Numerous life insurance customers in Germany will lose thousands in payouts because of an amendment to a law that allows insurers to cancel certain distributions. It’s particularly bad news for those customers with more than one insurance policy.
Although the law was adopted last year, its true consequences are only becoming apparent today. Instead of the expected cuts in payouts to a small number of financially weak insurers, the industry is in the process of cancelling these special distributions across the board.
Not only small insurance companies but also several major providers including R+V, AachenMünchener and Generali, as well as Debeka, Cosmos and Ergo have announced plans to reduce distributions to their customers, according to the business magazine Wirtschaftswoche.
The changes stem from the life insurance reform act, known by its German acronym LVRG, which was adopted last August. It permits insurers to refrain from distributing valuation reserves of fixed-interest securities.