The insurance brokerage market - Germany (2023)

1.2 Global market

The insurance industry is present in every country in the world and has generated over $* trillion in life and non-life insurance premiums by ****:

Premium income of the global insurance industry Worldwide, **** - ****, in billions of USD Source: ****

In ****, life insurance premiums totaled USD **** billion and non-life premiums totaled USD **** billion. Between **** and ****, global premiums grew by an average of *.*% per year, with non-life premiums growing faster (***), while life premiums grew by an average of only *.**% per year. Largest insurance markets by share of global premium income Worldwide, ****, in % Source: GDV The USA is the largest insurance market, accounting for **.*% of global premium income. Germany ranks sixth with *% of global revenue.

Europe

Countries with the highest life and non-life insurance premiums Europe, ****, in USD billion Source: FFA in ****, the three European countries with the highest insurance premiums, all combined, are the United Kingdom, France, and Germany. The distribution of contributions varies widely among European countries: While life insurance dominates in the United Kingdom, France, and Italy, non-life insurance collects the most premiums in Germany (***) and Spain.

Intermediaries

BIPAR has collected information on the number of intermediaries of ** former member countries of the European Union (***). According to BIPAR's data, there are a total ...

1.3 German market

Insurance brokers depend on the insurance market, here is first an overview of insurance premiums and charges in Germany.

Insurance premiums by line of business in Germany Germany, ****-****, in EUR billion Source: ****

In the period from **** to ****, primary insurance as a whole in the German insurance industry recorded continuous growth. Total premium income of primary insurers amounted to approximately EUR ***.** billion in **** and increased to approximately EUR ***.** billion by ****. This represents a compound annual growth rate (***) of approximately *.**% over the entire period. Primary insurance includes property and casualty insurance, health insurance (***) and life insurance. During the period under review, all these subsectors recorded steady growth. Property and casualty insurance grew at an average annual growth rate of around *.**% from **** to ****, with premium income increasing from €**.** billion to €**.** billion. Health insurance (***) grew at an average annual growth rate of approximately *.**% over the same period, with premium income increasing from €**.** billion to €**.** billion. Life insurance showed overall moderate growth from **** to ****, with an average annual growth rate of about *.**%. Premium income decreased from **.** billion euros to ***.** billion euros, but showed a particular increase in **** and ****. Insurance broker market size Germany, ****-****, in EUR billion Source: ****

The figures show the industry revenue of ...

2.1 Overview of insurance companies in Germany

Insurance brokers depend on the supply of insurance, and there are many different types of insurance, each occupying a more or less important segment of the sector:

Survey in Germany on insurance policies taken out in the household Germany, ****, in % Source: VuMa Statutory health insurance remains the most widespread type of insurance in Germany, with **% of the German population covered. This reflects the importance of the healthcare system to the population, as statutory health insurance plays an important role in covering people's healthcare needs. Private liability insurance is also very popular with **% of the German population. It protects private individuals against the financial consequences of damage they unintentionally cause to third parties. The high prevalence shows people's awareness of the need for liability insurance. Homeowner's insurance/household insurance and motor vehicle partial coverage are other important insurance categories in Germany, with **% and **% of the German population respectively. Household insurance protects property in the apartment or house, while motor vehicle partial coverage covers damage to one's own vehicle caused by certain risks. Private accident insurance and private life insurance also have a high penetration rate, with **% and **% of the German population respectively. Private accident insurance provides financial protection in the event of ...

2.2 Typology and preferences of insurance customers

Preferences Customers' preferences with regard to insurance and insurance brokers are extremely complex and are influenced by various factors. A recent chart clearly illustrates which aspects are of particular importance to customers. A key concern for customers is "investment security." With an impressive ** percent share, the chart shows that the security of the invested capital is of paramount importance to many insurance customers. It is understandable that customers want some guarantee for their investments and want to minimize risks. Another crucial factor is the "security of the contracting party," which is of great importance to ** percent of customers. Choosing a trustworthy insurance company or insurance broker gives customers confidence that their insurance needs are in good hands. "Investment flexibility" also plays a crucial role. For ** percent of customers, it is important that they can adjust their investments as needed. Flexibility enables customers to respond to changing life circumstances or financial needs. "Prospects for return" are of interest to ** percent of customers. In addition to capital security, many customers also want to earn a reasonable return on their investments. Tax benefits and government subsidies are a relevant factor for ** percent of customers. These aspects can be an attractive motivation to consider certain ...

2.3 Life insurance

Life insurance policies play a significant role in the German insurance market and are an important form of financial security and provision for the future for many people. These insurance products offer a variety of benefits and serve as a tool for long-term financial planning and security. A life insurance policy is essentially an agreement between the policyholder and the insurance company. The policyholder pays regular premiums into the policy, while the insurance company in return guarantees a financial payout, either in the event of the policyholder's death or at the end of the agreed term of the policy. A primary objective of life insurance is to provide financial support for survivors in the event of the policyholder's death. The agreed death benefit is paid out to the designated beneficiaries to cushion financial shortfalls and secure the standard of living of the surviving dependents. This aspect of life insurance is particularly important for families and individuals, as it gives them the peace of mind that their loved ones will be financially secure in the event of their demise. In addition, life insurance offers an attractive opportunity for long-term capital accumulation and retirement planning. Many life insurance policies offer the option of ...

2.4 Property and casualty insurance

Property and casualty insurance plays a prominent role in the German insurance market and is an essential form of protection against various risks and damages for many people. This line of insurance comprises a wide range of policies that offer protection against financial losses that may arise from unforeseen events such as accidents, damage to the home or vehicle.

In ****, property and casualty insurance showed a robust performance with total gross premiums written of around **.** billion euros. This underscores the high demand and need among the German population for comprehensive coverage against various risks and dangers in everyday life.

Gross benefits in property and casualty insurance amounted to around **.** billion euros in the same period. This illustrates the enormous importance of this line of insurance as an instrument that provides rapid and effective financial support and compensation in the event of a claim.

Premiums and benefits in property and casualty insurance Germany, ****-****, in EUR billion Source: ****

Property and casualty insurance is divided into various subsectors, including motor vehicle liability insurance, personal liability insurance, household insurance, comprehensive motor vehicle insurance and many more. Each of these insurances covers specific risks and offers tailored protection depending on the individual needs and requirements ...

2.5 Health insurance (PKV)

Private health insurance occupies an important position in the German insurance market and plays a crucial role in the health care and coverage of the insured. It offers an alternative to statutory health insurance and is aimed primarily at people with higher incomes or specific demands on their health protection.

In ****, private health insurance recorded total premium income of around ** billion euros. This shows the continuously high demand for tailored healthcare solutions and individual coverage through private health insurance.

Development of premium income in private health insurance (***) Germany, ****-****, in EUR billion Source: ****

Private health insurance allows policyholders to benefit from a wide range of services and additional offerings that go beyond the basic care provided by statutory health insurance. Individual rates and tailored insurance solutions offer policyholders the opportunity to select their health care according to personal needs and requirements.

Private health insurance is particularly attractive for people who value comprehensive medical care and flexibility in their choice of doctors and treatment methods. Private health insurance is also a suitable option for the self-employed, freelancers and high earners to optimize their individual health protection.

The premium income of private health insurance reflects the high appreciation of the insured for the ...

3.1 Definition of terms

Insurance broker

An insurance broker operates on a professional basis and undertakes the brokerage or conclusion of insurance contracts on behalf of the customer without being commissioned by an insurer or insurance agent. The broker is a fiduciary trustee of the customer and acts exclusively in the interest of the policyholder. He is independent of insurance companies and concludes a brokerage contract with the customer, in which the permanent management of the customer's insurance interests is regulated. The broker is obliged to select and arrange the best possible insurance solutions for the customer.[***]

Insurance agent

Insurance agents work professionally for insurance companies and are entrusted by them with brokering or concluding insurance contracts. There are two types of insurance agents: exclusive agents, who work exclusively for one insurance company, and multiple agents, who work for several insurance companies. Exclusive agents are bound to the insurance company by contractual non-competition agreements, while multiple agents work for different insurers who may compete with each other.

Demarcation

The distinction between insurance brokers and agents can be difficult in some cases. Key differentiation criteria include the compensation designation, being "entrusted" by the insurer, the number of insurers represented, and the scope of the contractual relationship. ...

3.2 Insurance brokers and intermediaries winding up

At the beginning of ****, a total of ***,*** persons were registered in the insurance broker register of the Association of German Chambers of Industry and Commerce (***). **,*** of these were registered as insurance brokers in . Insurance broker companies could be counted in total **,*** in Germany.

The given graph shows a strong decrease in the number of registered insurance brokers. In ****, there were still ***,*** insurance intermediaries in Germany, which corresponds to a decrease of about **.*%.

Number of registered insurance intermediaries Germany, ****-**** Source: DIHK The number of tied agents shows a clear downward trend, with the exclusive agents registered by insurance companies and not requiring a license being particularly affected. Their number shrank to just ***,*** in **** (***). Their share of the total market decreased to just under ** percent, whereas they still accounted for a share of around ** percent at the beginning of the intermediary register. The number of brokers, on the other hand, followed a long-term trend and increased slightly by *** or *.* percent. Research by Asscompact indicates that insurance brokers are remaining in the market longer and longer into old age. Unlike insurance agents, who often have an age-related contract end date agreed upon, brokers can decide for themselves when they retire. However, the decision ...

3.3 Biggest players

Largest insurer

In ****, Allianz maintained its position as Germany's largest insurer with impressive premium income of about***.* billion euros. The company is headquartered in Munich and operates in various lines of insurance. It was followed in second place by Munich Re or Münchner Rück, which recorded a premium volume of around **.* billion euros. The Talanx Group ranked third with premium income of around **.* billion euros.

The size and importance of Allianz is also reflected in its strict implementation of the principle of division separation, which is enshrined in the Insurance Supervision Act (***). According to this principle, insurance companies that are active in the life or substitutive health insurance business are not allowed to operate other insurance lines such as property and casualty insurance. Thus, all insurance lines must be managed in independent companies to ensure a clear separation. As a result, Allianz operates various independent subsidiaries, each covering specific lines of insurance.

An example of the implementation of this principle is Allianz Deutschland AG, which acts as the umbrella company for the Group in Germany. The various lines of business are served by separate companies such as Allianz Versicherungs-AG, Allianz Lebensversicherungs-AG, Allianz Private Krankenversicherungs-AG and Allianz Beratungs- und Vertriebs-AG ...

3.4 Online sales

Online sales brokers have become much more important in recent years and have advanced to become an important pillar in the insurance market. Digitalization and changes in customer behavior have led to more and more insurance products being sold online. This development is also reflected in a table showing the share of online sales for various insurance categories:

Proportion of insurance policies taken out online Germany, **** in % Source: ****

The chart illustrates that a considerable proportion of customers use online sales, especially for insurance policies such as motor vehicle insurance, personal liability insurance, and homeowner's insurance. For these insurance categories, the share of online sales is between **% and **%. As many as **% of customers indicated that they do not purchase insurance online. The increasing popularity of online sales is primarily due to the numerous advantages it offers. Customers can compare insurance products, obtain information and conclude contracts from the comfort of their own homes. The online platforms provide a transparent overview of various offers and conditions. In addition, processing times are usually shorter and contracts are concluded more quickly. For online sales brokers, this development opens up new opportunities. They can digitize their services and thus address a broader target group. Through targeted ...

4.1 Overview of brokerage services for companies and individuals

Insurance brokers offer their services to companies and individuals. The aim is to find the best value for money in insurance for their customers.

Unlike brokers, they are not tied to a specific insurance company and therefore must provide the best offers to their clients without any conflict of interest.

They can be specialized (***).

Some services are primarily aimed at individuals, such as brokering life and home insurance. However, the majority of brokerage activity is focused on businesses (***).

Types of Brokering :

Motor insurance broker: determination of the best contract according to the situation of the client (***)

Mutual dental insurance broker: allows its clients to benefit from mutual advantages previously negotiated with its partners

Mutual insurance broker for seniors: assists seniors in identifying their needs and the potential costs that can be assigned to them

Home insurance brokers: analyzing the risks of a home to determine the best offer for a client

Life insurance broker: representing the investor to the financial institution to make recommendations

Credit insurance: finding the best credit insurance for an individual or business

Individual health insurance Individual health insurance: researching insurers' offerings to determine the best fit for a client (***)

Property and casualty insurance risks: selection of suitable ...

4.2 Remuneration models of insurance brokers

There are various remuneration models used by insurance brokers when brokering insurance policies. Depending on the type of insurance and the individual needs of the customer, different remuneration structures can be applied.Here we rely on the information provided by Sebastian Kresse.

Brokerage consulting

The most common form of insurance brokerage is brokerage consulting. Representatives, agents, banks and also online portals such as Check** & Co work according to this principle. The brokerage fee, also known as commission, is already factored in by the insurer when calculating the insurance premiums.

Property & health insurance: For property and health insurance, brokerage rates of between **% and **% of the insurance premium are factored in for the agent's support. For example, for a private liability insurance with a premium of **€ per year, the intermediary may receive a brokerage of *,**€ to **,**€. Health insurance: In the case of health insurance, *-* monthly premiums are usually calculated as the acquisition fee. In addition, the intermediary receives an ongoing support fee, which is about *-*% of the premium. Life insurance: The remuneration rates for life insurance are usually *-*% as a closing fee and *-*% for ongoing support. The calculation of the remuneration is particularly complex here due to the long ...

4.3 InsurTech - The digital revolution in the insurance industry

In recent years, the insurance industry in Germany has also undergone profound change, driven by the rapid development of new technologies. Insurtech, a compound of "insurance" and "technology," stands for insurance startups that use innovative technologies to revolutionize the insurance industry. These emerging companies focus on digitizing the traditional processes of the insurance industry, strengthening customer relationships, and offering personalized insurance solutions.

Insurtech benefits:

Strengthened customer relationships: Insurtech companies rely on digital platforms and mobile apps to create a direct channel to communicate with customers. This allows them to build a closer relationship with policyholders and better understand their needs. Optimizing rates: Insurtech startups use innovative technologies to develop more efficient business models that can reduce costs and thus offer more competitive rates. Digitization of the purchasing process: the entire insurance process, from the preparation of the offer to the conclusion of the contract, is digitized by insurtech companies. This enables customers to conduct insurance transactions easily and conveniently via the Internet. Online claims management with the help of AI: Insurtech startups use artificial intelligence (***) and data analysis to process claims efficiently. This leads to faster claims settlements and an improved customer experience. Personalization of insurance offers: Insurtech companies are using ...

4.4 Development of highly specialized brokers

Insurance brokers are facing a gradual decrease in margins and a concentration of the sector, which makes activities increasingly complicated for independent brokers. Nevertheless, the development of insurance for niche markets allows some players to differentiate themselves and maintain comfortable margins. [***]

Among these niche markets, some are particularly promising, such as:

Insurance for pets, managed by some companies such as "Agila" and whose specialty has become some brokers, such as "Petplan". Insurance for collectibles, whether for vehicles or other objects. Some brokers have focused on this specialty, such as "Classic-Data". Insurance for unpaid rent, a market on which "Deutsche Kautionskasse", for example, has positioned itself.

These brokers usually develop their own insurance company, which acts as a subsidiary and develops the insurance products itself. Subsequently, it is the brokers who offer these products to customers (***).

The trend towards highly specialized brokers in niche markets is a significant step in order to compete in a changing insurance sector. As traditional lines of business may be impacted by sector concentration and competition from large insurance companies, targeting specific niche markets allows brokers to leverage their expertise and provide unique value to their clients.

By focusing on niche markets, brokers can develop tailored insurance ...

5.1 Legal environment

The regulation and legal environment for insurance intermediaries in Germany are subject to a large number of statutory rules and regulations. Although there is no direct supervision of insurance intermediaries by the German Federal Financial Supervisory Authority (***) enable BaFin to monitor the sales activities of insurance companies. These include, in particular, the provisions in Sections **, ** and ** et seq. VAG, which include the monitoring of contractual agreements between insurance intermediaries and insurance companies and the structuring of sales incentives such as commissions.

The legal regulations for insurance intermediaries in Germany can be found in various laws and ordinances. A large proportion of these are trade regulations, which govern, among other things, the licensing requirement for certain brokerage activities. The Trade Regulation Act (***), in turn, specifies the level of expertise that insurance brokers and other insurance intermediaries must demonstrate and the continuing education obligations to which they are subject.

In addition to the regulations under public law, there are also regulations under civil law that deal with the provision of advice to customers by insurance intermediaries. The German Insurance Contract Act (***) that not only include the definition of an insurance intermediary, but also describe the obligations when advising customers. In addition, these provisions ...

5.2 Threat of a commission ban

The possibility of an impending ban on commissions in financial advisory services has caused considerable unrest in the industry. In the market for insurance intermediaries in particular, there are fears that such a ban could have a significant impact on their business models and customer advice.

According to an article in the Handelsblatt, the Commission for Financial Advice envisages the potential introduction of a commission ban for financial advisors, particularly in the area of sales of insurance investment products involving long-term savings plans or investment functions. These products include life insurance policies with investment components or unit-linked insurance policies. The goal of such a ban is to strengthen the independence of financial advice and ensure that advisors act in the best interests of their clients.

For insurance intermediaries, however, a commission ban would mean significant changes. Currently, many intermediaries receive commissions from insurance companies for selling certain products. A ban on these commissions could result in intermediaries having to adopt alternative compensation models. Possible options could include requiring clients to pay directly for advisory services or introducing new fee models.

Proponents of a commission ban argue that it would strengthen advisors' independence and eliminate potential conflicts of interest. On the other ...

6.1 Positioning of the players

• Allianz Versicherung
• Aon Versicherung
• Marsh GmbH
• ERGO Group
• HDI Global SE
• Gothaer Versicherung
• Ecclesia Gruppe
• Funk Versicherungsmakler GmbH
• GrECo JLT GmbH
• Check24 Versicherung
• Verivox Versicherungsvergleich GmbH
• Wefox