Kongruente Rückdeckung von Pensionszusagen durch Versicherungsprodukte

When a German employer establishes a defined benefit pension plan for his employees, it is common practice in Germany to purchase life insurance policies in order to finance the plan and transfer the risks from the plan to the insurer. A complete transfer of risk can only be obtained by purchasing a congruent insurance policy. The present paper develops a formal definition of congruence of an insurance policy to a pension plan. The definition is applied to a simple practical example. It becomes clear that it is almost impossible to obtain congruence of a traditional German life insurance product to an employer's defined benefit pension plan.     

Betriebsunterbrechungsversicherung bei kleinen und mittleren Unternehmen

The business interruption caused by a property claim is an existential risk both for large industrial companies and for small to medium enterprises (SME). It is especially relevant for companies working on a more complex sales and production infrastructure. Statistics show that in case of a large property claim the cost of the accompanying business interruption claim frequently exceeds the property claim. In Germany, however, the share of companies opting for business interruption insurance is much smaller than those opting for property insurance. This is especially true for SME that can hardly cover the risk themselves. The goal of this paper is to analyze the insurance decision for a business interruption policy with a special focus on SME. As a database we use the results of a representative survey among 1802 German SME with up to 100 employees. Our results show that the decision for a business interruption policy is not only dependent on hard factors such as company size and industry, but also driven by the so-called “insurance mentality”, which includes risk aversion, insurance know-how and price-sensitivity.     

Understanding price competition in the German motor insurance market

This paper analyzes price competition in the German motor insurance market since 1994 and looks for evidence to back up a claim frequently found in the trade literature—that there have been two recent price wars in this industry, the first in 1996–1999, the second in 2005–2006. In a first step, we analyze the development of the German motor insurance market and compare it to that of other property-liability lines of business. In a second step the applicability of price war definitions found in the marketing literature to the German motor insurance market is checked. In a third step, a comparison to reference cases from other industries, where price wars have been subject to academic analysis, is conducted to complement the analysis. We conclude that, contrary to reports in the trade literature, the periods of 1996–1999 and 2005–2006 should be considered as times of intense competition in the motor insurance industry, not as times of price war.     

Garantieversprechen für Gebrauchsgüter als erlaubnispflichtige Versicherungsgeschäfte aus deutscher und europäischer Sicht

The article deals with the conditions under which the provider of guarantees for consumer goods operates an insurance business and therefore needs a permit. This question is of fundamental academic importance as it concerns the limits of insurance. Secondly, it is of practical relevance, as is reflected in court decisions in Germany as well as in other European countries. A comparative analysis supports the following rules: An extension of the statutory warranty offered by the seller or manufacturer is normally to be regarded as ancillary to the purchase agreement, which does not lead to regulatory licensing requirements. By contrast, if a third party offers a guarantee this is to be considered as an insurance business and therefore requires a permit.     

Katastrophenanleihen als Risikotransfer-Instrument für Industrieunternehmen

All over the world an increase in natural catastrophes and resulting damages can be observed for entire economies as well as for individual industrial enterprises. This trend leads to extraordinary expensive traditional natural catastrophe insurance or even a lack of insurance capacities. Due to the increased threat resulting from natural catastrophes and the inefficiencies of traditional insurance solutions, it will be analyzed in the following whether catastrophe bonds (cat bonds), as an alternative risk transfer instrument, should play a role in the risk management portfolio of industrial companies. It will be discussed whether catastrophe bonds are possible risk transfer instruments for industrial companies and whether certain basic prerequisites for a confirmation of the suitability are recognizable. In a further step, the design possibilities for cat bonds will be presented and the most suitable design alternatives for industrial companies as issuers of cat bonds will be elaborated. In addition, a critical comparison between the usage of traditional insurance solutions and cat bonds by industrial companies in order to protect themselves against natural catastrophes will be conducted. The result is a first orientation and a general guideline for dealing with catastrophe bonds as part of the operational risk management for industrial companies.     

Zum Treuhänder des Sicherungsvermögens unter dem neuen Versicherungsaufsichtsgesetz – Auswirkungen der Solvency II-Umsetzung

This paper is about the consequences of the transposition of the Solvency II Directive into the new German insurance supervisory law (VAG 2016) on the trustee for monitoring of the guarantee assets. The trustee of the guarantee assets is a national security mechanism to protect policyholders in case of insolvency of their insurance undertaking. The previous German Regulation of Investments (AnlV) is not valid any more for insurance undertakings falling under Solvency II since 01.01.2016. Instead of legal investments rules insurance undertakings are now obliged to have a (written) internal investment policy, which is also the basis for monitoring of guarantee assets by the trustee. Challenges arise because of the clash of the accounting view (German local GAAP) and the market valuation view of Solvency II. Our analysis contributes to a better understanding of the interplay between unchanged legal provisions and the new economic, risk based perspective of Solvency II.     

Die Mitgliedschaft EG-ausländischer Versicherungsunternehmen im Sicherungsfond der Lebens- und Krankenversicherung

The present regulation of the German guarantee funds for life and health insurance offers no possibility for insurance enterprises from other memberstates of the EC to become a member of these funds. Whereas an obligatory membership for EC-foreign insurance enterprises would violate the single-license-principle for financial supervision in the EC, community law requires a possibility to become a member of the German guarantee funds on a voluntary basis. The absence of the possibility of such a voluntary membership in the German insurance supervision law leads to an inadmissible restriction of the fundamental economic freedom rights of the common market. Therefore, the German legislator has to add the possibility of a voluntary membership to his national regulation of the guarantee funds to secure an undistorted competition on the common market for insurance in the EC.     

Wandel der Beratungsqualität auf dem Versicherungsvermittlungsmarkt: Eine ökonomische Analyse der Veränderungen aufgrund der Anforderungen der EU-Vermittlerrichtlinie

The EU-Directive on insurance mediation has introduced an important and sustainable change to the insurance brokerage market with special regard to the quality of the consulting services. The restructuring is necessary due to the increased administration costs of the business accreditation in conjunction with the increased workload. Dependent on the remuneration system—a commission system vs. a fee vs. a mixed commission—, different scenarios for the market organization are possible. This has consequences for the distribution policy. In this situation, the most obvious model seems to be the one, where the insurance brokers specialize and provide only selected type of consulting services. Furthermore, the analysis shows possible influences of further regulation of the insurance brokerage market, which could result in an increase of brokerage costs. This paper continues the actual political discussions regarding the form and basis of remuneration.     

Digital insurance brokers—old wine in new bottles? How digital brokers create value

This article analyzes digital brokers in the countries of the DACH region, Germany, Austria, and Switzerland, from a business model perspective. We argue that the potential to create new value for insurance customers has not yet been fully realized. Our analysis has identified two strategic action areas. The first concerns the exploitation of the wealth of customer data available. Those digital brokers who will succeed in generating new content and services using data analytics have the potential to take customer centricity and individuality to new bounds. The second centers around introducing aspects of community, such as connecting peers and enabling them to interact. The critical success factors are volume, a high degree of automation as well as leveraging the infrastructure and data to delivering new, value-adding content and services that go beyond traditional intermediation.     

Kundenzufriedenheit als Steuerungsinstrument in einem Versicherungsunternehmen – nur Schall und Rauch oder ökonomisch sinnvoll?

Customer behavior is managed by customer satisfaction in two dimensions: Insurer can profit by a higher customer loyalty und in addition, by a sensitive price behavior of customers. The findings of moderating effects are mean considered and thus, customer satisfaction is a too strong indicator of economic success in established concepts. To mange an insurance company effective, it is a good advice to implement a model that is specific for each company. This model should respect the heterogeneous factors of influence due to customer satisfaction by multidimensional instruments. Hence, insurer may identify drivers of service and work with analysis of correlations to describe the coherence between customer satisfaction and economic success exactly. The alignment for customer satisfaction is worth for traditional insurance companies, but only, if customer satisfaction is understood as an economic valued management that is culturally based in the firm. Manager should account for this suggestion to follow a sustainable story in a saturated competitive environment.     

German bond markets and US monetary policy

Low interest rates have been a major problem for the European life insurance industry. The implementation of Solvency II certainly has forced European life insurers to improve their risk management procedures and to buy long term bonds in order to handle the interest rate risk inherent to their liabilities. As a consequence, the industry meanwhile more or less seems to be able to cope with the problem of low interest rates. However, now the US central bank has started to hike rates. The Bank of Canada meanwhile has followed its southern neighbor. The changed monetary policy environment in North America might create new challenges for asset managers in the European life insurance industry. This paper provides some additional thoughts and empirical evidence about the linkages between US monetary policy and the European bond market employing techniques of time series analysis.     

Income heterogeneity and index insurance demand

Weather index insurance as a tool to insure the income of agriculturally active households has triggered extensive discussions in the literature. Despite the convincing theoretical argumentation, the demand for these products stays behind expectations. Several studies revealed effects impacting the demand for index insurance, such as liquidity constraints, basis risk, lack of understanding and trust in insurers and products alike. This paper takes a different perspective and hypothesizes that low demand is due to heterogeneous risk exposure towards weather variability among potential insured. The paper tests the impact of income heterogeneity as a measure of risk exposure on insurance demand and finds that risk exposure negatively affects insurance demand. In order to increase demand, it is concluded that product design should emphasize more the importance of income risk composition and exposure of potentially insured.     

财产保险公司资产负债管理多维量化评估体系研究

良好的资产负债管理是保险业可持续发展的基石,也是支持保险业在日益复杂的风险环境中保持稳健发展、防范系统性风险的重要保障。近年来,随着我国金融市场发展,业务产品创新加快,保险业在资产端与负债端的业务结构和风险特征出现了新情况、新变化。特别是部分保险公司缺乏有效的治理结构,采取激进经营、激进投资的策略,导致业务快进快出、风险敞口过大以及流动性问题,对保险公司资产负债匹配管理、风险控制提出了挑战。本文介绍了财产保险公司资产负债多维度量化评估规则设计原理、主要评估模型和评估方法,针对财产保险公司的负债特性提出的沉淀资金匹配,在成本收益匹配中有机地将资产投资收益与承保业务综合成本进行匹配,在现金流匹配模式中打破了僵化的匹配模式,解决了长期困扰财产保险公司的资产负债期限不匹配的问题,对财产保险公司资产负债管理具有重要意义。     

Vierfelder-Matrix der Markenpositionierung von gesetzlichen Krankenkassen

The branding in statutory health insurance is used for the delimitation of a legally regulated and quite homogeneous market. This paper presents a marketing concept as four-field matrix, which works out the essential determinants and severity factors. Health is here considered either emotional or rational concept. The health insurance company is regarded in this context as a saver versus supporter. The shaping factors are systematized in a four-field matrix for brand positioning (increasing the performance, motivation to comprehensive health, strengthen the capabilities, and preservation of the performance). Afterwards the concept is presented for the example of selected health insurance and critically discussed. In summary, the brands of individual health insurance can be useful classified and separated according to the present concept.     

Online-Aktivität als moderierender Effekt der Wirkung Convenience instrumentalisierender Attribute auf Kundengewinnung im Versicherungsneugeschäft

Digitization’s increasing influence on the Germans’ everyday lives leads to changes in their buying behavior. In the internet age, customer orientation means, inter alia, to actually understand the changes in the consumers’ expectations. This raises the question how the shift of customer activity from the analogue to the digital world changes the effect of certain exogenous, convenience exploiting attributes on a supplier’s predefined response variables (e.?g. customer acquisition). This article focuses on the insurance industry and, theoretically, deals with the question, whether doing business online can be considered as moderating effect of the relationship between convenience attributes (controllable by insurers) and customer acquisition as target figure in insurance business. Based on the example of contracting a new motor insurance policy it can be derived hypothetically that “digital customers” have different expectations in terms of speed of processing (as convenience attribute) than those signing a policy together with their agent.     

Aktienanlage für Lebensversicherer unter Solvency II

Life insurance companies are among the largest institutional investors. As part of their investment policy they are subject to special legal requirements. In particular the calculation of the solvency capital that has to be deposited for the market risk has changed under Solvency II. A widely spread thesis on this topic is that investments in equity have become unprofitable for life insurers due to solvency capital requirements – compared to previous periods of high equity ratios of temporally over 25%. Therefore insurers might have dropped their average stock quotas to below 5%.The intention of the present study is to analyze whether the capital requirements for the equity investments under Solvency II are a hurdle to achieve a reasonable profitability or – opposite to that – whether the equity investments are a suitable investment to provide an acceptable return on assets. For this purpose the solvency capital requirements of the equity investment under Solvency I considering the BaFin stress test are compared with the new solvency capital requirements under Solvency II including the symmetric adjustment factor (SA). Furthermore the diversification effects are taken into account; they are analyzed on the basis of the SFCR reports of the life insurance companies first published in 2017. As a result the risk capital requirements for equity investments under Solvency II have been reduced to more than 50% compared to prior solvency requirements and depending on the observed scenarios. Whilst Solvency I required an underlying risk capital of 31% at the end of 2017, Solvency II requires only 13.56% following the standard model and after aggregating the risk-mitigating effects in the group scenario. This effect results in a surplus of 7.2%, considering industry-standard capital costs for the underlying solvency capital and an average stock market return of 8% per annum. Consequently the equity investment is suitable to increase the profitability of the investments of German life insurance companies especially in the environment of low interest rates in the capital market for fixed income titles.     

Der Einfluss von Cat Bonds-Emissionen auf das ökonomische Zielkapital von Schaden-/Unfallversicherungsunternehmen

One of the major problems in the market development of cat bonds is their impact on the economical capital requirement, while non-indemnity-triggers are used. In this article, an example portfolio is constructed which is heavily exposed to hurricane risks in Florida. A cat bond with a parametric trigger, a reinsurance without collateral and two other reference covers are used on this portfolio and their capital relief effect are calculated by means of monte carlo simulation. Amongst others, it shows that not only basis risk, but also default risk and cost disadvantage lead to the decline of a risk transfer instrument's capital relief effect. In the next step, the simulation is extended to the value based management with the capital requirement being a constraint and the maximization of the company's value being the objective function. In this context, the basis risk shows a much lower influence compared with the cost factors.     

Determinants of M&A success in the European insurance industry

This research analyzes the success of mergers and acquisitions (M&A) for European acquiring insurers using a stock market perspective. In contrast to previous papers that use an event study approach, our analysis is based on the stochastic dominance methodology, in which we analyze short and long term capital market reactions following an M&A announcement. In addition, we examine firm- and transaction-specific determinants associated with superior M&A success. Using a sample of 102 European insurance M&A transactions over the period 1993–2009, our results indicate that acquiring insurers are second-order dominated by their benchmark portfolio in the short term. In the long run, we find no evidence of stochastic dominance compared to their non-acquiring counterparts. Moreover, we find that geographically diversifying acquirers are rewarded by the market, and that transactions in which the acquirer and target have a business relationship before the M&A announcement outperform transactions without pre-M&A participation in the short-term. Finally, we detect a positive relationship between cash payment and acquirers’ M&A success.     

Optimal Risk Financing in Large Corporations through Insurance Captives

A captive is an insurance or reinsurance company established by a parent group to finance its own risks. Captives mix internal risk pooling between the business units of the parent group and risk transfer towards the reinsurance market. We analyse captives from an optimal insurance contract perspective. The paper characterises the vertical contractual chain that links firstly business units to insurance captives or to “fronters” through insurance contracts, secondly fronters to reinsurance captives through the cession of risks and thirdly insurance or reinsurance captives to reinsurers through cessions or retrocessions. In particular, the risk cession by fronters to a reinsurance captive trades off the benefits derived from recouped premiums and from the risk-sharing advantage of an “umbrella reinsurance policy”, against the risks that result from the captive liabilities.