Life insurance saw minimal premium reduction (-0.1 percent; forecast: -0.5 percent) to EUR 90.7 billion. New single-premium business performed particularly well at EUR 26.1 billion (-0.5 percent). Income from new contracts financed by recurring premiums was down to EUR 5.2 billion (-4.6 percent). The cancellation rate looks set to stay at the previous year’s level of 2.8 percent.
The share of life insurance products offering alternative guarantee concepts increased again. This segment accounted for almost 50 percent of new business, while the share of traditional policies with a continuous guaranteed interest rate fell to about 40 percent.
Insurers concluded 15.7 million contracts for occupational pension provision (+1.9 percent). The premium volume of EUR 19.4 billion accounts for a share of 21.3 percent of total life premium income, compared to 12.7 percent in 2000.
The development of assets under management also testifies to customer confidence in life insurance: the sum of capital investments under management as claims reserves has grown by an annual 3.03 percent on average in the past five years to its current level of EUR 893 billion. The average net capital return for life insurers in 2017 was 4.5 percent and slightly above the prior year level.
“Life insurance is still an important component of old-age provision in Germany“, said Weiler. “Given the low interest rates and demographic development, we require new momentum from our sector and from politics, though, so we can continue the expansion of retirement provision products.”
Property and casualty insurance
Property and casualty insurers posted a 2.9 percent increase in contributions (forecast was +2.1 percent) to EUR 68.2 billion. Benefit payments are projected to have increased by 3.2 percent to EUR 51 billion. As a result, German insurers stayed in the black in 2017: underwriting profits look set to remain at EUR 3.4 billion (prior year: EUR 3.5 billion) while the combined ratio stayed unchanged from 2016 at 95 percent.
“Property and casualty business saw strong growth and we want to continue that in 2018“, said the GDV President. “This year we will focus on combating cybercrime and improving protection against natural disasters.”
Private health insurers
Total premium income rose 4.3 percent to EUR 38.8 billion and health insurance accounted for EUR 36.5 billion (+4.1 percent). Nursing care insurance premium income increased to EUR 2.3 billion (+6.1 percent).
Benefit payments rose by 1.6 percent to EUR 27 billion, with private health insurance customers accounting for EUR 25.9 billion (+1.5 percent). EUR 1.1 billion of nursing care insurance claims (+4.3 percent) was paid out to customers.
The Solvency II supervisory regime has been in force for two years. Public perception focuses mainly on coverage ratios as a measuring stick for the stability of the sector. The coverage ratio was 350 percent for life insurers on 31 December 2017. In other words, the sector holds more than three times the equity demanded by the regulator. The GDV estimates the coverage ratio at just below 300 percent for property and casualty.
The insurance industry is cautiously optimistic about 2018. “We expect stable business development“, said Weiler. “The economy supports our business, the low interest rates remain a burden.” Overall, premium income across all three lines is likely to be up by 1.3 percent.