2015: Rating German Risk Insurance
Risk insurers are life insurers mainly providing biometric insurance products like risk life or disability insurance. Therefore, their most important source of revenues is the profit margin of their biometric products. From the point of view of the customers this is a very important point because it is directly related to their premium paid: In general, risk life insurers reduce the premiums paid making use of the customer’s profit participation. If, however, risk returns are low, then the customer’s profit participation will decrease and insurance premiums paid will increase. In this ranking we compare the German risk life insurers with respect to their financial strength. Healthy risk insurers are acting and calculating in a prudent way, having stable and profitable products. We therefore expect them to be financially strong in future, too.
Measuring Financial Health.
To quantify a risk insurer’s financial health we use the Economic Capital Ratio. It is simply the company’s available capital divided by its assets. This ratio enables us to rank and compare insurers of different size. Indeed, it is not the size that matters, but whether the insurer has the financial means to be resilient in adverse situations. Computing the economic capital of a risk life insurer is the core of RealRate’s computational model. Picking the most important information from the annual business reports, we transform those accounting values to economic market values. This approach is especially important for German risk life insurers since their statutory accounting relies on book values often being quite different from fair market values. In addition, their business model and corresponding accounting is difficult and deviates from other industries. The Economic Capital Ratio is a forward-looking key ratio capturing financial health in just one figure.
RealRate examines German risk insurers separately from life insurers. The relative financial strength of risk insurers varies much more. This is due to the fact that risk insurers, i.e., especially life insurers, form a comparatively small provision. The provision is the benchmark for financial strength.
In the first ranking of risk insurers, Delta Direkt Lebensversicherung emerged as the winner. Delta Direkt impresses with an exceptionally high risk result. Second and third place went to Dialog Lebensversicherung and Deutsche Lebensversicherungs-AG.
The main difference between risk life insurance and traditional life insurance is when a payment is made. Risk life insurance will only pay out in the event of death, whereas traditional life insurance also pays in the event of survival.
Risk life insurance is also significantly cheaper than classic life insurance.
There are currently around 8 million active term life insurance policies and over €4 billion in annual premiums are paid.
RealRate are very unique in their model. They bring to the table 100% independent and fair ratings, bringing together expert knowledge and superior artificial intelligence. The AI model that they use works out all important Economic Capital Ratio figure.
The AI is completely unbiased and uses public data that’s been audited. RealRate are fair, explainable and to top it off they avoid any conflicts of interests.
1. Delta Direkt Leben
2. Dialog Leben
3. Deutsche Lebensversicherungs-AG
4. InterRisk Leben
5. EUROPA Leben
6. COSMOS Leben
7. Hannoversche Leben
8. ERGO Direkt Leben