repayment insurance, in particular about the return of the unused portion of premiums in cases of early loan repayment. In 2023, there were 10 such complaints, with another five in the first half of 2024”according to this office.
We contacted both banks and insurance companies twice. First with questions and then to remind them that we expected responses. Except for UniCredit Bank, none of the subjects responded.
UniCredit Bank asked for details of who we had sent the application to and set conditions for responding. Despite our repeated deadlines, they did not respond after that.
CAPITAL: Andrijana Pisarevic
Tagovi: Bank
