Collected Promises

Losing Out on Life Insurance

Every German has at least one insurance, according to surveys. Source: picture alliance / Westend61
Every German has at least one insurance policy, according to surveys.
  • Why it matters

    Why it matters

    A new law, initially aimed to help financially weak insurers, is being applied by companies across the board to cut benefits.

  • Facts

    Facts

    • Life insurance Reform Act, adopted in August 2014, permits insurers to refrain from distributing valuation reserves of fixed-interest securities.
    • In late 2013, valuation reserves were reportedly worth a total of €57.8 billion ($66.9 billion).
    • Customers whose policies expired shortly after last August saw the value of their shares of valuation reserves reduced by up to several thousand euros.
  • Audio

    Audio

  • Pdf

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.

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