München 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. The 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 important business in property insurance, in which, among other things, cars, household goods and liability claims are insured. The 52-year-old business mathematician sees room for improvement in a number of areas.
Some of the reforms he initiated are already causing trouble among customers, who are complaining about the sometimes significant increase in contributions.
Sommerfeld chooses clear words for what was previously the norm at Allianz in the German business with industrial insurance: “We can no longer allow ourselves the luxury of cross-subsidizing certain areas, because if the other customers have to pay for it, we are less competitive there .”
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The manager means policies for medium-sized companies with an annual turnover of up to 500 million euros, in which Allianz, according to Sommerfeld, has made losses in the higher three-digit million range over the past ten years. This was mainly due to major damage and fire damage in the chemical, wood, recycling, electroplating, meat and water damage sectors in the housing industry.
Allianz Board: Every business model has to be self-sustaining
“In the future, every business model must be self-supporting,” 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 recently been raised noticeably, more than doubled. “Should we not be able to implement price adjustments and adequate fire protection in the market, we will consistently part with such risks in the future,” Sommerfeld goes one step further.
Potential for conflict with customers is therefore programmed. Because in practice, this could mean the separation of customers who do not agree to increasing premiums, lower protection or higher deductibles.
But one definitely wants to continue the property-industry business, says Sommerfeld. The “Süddeutsche Zeitung” had quoted insurance brokers who believe that Allianz wants to get rid of individual SME customers with drastic price increases. The group denies that.
Advance in elementary insurance
Since February, Allianz has been offering its new customers protection for their house and apartment automatically with integrated elementary insurance. If you do not want the additional protection against flooding or heavy rain, you must deliberately deselect it.
In the future, Sommerfeld wants to prevent painful discussions like last year after the flood disaster in the Ahr Valley, when customers had insured their house, but the important additional component in the event of flooding was missing. The GDV is still discussing such a procedure for the entire industry with politicians. In the course of the year, all providers could then bring similar models onto the market.
On the other hand, Sommerfeld clearly rejects the proposal for compulsory insurance against natural hazards, as was the case in Baden-Württemberg up until 1994. “That would be fundamentally the wrong solution, because it would hide the individual risk of each individual customer and create no 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 flooding, backwater 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 end in category 4, only 98,000 addresses are particularly at risk.
It is important to start with the particularly endangered addresses, demands Sommerfeld. “The building code needs to change. In addition, buyers must be informed before purchasing a property or house that it is a flood-prone area.”
The end of the discount battle for car insurance
In the car insurance business, Sommerfeld is observing “increasingly cautious discounts”. From the customer’s point of view, the discount battles of the past few years are over. The increasing claims after two years of the corona pandemic, high burdens in comprehensive insurance due to severe storm damage and rising spare parts prices are causing burdens for motor vehicle insurance, which was once a profit driver.
According to figures from the industry association GDV, comprehensive insurance in particular became a loss-maker last year. Added to this is the lack of chips and parts, which is why fewer new cars are being produced. The stock is getting older and needs less insurance cover. This was recently confirmed by Klaus-Jürgen Heitmann, head of the market leader Huk-Coburg.
Allianz, number two in the motor vehicle insurance market, wants to buck the trend with partnerships. Agreements already exist with ADAC or manufacturers such as Volkswagen, Ford and Volvo. “The mediation of policies when buying a car is the big challenge, that has to get better,” demands Sommerfeld.
For example, with new services such as “Drive before you buy”, with which the customer receives Allianz insurance cover 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 in the product portfolio
As far as the range of products in his division is concerned, Sommerfeld’s view of the past is critical. “Synergies were never really exploited,” sums up the manager. This was partly due to the fact that until recently each national company created its own portfolio. The developers are now working together throughout Europe, and the products are to be standardized in this way.
Allianz also wants to attract customers with additional services: “We have to think more broadly, for example which services we can offer customers in addition to pure insurance.” Drivers of an electric car could already claim their premium for greenhouse gas emissions of 350 euros via Allianz through a partnership with the energy supplier EnBW, they can fill up on electricity at a discount, through Eon Drive they can get a wall box at a discount.
Sommerfeld wants to make the customer experience at Allianz more pleasant
When reorganizing the product world, the famous “small print” is also on Sommerfeld’s to-do list. Special clauses that insurers used to exclude certain claims for years should disappear, thus avoiding negative surprises for customers. In the event of flooding, it is no longer differentiated whether the water comes from the roof or over the terrace. In the case of damage caused by game, it is no longer differentiated whether it was caused by feathered game or furred game.