VInsurance associations are obliged to their members, listed insurance groups to their shareholders. However, this difference does not make a general statement about the efficiency of one or the other legal form. Anyone who looks at the evaluation of the balance sheets of the twelve largest insurance associations made by Hermann Weinmann, a business economist from Ludwigshafen, will find that the associations are overall somewhat less powerful than the best corporations. However, their customers get a higher share of what they earn. “It is true that no legal form-dependent superiority over the other two legal forms can be derived from an economic point of view, but competitiveness is given,” writes the professor in his analysis for the “Journal for Insurance”.
Life insurance is always compared to a decathlon. Whoever wants to be the best should do reasonably well in all individual disciplines (capital investment, financial strength, insurance risks, costs). For some time now, it has been Hannoversche Leben among the largest insurance associations, this time on par with LV1871, each of which achieves very good results, but does not quite come close to the most successful group, market leader Allianz. The table below shows the Continentale and WWK with satisfactory results and the Debeka and Signal Iduna with sufficient results. The “field of persecutors” is the Volkswohl Bund, the Alte Leipziger and the LVM.
Participates in the gross surplus with up to 95.7 percent
All of the clubs have lower new business dynamics than Allianz, whose contributions increased by 31 percent in 2019. Weinmann explains this with the good positioning of the large life insurers such as Allianz, Zurich and Axa in bank sales, where a not inconsiderable part of the policies is sold. Gothaer with 12 percent, Continentale (6 percent) and Alte Leipziger (almost 6 percent) were the strongest distributors in this segment.
The best discipline in the decathlon of this year’s winner Hannoversche is the high gross surplus margin of 31 percent, this parameter sets the profit in relation to the premium income. This time LV1871 and Gothaer proved to be particularly profitable. The acquisition costs increased for all insurers except for the Hanoverian in 2019. The Federal Government’s request to introduce a commission cap has long been in the air. In contrast, administrative expenses for the insurers examined are between 12 and 27 percent of operating costs. “This makes it clear that the acquisition costs are the main target of life insurance and that it makes sense to also include the other and the extraordinary result,” writes Weinmann. Broker insurers with a weaker own sales force have particularly high expenses. At the top here is the Continentale.
The solvency ratios have fallen due to the difficult capital market environment – with the exception of Alter Leipziger, Stuttgarter and LVM, who put a lot aside for financial stability. Half of the insurers have participation rates of more than 90 percent, which means that their customers receive up to 95.7 percent of the gross profit. Corporations don’t have such high rates.