Facts and figures

Interest rates and therefore solvency figures have risen in recent years and several life insurance companies have increased their returns for customers. 

However, many life insurance companies are only benefiting to a limited extent from the higher interest rate environment. Due to higher interest rates and relatively weak new business volumes, life insurers generally have limited free liquidity available to (re-)invest at higher rates.

Additionally, overall interest rates are already beginning to decline again. As a result, the pressure to reduce administrative costs and achieve synergies and economies of scale remains high.

The IT systems for life insurance back-books are often outdated, and the necessary specialised skills are becoming increasingly rare. In addition, the number of tariff structures in primary insurers' portfolios is very high.

Historically, primary insurers frequently developed new products and tariffs, leading to complex and costly IT systems. To sustainably manage contracts in the future, primary insurers must comprehensively renew their IT platforms and harmonise their structures.

This effect is further amplified by decreasing portfolio sizes, which drive up costs per contract.

The German life insurance market is unusually fragmented: there are currently approximately 80 life insurers in Germany. Only the five largest groups hold a market share of more than five per cent each, while around 70 per cent of life insurers have a market share of less than one per cent.

To achieve financial and operational stability in the future, these approximately 80 life insurers will require extensive investments and a large number of specialists. This complexity and high cost burden are not in the customers' best interest.