Fragmented insurance market on the cards for Germany

How do you see the German insurance sector developing?

There are trends that frighten me. There is a point of view that I find concerning, and in fact I am frightened of it. There is an increasing trend towards the fragmentation of insurance portfolios into retail, middle market and specialty and industrial. One has become three, and of course they are smaller and more volatile. Within those clusters the insured is no longer seen as a whole account; insurers want profitability in every line.

If this is intensified then I believe that the insurance industry will be saying goodbye to the basic principles of insurance: the balancing of claims over time.

Dividing the customer line by line means that there is not the ability to balance claims. I am very concerned about this. Insurers should be looking at the customer holistically, otherwise the industry will arrive at a situation where the customer will start to ask themselves if it makes sense to get insurance.

Can clients get the cover they need?

Looking at the new risks, cyber, reputation, supply chain, I am concerned whether the insurance industry takes enough risk. They are waiting until there is enough claims experience, but those who want this insurance are asking them not to wait. They need cover now, not in a year or more.

At the moment the insurance industry is hesitating to give cover, and that is a problem, particularly for smaller companies.

Which are the more significant risks: insurable or non-insurable?

It is my estimation now, and I think we all know, that the non-insurable risks are at a level that is higher than the insurable risks. Especially for great industries. The bigger the company, the higher the percentage that is non-insurable.

These risks really are at a place that can threaten not only businesses, but industries and markets.

I think that in the end [how much of a problem this is] depends on the size of the company. If they have revenue of €30bn-€40bn, then they are at a size that no insurer will touch anyway. If there was an internet shitstorm – and we have seen examples of companies falling down due to public discussions of, say, labour conditions in their factories – there is nothing insurers can do to cover this. But perhaps they have the resources to cope. For smaller companies, it is even more of a problem.

What can the DVS do to help?

We have to strengthen our discussion internally with our members to find solutions for both the smaller and bigger companies. We also have to have discussions with individual sectors to find models for the new, emerging risks affecting those companies.

This has to be intensified, otherwise we will not be able to take any steps towards solutions.