Despite of the loss of confidence in banks and the investment sector, the competitive environment in life insurance has not relaxed. Uncertainties regarding the performance of social pension programmes after termination of the “Riester” stimulus have hindered significant growth. Munich Re sees franchise strength and the cost situation as keys to invigorate the market. To that effect Munich Re offers focused consulting services.
Private life insurance continues to be the established supplement to and substitute product for statutory old-age provision, and is the experiencing the strongest premium growth of all savings products. What might prove to be positive for the sector is the weakened confidence of clients in banks. Also, uncertainty regarding statutory old-age provision is giving life insurers an opportunity to market their annuity products.
In spite of positive market influences, however, life insurers are currently experiencing only weak growth rates. The edge over bank and investment products is narrow, new impulses are needed. The growth-stimulating trend that Munich Re is currently witnessing is resulting in increased competition with regard to premium rates, e.g. in disability insurance. In the long term, however, this is likely to have an adverse affect on profitability.
Munich RE sees considerable growth potential primarily in product development and process optimisation, but also in positioning and in balance-sheet management, and are therefore offering their clients extensive and individualised consulting services throughout the entire value-added chain.
New impulses in product development
New products like variable annuities stimulate the market. Unit-linked life insurances with guaranteed minimum benefits are also gaining ground in Germany. Munich RE offers to their clients consulting support that ranges from product design to risk management for tapping this new field of business. The general principle for designing new products is that they must be realisable and marketable, and, at the same time, their risks must be measureable and controllable.
Existing complex products need to be adapted for a broader clientele, so Munich RE advise simplification of risk selection. An easy-to-grasp application concept breaks down barriers to understanding and perceptibly improves the chances of landing an account.
Munich Re supports in optimisation of processes
There is also potential for optimisation in process structures, for example in policy processing. Concluding insurance often takes long. Applications submitted for risk assessment are frequently incomplete, clearing up questions further retards the process. This is superfluous, as experts from underwriting well know. Certain steps of risk assessment are not even required in many cases. Parts of the application process are too complicated and tedious. An analysis of current processes is an indispensable part of exploiting optimisation potential. Building on this, Munich RE prepares individualised, custom-made solutions together with their clients that include various aspects such as staff structure, marketing requirements and product range. New software developments that allow risk assessment directly at the time of application submission significantly enhance flexibility. Market leader Allfinanz‘ software-based solutions have meanwhile made point-of-sale risk assessment possible. KarstadtQuelle insurances successfully implemented tele-underwriting this year.
A company can of course not be completely restructured from one day to the next. This is usually not even necessary. Long-term cooperation and partnerships make it possible to gradually arrive at solutions that are precisely tailored to the primary insurer’s situation, and can then be smoothly integrated into existing structures. As a consultant and risk carrier, Munich RE always pursues the aim of achieving success for both parties.
Asset and liability management complete Munich’RE’s services
For questions that have an impact on balance sheets, assistance is provided by Munich Re staff in Solvency II Consulting. And this is where MEAG know-how also comes into play. With its integrated business model, Munich Re can offer its clients the full range of instruments, from classic reinsurance to risk and claims management, to capital and balance-sheet management.
One example of asset and liability management is structured reinsurance. These transactions offer attractive concepts in the area of financial corporate management. This can free up additional capital and provide scope for growth. Munich RE creates measurable added value for their clients. Munich Re as a solution-focused reinsurer offers more. Munich RE has the necessary in-depth understanding of risks and know-how at Munich RE’s disposal, and are available to its clients for individualised service. This is how Munich RE bring business to life.
