Haydn Franklin Haydn Franklin, Tuesday 3rd December 2019, 7:48 AM CET
Germany Innovating Insurance

Germany Innovating Insurance

The one thing that Germans are infamous for is their nationwide demand to be insured over practically any scenario. It’s estimated that each household in Germany maintains six to eight forms of insurance, making this country the most significant market worldwide for insurance corporations. The insurance industry on average earns $205 billion in total funds, with paid out provisions estimated around $16 billion. This comes out to be $189 billion in overall profits, which is spread out between hundreds of corporations. Subsequently, the market is growing at an increased rate. The rate-per-startup has risen by 40% over the last decade, proving that Germany is one of the faster-growing economies worldwide.

The Federal Government of Germany implements a back-end system that has the sixteen states of Germany overseen by this public entity. All insurance corporations must comply with the various terms and conditions maintained in the Insurance Supervision Act. The Federal Financial Supervisory Authority governs these corporations, or more commonly known as BaFin.

This supervisory authority manages an estimated several hundred insurance corporations. Any start-ups cannot begin providing their services until they’ve received the authorization of BaFin. Three forms of criteria must be met for immediate approval. This includes viable safeguard provisions, legal obligations under the contract must be agreed upon, and business operations are correctly recorded to BaFin. If these three criteria can be met and proven annually, an insurance licence can be maintained. However, the unique legislation surrounding the insurance industry causes the German Insurance Market to be one of the most challenging to enter. Once approval is granted the trust of consumers is inevitable.

Further Growth

The insurance market in Germany is so large that every corporation increased its profit by an average of 1.9% to 2.4%, which is considerably high in such an oversaturated industry. The German Insurance Association, which provides the statistical data on the market, noted that this trend is on the rise. It’s estimated that between 2020 and 2021, client acquisition percentages for these insurance corporations will rise by 80%. The majority of this growth is attributed to property acquisitions and casualty agreements, which grows by 1.3% in Germany yearly. The advancement in popular and homeownership is fueling the progress of the market, making it the sixth-largest jurisdiction for insurance corporations. By 2022, insurance analysts speculate that Germany will be the largest market.

It should be noted that 99% of all insurance corporations in Germany are national entities, with only one international company successfully entering the market. Lemonade survived in the market for their willingness to adapt to alterations in business protocols. However, there is a flipside to this coin. German Insurance Companies can become international, with their names becoming globally recognized through immigration. Corporations like InsureTech could become a leading insurance service worldwide.

The Innovation

Innovation is helping to assist the growth of Germany’s insurance market, with new start-ups providing innovative products and services. It’s estimated that in 2019, more than 130 new companies were approved for operational integrity. Unlike most markets, where data remains private between companies, these new start-ups share their information to increase collaborative capabilities. The result is better services for the consumer, and it also thrives friendly-natured competition.

This has challenged the original insurance companies in Germany that have dominated markets for decades, forcing them to stop disrupting the industry with false claims and refusal to provide payment. The several hundred start-ups managed in Germany are working together on the frontier of new technologies. This included machine learning, artificial intelligence and blockchain. This will assist with market efficiency and consumer accessibility.

Right now, these start-ups are working themselves into the maturing phase of development. Most of these operators have only begun providing their established services and are still working to create a formalized business model. So it should be noted that during this time of innovation, anything can change at any time. It’s estimated that the first start-up to become an internationally recognized insurance initiative will come in a few years. Until then, new technologies will continue to be adapted into the market. Most analysts suspect that insurance corporations will begin accepting payment via security tokens and blockchain currency.

The JDC Group

The German Insurance Industry is growing faster than ever before. However, even with thriving markets, there are only a select few corporations operating at the corporate level. One dominant force in the market is the JDC Group, who stand apart from the rest. Their innovative towards platform architecture and safety has made insurance a far more easily maintained service for these new start-ups. This is called the Plug and Play Insurance System, which has brought the group success internationally and in the German market. This is the very product that started a drastic shift in the insurance industry and caused these increased percentages.

By implementing these advanced white-label technologies, the JDC Group has managed to create a product that allows for the insurance corporations of Germany to maintain its client basis efficiently and effectively. The adoption of these technologies has also assisted with the profitability earned by insurance corporations. It’s known that start-ups refusing this growing progress are facing struggling periods, which is why high percentages of companies come to the JDC Group daily, searching for assistance with their new platform. It should be noted that this insurance-governing group maintains its platform through both artificial intelligence and human curation. The result is some of the best products displayed in an insurance market. The JDC Group has gifted insurance companies nationwide with insight.

The Digital offer at the JDC Group, Stefan Bachmann, spoke on the Pay and Play Insurance System. He said: “This is a great chance for everyone who already owns customers and wants to generate new revenues in this $221 bn market. Banks, independent financial advisors, and even bound agents have the opportunity to innovate their business models and increase revenue sustainably.”

Haydn Franklin

Author: Haydn Franklin

Hayden joined whichbroker.com in March 2019. He previously held positions at leading US facing financial news outlets. Hayden's focus is primarily Crypto and Forex news at whichbroker.com, however he is also whicbrokers long form content specialist leading him to write longer posts with an investigative angle. Hayden gradutated from the University of Chicago. Haydn Franklin can be contacted at [email protected], View all posts by Haydn Franklin

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