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Private health insurance DE. Opportonities for tech disruption


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Research on opportinities for tech disruption in private health insurance for German mkt

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Private health insurance DE. Opportonities for tech disruption

  1. 1. Market survey. Opportunities for new technology, 2015 Private Health Insurance in EU: Germany
  2. 2. Statutory vs private insurance √√ Insurance is about risks and capital pooling in essence. Health risks (and healthcare expendi- tures) are distributed unevenly across indivuduals and clusters (risk groups) √√ Calculation of health insurance premiums has to deal with this uneven distribution How much each participant to pay for health insurance? Statutory means social solidarity: You make more money - you pay more (proportional?) You are part of the group (social, professional etc) - all pay equal in the group Risk solidarity Income solidarity Income rated YES YES Community rated YES NO Risk rated NO NO SHI Germany PHI Germany Private means market reality ÎÎ you pay market price of your health risk. This is risk-rated premium. The process is called medical under- writing in insurance
  3. 3. PHI in Germany. Key numbers 2013 √√ Comprehensive PKV is an alternative to GKV √√ 8,9 million policies with annual payments of EUR 25,7 billion √√ There are some group insurances assumed insignifi- cant. I.e. PKV is individual (B2C) market √√ There is also 23,5 million supplimentary policies with EUR 7,4 billion annual payments * Numbers under PKV Supplimentary adn Long-term represent number of insurances (policies) rather than individuals insured. One person can have multiple insurance and vice versa (group insurance). We assume it roughly equal to population numbers Source: DUAL system
  4. 4. GKV to PKV migration Source:, “Private Health Insurance in Germany” presentation at the World Bank Workshop June 28, 2011 by Stefan Greß, PhD 2010 2011 2012 2013 PKV policies 8 895,5 8 976,4 8 956,3 8 890,1 Arrivals from GKV 227,7 232,0 159,9 123,9 Departures for GKV 153,2 157,6 162,4 161,2 Net PKV growth 84,6 80,9 -20,1 -66,2 figures in thousabds You get the right to switch But.. Once private, ever private! Occupation (German) Occupation Angesteller (>54 900 euro income) Employee (> 54 900 euro pa income) Selbstandliger/ freiberufler Independent/self employed Beamter Civil service officer Beamtenanwarter Candidate for civil service Student Student Praktikant Intern Nicht erwerbstatig Unemployed Only ~25% of those having the right did switch to PKV
  5. 5. PHI supply and traditional distribution channels Sources: wikipedia, (Statistical Yearbook of German Insurance 2013), √√ There are 43 PHI insurers of which 24 are joint-stock companies and 19 are mutual societies √√ PHI insurers provide both comprehesive substitutive PKV and suplimentary/com- plimentary coverage √√ PKV is a private law contract Concentration, PHI 5 largest companies 53,1% 10 largest companies 77,5% 15 largest companies 90,2% Distribution led by intermediaries type of intermediary 2010 2011 single-tied or insurance group intermediaries 48,6% 49,2% as main occupation 32,0% 32,3% as side job 1,1% 1,0% employed field staff 15,5% 15,9% multi-tied intermediaries 37,5% 37,3% brokers 31,7% 31,8% multiple agents 5,8% 5,5% credit institutions 3,1% 2,9% as single-tied intermediaries 2,0% 1,8% as multi-tied intermediaries 1,1% 1,1% directselling 3,9% 3,9% other 6,9% 6,7% Insurer Insured persons 2013 thousand Change to 2000 thousand Premiums EUR billion 1 Debeka 2 243 327,7 5,1 2 German Health 857 0,2 4,8 3 Axa 779 321,8 2,5 4 APKV 654 -253,7 3,3 5 Signal Iduna 614 97,5 2,0 6 Versicherungskammer Bayern 464 47,0 1,3 7 HUK Coburg 398 180,5 1,1 8 Continentale Insurance 392 21,3 1,4 9 Central Health Insurance 379 2,1 10 Barmenia 306 -2,5 1,5 Total number of insurance intermediaries/ advisors: 257,6 thousand including: tied agents: 175,8; authorized agents: 33,1; brokers: 45,6; product accessory: 3,1 in 2011
  6. 6. Client’s market »» It is individual mas market. Group purchases are rare »» You deal with offline intermediary rather than direct with insurance company. This is how PKV product reaches ~90% of the client market »» Comprehensive PKV works like GKV. You enrolled and go on paying your (monthly or annual?) bills But what if customer not happy with PKV value for the money? Tariff change? Insurer change? √√ That is same insurance company but dif- ferent plan (i.e. set and scope of services) √√ Not easy. May deliberately be intricated by insurers (Spiegel article) √√ Trditional broker do not earn comission if you change plan but stay with same insurer ** Cancellation possible as each year with a three months written notice be- fore year end. OR at the premium in- crease (HUK Coburg). Is this a mar- ket standard? The bread-and-butter business of private health insurers, the comprehensive health insurance is advised in recent years clearly stalled. Growth generated the sector last only in the supplementary insurance Experts say: Insuredpeople,comprehensive PKVmillion Contractduration,years Newdeals perannuminthousand NewarrivalsGKV2PKV 2013inthousand Stat Est Est Stat 8,89 25 356 124
  7. 7. Preliminary conlusions ÂÂ Your PKV premium is risk-rated. At least you definitely pay more with age. But usually no come back to GKV heaven ÂÂ Comprehensive PKV is the client market now. Intermediaries (brokers) compete for new deals ÂÂ This competition is really tough these days as number of brokers compare to number of new deals available on the market ÂÂ Insurers strive to keep prices and switching costs up ÂÂ Brokers do not make any money if their costomer changes tariff (plan). New ad- visor/broker revenue model may be taking off, get paid as a % of the clien’t saving ÂÂ Broker’s commsiion for new biz remains traditional high (7-9 monthly premiums). Competition doesn’t lead fast decrease in broker’s commission. Client kickbacks are not common practice ÂÂ Overall PKV distribution seems hardly cost effective now ÂÂ If effective marketing tech are available for outsourcing (i.e. digital lead gen) it’s market price likely to soar... Doesn’t seem ready for some tech disruption now?