PKV Market Competition: The Battle for Customers and the Biggest Winners

Background: A fierce battle for customers is raging in the German private health insurance (PKV) market. The extent of this competition is debated. Insurance expert Matthias Beenken, in a recent article for Versicherungsmagazin, posits that for years, significant growth in private health insurance has only been achievable by taking existing customers away from competitors.

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On the other hand, the Bayerische Beamtenkrankenkasse (BBK) – highlighted in previous Versicherungsbote articles as one of the losers in customer switching – points out that the lost amount in aging provisions used for evaluation represents only 0.02% of its total stock of aging reserves.

The Engine of Competition: Portable Aging Provisions

Aging provisions (Alterungsrückstellungen) are precisely what allow us to identify winners and losers in customer switching. The GKV Competition Strengthening Act (GKV-Wettbewerbsstärkungsgesetz or GKV-WSG) enables policyholders with full-coverage contracts (Vollversicherung) concluded from 2009 onward to transfer aging provisions up to the value of the basic tariff when switching providers, based on § 204 of the Insurance Contract Act (VVG). This has made it possible for PKV policyholders to change insurers without all their accrued reserves remaining with the old insurer's risk pool.

For American readers, this concept of portable reserves is somewhat analogous to the ability to change US private health insurance plans during open enrollment, though the financial mechanics differ significantly from the German PKV system or US government programs like Medicare.

Measuring Success: The Net Transfer of Reserves

The most important metric for evaluating an insurer's performance in this switching competition is the net balance of incoming and outgoing aging provisions. Insurers that receive substantially more aging provisions than they pay out have successfully lured PKV customers away from their rivals. Conversely, those with a high negative net balance in aging provisions are losing a significant number of full-coverage policyholders to the competition.

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Identifying the Winners in Customer Acquisition

Having previously presented the losers in this switching competition, a new visual feature now introduces the winners. The figures are taken from the current MAP Report No. 920 – the balance sheet rating of PKV insurers. This report, along with other editions of this traditional rating, can be acquired for a fee.

This analysis is crucial for anyone involved in or researching the health insurance market. Understanding which insurers are gaining ground through customer switching offers insights into competitive strategies, pricing, service quality, and overall market health. For brokers and advisors, knowing the winners and losers helps in guiding clients toward stable and competitive private medical insurance providers.

Insurers and brokers struggle in claims management with high backlogs, increasing claim frequencies, skilled labor shortages, and growing customer expectations. Manual processes are expensive and slow.