Munich It was the biggest change in the history of 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, as well as sales, remained intact. The realignment with new responsibilities, new teams and more personal responsibility has been underway since this year.
Frank Sommerfeld is responsible for the substantial property insurance business, in which, among other things, automobiles, household items and liability claims are insured. The 52-year-old business mathematician sees room for improvement in several areas.
Some of the reforms that he initiated are already causing problems among clients, who complain about the sometimes significant increase in prices.
Sommerfeld chooses clear words for what was previously the norm at Allianz in the German business with industrial insurance: “We can no longer afford to cross-subsidize certain areas, because if other customers have to pay for it, we are less competitive there ”.
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The manager is referring to policies for medium-sized companies with an annual turnover of up to 500 million euros, in which Allianz, according to Sommerfeld, has had losses in the upper three-digit million range in the last ten years. This was mainly due to major damage and fire damage in the chemical, lumber, recycling, electroplating, meat, and water damage sectors in the housing industry.
Allianz board: every business model must be self-sufficient
“In future, every business model must be self-sufficient,” is Sommerfeld’s clear statement. The 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 increased notably in recent times, more than double. “If we cannot implement price adjustments and adequate fire protection in the market, we will constantly say goodbye to such risks in the future”, Sommerfeld goes a step further.
Therefore, the potential for conflict with clients is scheduled. Because in practice, this could mean the separation of clients who do not agree with increases in premiums, lower protections or higher deductibles.
But you definitely want to stay in business in the real estate industry, says Sommerfeld. The “Süddeutsche Zeitung” had cited insurance brokers who believe that Allianz wants to get rid of individual SME clients with drastic price increases. The group denies it.
Advance in elementary insurance
Since February, Allianz has offered its new customers protection for their house and apartment automatically with an integrated elementary insurance. If you don’t want the extra protection against flooding or heavy rain, you should deliberately deselect it.
In the future, Sommerfeld wants to avoid painful discussions like last year after the flood disaster in the Ahr valley, when clients had insured their house, but the important additional component in case of flooding was missing. The GDV is still discussing such an industry-wide procedure with politicians. In the course of the year, all providers could launch similar models on the market.
On the other hand, Sommerfeld clearly rejects the proposal for compulsory insurance against natural risks, as was the case in Baden-Württemberg until 1994. “That would be fundamentally the wrong solution, because it would hide the individual risk of each individual customer and would not create any incentive for prevention,” argues the head of the property insurance division.
Germany is already divided into four zones by the so-called zoning system for floods, backwaters and heavy rain (ZÜRS). According to the GDV, 20.4 million addresses and thus 92.4 percent of all are in the lowest risk category 1. At the other extreme, in category 4, only 98,000 addresses are particularly at risk.
It is important to start with particularly threatened addresses, Sommerfeld demands. “The building code needs to change. Also, buyers need to be informed before purchasing a property or home that is a flood-prone area.”
The end of the battle of car insurance discounts
In the auto insurance business, Sommerfeld is seeing “increasingly cautious discounting.” From the customer’s point of view, the discount battles of the last few years are over. Rising claims after two years of the corona pandemic, high loads on comprehensive insurance due to severe storm damage, and rising prices for spare parts are causing loads on motor vehicle insurance, that was once a profit generator.
According to figures from industry association GDV, comprehensive insurance in particular became a loss-maker last year. Added to this is the lack of chips and parts, so fewer new cars are being produced. Stock is aging and needs less insurance coverage. This was recently confirmed by Klaus-Jürgen Heitmann, director of the market leader Huk-Coburg.
Allianz, number two in the motor vehicle insurance market, wants to buck the trend with partnerships. There are already agreements with ADAC or manufacturers such as Volkswagen, Ford and Volvo. “The mediation of policies when buying a car is the great challenge, that has to improve”, claims Sommerfeld.
For example, with new services such as “Drive before you buy”, whereby the customer receives Allianz insurance coverage for a few weeks after purchasing the vehicle and can then decide whether to stay with this provider or switch to a competitor. .
Need for action on the product portfolio
In terms of your division’s product range, Sommerfeld’s insight into the past is essential. “Synergies were never really exploited”, sums up the manager. This was due in part to the fact that until recently each national company created its own portfolio. The developers are now working together across Europe, and the products will be standardized in this way.
Allianz also wants to attract customers with additional services: “We have to think more broadly, for example, what services can we offer customers in addition to pure insurance.” discount, through Eon Drive they can get a discount wall box.
Sommerfeld wants to make the customer experience at Allianz more pleasant
Reshaping the world of products, the famous “fine print” is also on Sommerfeld’s to-do list. The special clauses that insurers used to exclude certain claims for years should disappear, thus avoiding negative surprises for customers. In the event of a flood, it no longer differentiates whether the water comes from the roof or the terrace. In the case of damage caused by hunting, it is no longer differentiated whether it was caused by feather hunting or hair hunting.
This article first appeared on 05/30/2022 at 04:00.