Morgen & Morgen Study: Premium Stability in German Private Health Insurance (PKV) is Declining
If you're researching German private health insurance (PKV) or comparing it to options like US private medical insurance, a new benchmark study is crucial reading. The latest "M&M Rating PKV Premium Stability" from the analysis firm Morgen & Morgen reveals a concerning trend: the number of top-rated plans with excellent premium stability has plummeted, while the share of poorly rated plans has surged. This shift signals rising long-term costs for policyholders and underscores the importance of meticulous plan selection for your financial and health security.
The Big Picture: Fewer Top Plans, More Underperformers
Morgen & Morgen analyzed 808 policies from 26 providers. The results show a stark decline in premium stability:
- Top Plans (5 Stars): Only 82 plans (10.1%) received the highest rating for premium stability. This is a dramatic drop from 266 plans in the previous year's analysis.
- Underperforming Plans (1 & 2 Stars): 33.3% of all plans reviewed received a below-average rating. This segment has nearly doubled from 17% last year, with 110 plans rated "very weak" (1 star) and 159 rated "weak" (2 stars).
- Average Premium Increases: The average annual premium adjustment rose from 1.77% to 2.53%, indicating broader cost pressures.
This data is vital for anyone seeking long-term health coverage, whether in Germany's PKV system or when evaluating the premium sustainability of US private health plans.
Why is Premium Stability Weakening? The Aging of "Unisex" Tariffs
Thorsten Bohrmann, Senior Insurance Analyst at Morgen & Morgen, explains the core driver. After the 2012 introduction of unisex tariffs (which eliminated gender-based pricing), new plans started with a "premium reset," leading to several years of very low increases. Now, this generation of tariffs is aging. As insured populations within these plans get older, their claims experience naturally rises, leading to higher necessary premium adjustments (known as Beitragsanpassungen or BAP).
"The current premium adjustments are mainly due to medical advances and the aging of the portfolio," notes Bohrmann. While increases are rising, they have not yet reached the level seen in older, pre-unisex tariffs that had built-in 5% annual adjustment provisions.
Insurers with the Weakest Ratings
The study highlights specific insurers with a high number of low-rated plans. Of the 110 plans rated "very weak" (1 star):
- Barmenia: 51 plans
- AXA: 14 plans
- Inter and LKH: 4 plans each
This information is critical for conducting due diligence when choosing an insurer for your private health insurance policy.
How the Rating Works: A Focus on Long-Term Predictability
Morgen & Morgen's methodology focuses on predictability, a key factor for financial planning. They analyzed plans with new business premiums from 2015-2020 for entry ages 21-50. The rating is based on:
- Average Premium Increase: The mean annual increase over five years.
- Consistency of Increases: The standard deviation (volatility) of those annual adjustments.
A plan scores well only if the average increase is low and the year-to-year changes are consistent (low volatility). This dual metric aims to identify plans that offer true, long-term premium stability and budget predictability.
Navigating Insurance Ratings: A Note of Caution for Consumers
The report also touches on a broader industry issue: the potential conflict of interest in insurance ratings. Consumer advocates have previously criticized the abundance of "top" ratings, suggesting rating agencies may have a financial incentive as insurers often pay licensing fees to use award logos in marketing.
Morgen & Morgen confirms it charges a "modest fee" for insurers to use its ratings in advertising but asserts its independence. This highlights an important lesson for you: Use ratings as one key data point in your decision-making process, not the sole factor. Always consult an independent insurance broker or advisor who can provide unbiased comparisons and explain the fine print of coverage, exclusions, and long-term cost structures.
Key Takeaways for Choosing Health Insurance
| Consideration | Why It Matters | Action for Consumers |
|---|---|---|
| Premium Stability History | Indicates future cost predictability and insurer's risk management. | Review multi-year rating studies like Morgen & Morgen. Don't just look at the current premium. |
| Insurer's Portfolio Age | Newer "unisex" tariffs are now aging, leading to higher increases. | Ask your broker about the portfolio demographics and adjustment history of any plan you consider. |
| Underlying Coverage | Stable premiums are worthless if coverage is inadequate. | Prioritize comprehensive health insurance coverage that meets your needs first, then evaluate cost stability. |
| Independent Advice | Ratings have limitations; a broker provides personalized context. | Work with a fee-based or independent insurance consultant to navigate complex PKV choices or compare with public health insurance (GKV) options. |
Conclusion: Due Diligence is More Important Than Ever
The declining premium stability in German PKV plans is a clear market signal. It emphasizes that choosing private health insurance is a long-term commitment requiring careful analysis. While many good plans (rated "excellent" or "very good") still exist, finding them requires more effort. For expatriates, freelancers, or high-earners in Germany, this means thoroughly researching insurers and plans, understanding rating methodologies, and seeking professional advice to secure both robust coverage and financial predictability for the future.
Insurers and brokers face challenges in claims management with high backlogs, increasing claim frequencies, skilled labor shortages, and growing customer expectations. Manual processes are expensive and slow.