life insurance financial crisis | Industry in distress
That life insurance is in crisis is nothing new. However, if one follows a number of commentators, the situation will gradually become “fierce” (Der Spiegel). Obviously, one third of providers in the German market are no longer able to provide the guaranteed interest and reserves.
Der Spiegel refers to a study by life insurance buyer Policen Direkt. Obviously, 30 of the 84 life insurers surveyed are no longer able to cover and therefore need to tap new sources of revenue. Specifically, this can mean risk gains or even the reduction of administrative costs.
Another problem for the industry is the current trend of outsourcing entire life insurance lines. Currently, the Ergo and Generali are testing a so-called run-off, while at least the alliance is still ruling out this step. But it also shows in the industry leader that the classic life insurance with guaranteed interest is no longer offered.
The so-called yield buffer of life insurers amounts on average to only 0.22 percent of the actuarial provision. The result could be higher contributions for the insured, which may ultimately affect the customers of term life insurance or occupational disability insurance. It should also be noted, however, that the situation in the insurance companies is very different and there are still solvent providers.
In addition, there is no reason to panic anyway, because only due to the valuation reserves, the claims from the guaranteed sums insured could be served around 3.5 times. In other words, the insured are obviously taken care of.
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