Munich It was the biggest change in the history of the insurance giant Allianz in Germany. About a year ago, the Dax group announced the end of its German national company. Property, life and health insurance units and sales remained unchanged. The shift in terms of new responsibilities, new teams and greater personal responsibility has been underway since this year.
Frank Sommerfeld is responsible for the important non-life insurance business in which he is insured, inter alia, cars, household goods and civil liability. The 52-year-old business mathematician sees opportunities for improvement in many areas. Some of the reforms he has initiated are already causing problems for customers who complain about the sometimes significant increases in premiums.
Sommerfeld makes clear words on what was previously the norm at Allianz in the German industrial insurance business: “We can no longer afford the luxury of cross-subsidizing certain areas because if other customers have to pay for it, we are less competitive there.”
The manager is referring to policies for medium-sized companies with an annual turnover of up to € 500 million, in which Allianz, according to Sommerfeld, has suffered losses in the higher three-digit range of millions over the past ten years. This was mainly due to severe damage and fires in the chemical, timber, recycling, electroplating, meat and water sectors in residential construction.
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“In the future, any business model must be self-sufficient,” says Sommerfeld clearly. A consequence of this is that Allianz experts now check whether the premiums correspond to the risk. For this reason, prices in the most critical areas have recently increased significantly, more than twice. “If we are unable to market price adjustments and adequate fire protection, we will consistently part with this risk in the future,” Sommerfeld goes one step further.
The potential for conflict with customers is therefore pre-programmed. Because in practice it may mean separating customers who do not agree to an increase in premiums, lower protection or higher deductions.
But the real estate business is definitely going to continue, says Sommerfeld. The “Süddeutsche Zeitung” referred to insurance brokers who believe that Allianz wants to get rid of individual SME clients with drastic price increases. The group denies this.
Advance payment for basic insurance
From February, Allianz offers its new customers home and apartment protection automatically with integrated basic insurance. If you do not want additional protection against flooding or driving rain, you must deliberately deselect it.
In the future, Sommerfeld wants to avert painful discussions, such as last year after the Ahr flood disaster when customers had insured their home but missed an important extra component in the event of a flood. GDV continues to discuss this procedure with politicians for the entire industry. During the year, all suppliers were then able to launch similar models on the market.
On the other hand, Sommerfeld explicitly rejects the proposal for compulsory natural hazard insurance, as was the case in Baden-Württemberg until 1994. – This would be a fundamentally wrong solution, as it would hide the individual risk of each client and would not create an incentive for prevention – argues the head of the property insurance department.
Germany is already divided into four zones, the so-called zone system for floods, backwater and heavy rains (ZÜRS). According to GDV, 20.4 million addresses, or 92.4 percent of all addresses, are in the lowest risk category 1. On the other hand, in category 4, only 98,000 addresses are particularly at risk.
It’s important to start with vulnerable addresses, insists Sommerfeld. “The building code has to change. In addition, buyers must be made aware that this is a flood risk area before buying a property or a house. “
End of the rebate battle for car insurance
In the auto insurance industry, Sommerfeld sees “increasingly cautious rebates”, and from the customer’s point of view, the rebate battles of the last few years have come to an end. Rising claims after two years of the corona pandemic, high AC loads due to severe storm damage, and rising spare parts prices are putting a strain on motor insurance, which was once a profit engine.
According to the data of the GDV trade association, last year motor own damage insurance became the source of losses. In addition, there are no chips and parts, so fewer new cars are produced. Stocks are aging and require less insurance coverage. This was recently confirmed by Klaus-Jürgen Heitmann, head of the market leader Huk-Coburg.
Allianz, number two on the motor insurance market, wants to break this trend through partnerships. Agreements already exist with ADAC or with manufacturers such as Volkswagen, Ford and Volvo. “Political brokerage when buying a car is a big challenge that needs to be better,” argues Sommerfeld.
For example, thanks to new services such as “Drive Before Purchase”, whereby the customer receives Allianz coverage for a few weeks after purchasing the vehicle, and then can decide whether to stay with that supplier or switch to the competition.
Need to act in a product portfolio
When it comes to the product range of his division, Sommerfeld’s view of the past is critical. “The synergies were never really used,” concludes the manager. Part of this was due to the fact that, until recently, every domestic firm was creating its own portfolio. Developers are now collaborating across Europe and in this way products are to be standardized.
Allianz also wants to tempt customers with additional services: “We have to think more broadly, for example what services we can offer to customers in addition to pure insurance.” Thanks to the partnership with the energy supplier EnBW, they can top up their electricity at a discount, through Eon Drive they can get a discount on the wall cassette.
During the reorganization of the product world, the famous “fine print” was also on Sommerfeld’s to-do list. Special clauses by which insurers have excluded certain claims over the years should disappear, thus avoiding negative surprises for customers. In the event of flooding, it is no longer distinguishable whether the water flows from the roof or the terrace. In the case of damage caused by game, it no longer distinguishes whether it was caused by birds or hairy game.