Mr Riess, all the steps you’ve undertaken over the past few years have focused on customer satisfaction. Why?
If we want to sustainably safeguard and expand our lead in the German insurance market, we need to make sure our 20 million customers are so impressed with us that they’ll recommend us to others. We can only do that if we provide our customers with excellent service, offer strong products via first-class sales channels, and produce at low cost. And of course, our excellent employees make a major contribution here. So we have the whole list of areas to work on if we’re going to keep growing profitably into the future. The success of the steps we’ve taken is evident not just in the financial figures, but most of all in our key figures that relate to customers, which we also release annually in our report for our customers.
You’ve optimized a lot of processes behind the scenes. How and where would that become evident to customers?
It’s evident anywhere our customers come into contact with us – in advice, service, or claims handling. Apart from the comprehensive digitalization of our processes, from policy underwriting to claims adjustment, even very simple changes can make an important contribution.
Let me give you an example from the claims area. In the past we had a separate claims phone number for each line of insurance. So what happened? When our customers wanted to report a claim, only 25 percent of them got the phone number right the first time. In other words, 75 percent couldn’t get through to the right unit without additional support. It’s obvious why that didn’t help customer satisfaction. Which is why we set up a direct phone line for claims – just one phone number to report all claims. Since then, the number of customers who get the right phone number has risen to 65 percent. Which shows that when we optimize our processes the customer directly enjoys the benefit, too.
What’s the financial impact of these steps? After all, you’re growing again in the property and casualty business.
Our fit for the future program in property insurance, focuses on growth, more efficient claims processing, and an optimized cost structure, is already bearing fruit. In terms of growth, focusing on our customers’ needs is essential. One example here is our “Mein Auto” modular car insurance, with which customers can choose their own type and scope of coverage, and pay only for what they really need.
And how have these innovations affected profits?
We’re enjoying profitable growth in property insurance. By that I mean not just rising premium income, but improvements on costs, which in part we’ve achieved by automating processes more extensively, even though we cover a wider variety of customer needs – for example with modular products like “Mein Auto.” On top of that, we’ve made significant progress in processing claims, resulting in lower claims expenses. The property and casualty business has come back to being a strong earner.
So that’s the property and casualty business. But what about life insurance? The whole sector is still suffering from low interest rates.
We have a very robust business model in the life insurance business. Given demographic change, there’s still no alternative to private retirement insurance. So in spite of any criticism from the media, I still foresee growth opportunities in the life business. And here, too, we’re relying on innovation. Starting in July we’ll be offering new products alongside our classic life insurance policies, tailored to client needs and the current environment.
What do these new life insurance products look like?
The basic idea was to offer customers a product that still includes guaranteed benefits, but also a bigger opportunity for returns. Our new retirement concept includes a guaranteed interest rate for the savings phase, which is then renegotiated at the beginning of the payout phase. The renegotiated rate is determined on the basis of conditions when retirement begins. So the new coverage concept also includes lower guarantee costs, which we can pass on to customers as a larger share of the surplus.
And health insurance? Also a difficult market in Germany.
We’re number three in the private health insurance market, and are financially very sound. In terms of our business results, I expect this line to continue being a reliable contributor to our overall profit.
On top of that, our products and services enjoy very good ratings. That too is reflected in our figures. Our new products have been received very well, especially in the fast-growing business in supplementary insurance – our market share of new business in that segment has doubled since 2010.
