The positions of German insurers 2012

A medicine which helps the sick can be harmful for a healthy person. This is true in medicine, but it is increasingly true  or the efforts to overcome the financial crisis as well. The insurance industry withstood the financial crisis in good shape thanks to its conservative long-term investment strategy and its sophisticated risk management system. But now insurers face considerable challenges as a result of the „medicine“ which is being prescribed for banks and overindebted states.

Artificially low interest rates and the flooding of the markets with liquidity must not become a permanent condition (Section 1). At the same time, the upcoming amendment of the German Insurance Supervision Act represents an opportunity to strengthen the capacity of life insurers to bear risks (Section 2).

The new European regulatory scheme, Solvency II, is to take effect in 2013, in the midst of the difficult capital market environment (Section 3). The new rules will create significant challenges for insurers and regulators, and the impact will be felt by insurance  customers and the general economy as well. After all, Solvency II indirectly determines which insurance products may be offered in the future at what price, and how insurers will dispose over their more than 1.2 trillion EUR in investments. Not all questions relating to the new regulatory scheme have been conclusively clarified yet.

In addition to the substantive reform of supervisory law, an institutional reform of the supervisory structure for the financial services  industry is on the agenda in Germany (Section 4). BaFin (the Federal Financial Supervisory Authority) maintains a separate unit for insurance supervision, which has proven itself. Accordingly, it is the right approach that the government‘s regulatory reform proposal does not call for a reorganisation in this regard. However, a highly disturbing development is the growth in reporting duties, which are already extended too much by Solvency II. Accordingly, the further proliferation of reporting duties by the addition of new reporting channels to the ECB and/or Deutsche  Bundesbank has to be rejected.

The government´s debate on pensions is to culminate this year with the enactment of specific new legislation on pensions. The German insurance industry is a reliable partner in the pension system: life  insurers pay out more than 230 million EUR in benefits to their customers every day. Based on its expertise, the German insurance industry has developed reform options of its own for the improvement of the German pension system (Section 5). The same is true in health care policy, where a reform of long-term care insurance is needed (Section 9).

The German insurance industry has already undertaken a large number of voluntary initiatives in the field of consumer protection (Section 6), and further steps are planned. In doing so, the German insurance industry is supplementing the existing statutory framework in order to preserve and expand its role as a leader in consumer protection within the financial services industry.

While it is no longer the focus of media attention, climate change (Section 10) remains one of the  urgent problems of our time. Extreme weather events accumulate all over the world, including Germany, and the damage is mounting. The German insurance industry supports all measures to mitigate climate change and offers coverage for the consequences of storms, flooding, heavy rain and other weather events. GDV also conducts campaigns, together with a number of German Federal States, to raise awareness among the general public for the need to protect themselves against these natural risks.

In the Download-Service, you will find our positions on these and other important issues.

The themes at a glance:

  • Mitigating the consequences of the Euro crisis for retirement provision schemes
  • Increase risk-bearing capacityof life insurers
  • Ensuring an appropriate design of Solvency II
  • Strengthen insurance supervision
  • Shaping pensions for the future
  • Effectivley protecting consumers, while avoiding over-regulation
  • Tax law should promote growth
  • Retain criteria for risk differentiation
  • Structuring the health care system for all generations in a fair manner
  • Deal with the consequences of climate change
  • Looking ahead to counter changing risks
  • Optimize rules for traffic and mobility