Insurers have to fight for Riester

Hermann Weinmann drills thick boards. After criticizing Allianz’s profit distribution to customers and shareholders in a scientific paper a decade ago, he stayed on the ball. Since then, he has been providing balance sheet analyzes for leading life insurers every year. He refined his method. You can tell that the survival of life insurance is important to the business economics professor at the Ludwigshafen University of Economics and Society.

This time, too, he seems to have decided to drill thick boards. In April, he drafted a four-point plan on how insurers can prevent being pushed out of private retirement provision. The danger is because the costs and modest results have made them a dubious partner for politics. Weinmann’s paper was published in the magazine for insurance. But he does not give up.

Now he has written a second and a third paper, with which he provides arguments on how the commission burden of consumers can be alleviated and insurers create entry into share-based provision. “If the Riester pension fails, then acceptance for the entire life insurance in the population is at risk,” he writes. “Then it is time to cut back on the active commitment of the institutional investor to climate change.”

Insurers can offer collective investment

Weinmann’s aim is to preserve the collective investment scheme for which insurers are known and which smooth out fluctuations in earnings over the investment period. The interest rate situation has brought her business model to the brink of existence. At the same time, society’s interest in shares and financial education has increased. Cases of fraud, on the other hand, would have dwindled trust. Very few Germans wanted a share investment within the framework of the statutory pension insurance, as the FDP is striving for. “After the messed-up situation in the interest rate area, Germany seems ready for a share-based private pension plan,” he writes.

Unfortunately, the financial regulator BaFin was paralyzed by the Wirecard scandal. Before that, she literally begged that the insurers’ sales commissions be limited in order to get the cost problem of life insurance under control. The cost and product regulation must go even further.

The deregulation of the market from 1994 under the influence of the British, who have since left the EU, did not bring the desired results. They have “assumed excessive effects and destroyed the comparability of insurance products for the ‘responsible citizen'”, he writes.

Experience with unit-linked policies

Life insurers are suitable for share-based capital investments, as their portfolio in unit-linked life insurance, which has been growing for a quarter of a century, shows. But they did not publicly distinguish these policies sufficiently from other forms of savings. How high the share of unit-linked policies is with a provider can hardly be determined. “A ‘big cleaning up’ and regulation are the indisputable framework for share life insurance,” writes Weinmann.

Politicians would continue to be responsible for the Riester system. If the legislature simply put new rules for subsidized old-age provision alongside the old ones, the consumer would drown in them. “The idea behind the Riester pension was right, the implementation over the years has been amateurish,” says the business economist. Just as there are reliable monthly payments in the statutory pension, this is still possible in the form of an annuity of claims. Weinmann says that a Riester reform has a chance, but only if insurers are willing to make changes.


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