When you're comparing private health insurance (PKV) plans in Germany or evaluating insurers in any market, you'll often hear about acquisition costs. In public debate, high acquisition cost ratios are frequently equated with excessive commissions and sales practices that may not prioritize your best interest. While there's historical precedent for this concern, the reality for today's German PKV market is far more complex. Understanding which insurers had the highest ratios in 2020—and more importantly, why—is crucial for making an informed decision. This analysis provides context that is equally valuable when assessing US health insurance carriers or Medicare Advantage plan providers.
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The suspicion around high costs isn't unfounded. Two decades ago, average gross acquisition costs in the German PKV nearly doubled, with some brokers receiving commissions as high as 7,660 Euros for a single policy. This led to legitimate concerns about churning—where clients are moved to new, often unsuitable policies primarily to generate sales commissions. In response, the German government introduced a legal cap on acquisition commissions for substitutive health insurance (§50 VAG), limiting them to a maximum of 3% of the gross premium sum for new business.
Despite this cap, industry-wide acquisition costs have remained persistently high. In 2020, the average ratio only dipped slightly to 6.29% from 6.41% in 2019. This raises a critical question for you as a consumer: if commission excesses are capped, what drives these high costs, and should you automatically avoid insurers with high ratios?
The answer requires looking beyond the headline number. A high acquisition cost ratio can stem from several factors that aren't inherently negative:
- Company Size and Scale: The ratio expresses costs as a percentage of earned gross premiums. Larger insurers with massive premium income naturally tend to have lower (better-looking) ratios. Smaller and mid-sized companies, like Concordia (with a 2020 ratio of 12.29%), often show higher ratios simply due to their scale, not necessarily inefficiency.
- Product Portfolio and Specialization: The type of insurance sold drastically impacts the ratio. For example, ERG had the highest ratio in 2020 at 18.82%. This is largely because ERGO specializes in supplemental insurance (Zusatzversicherungen), which have lower premiums than full-coverage plans. The acquisition cost to secure a supplemental policy isn't proportionally lower, leading to a higher percentage ratio. This is akin to a US insurer specializing in Medicare Supplement (Medigap) plans versus major medical coverage.
- Strategic Growth Investment: A high ratio can represent a conscious investment in future growth, especially in a stagnant market. HanseMerkur, with the third-highest ratio at 12.83% (nearly double the industry average), used this investment to gain over 11,000 new policies in 2020—a significant achievement when most insurers lost customers. Their high cost ratio funded growth in a competitive environment where gaining market share often means attracting competitors' existing customers (Umdeckung).
This last point reveals the core dynamic of the modern PKV market: growth often comes not from new entrants but from poaching existing policyholders. Insurers actively investing in marketing, broker networks, and competitive products to win you over from another company will naturally have higher upfront costs. This context is vital. An insurer with a moderately high ratio that is successfully growing its customer base may be a more dynamic and competitive long-term partner than one with a low ratio stemming from stagnation.
To help you decode these numbers, consider this framework for evaluating any insurer's financial metrics, applicable to both German PKV and US health insurance analysis:
| Factor to Evaluate | Impact on Acquisition Cost Ratio | Key Question for You |
|---|---|---|
| Insurer Size & Market Share | Larger insurers typically have lower ratios due to premium volume. | Am I comparing a giant to a niche player? The ratio alone isn't a fair fight. |
| Primary Business Focus | Supplemental/Add-on insurance leads to higher ratios than full coverage. | What type of plan am I buying? The ratio must be viewed in the context of the product. |
| Net Customer Growth/Loss | A high ratio coupled with strong growth suggests strategic investment. A high ratio with customer loss may indicate inefficiency. | Is the insurer attracting new customers or shrinking? Growth can justify higher costs. |
| Overall Financial Strength & Stability | Independent ratings (e.g., Assekurata, AM Best) assess long-term solvency beyond sales costs. | Is the insurer financially sound enough to pay claims decades from now? |
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The key takeaway is that no single metric tells the whole story. A high acquisition cost ratio should prompt further questions, not immediate dismissal. It's essential to consult comprehensive analyses, such as the detailed MAP-Report, which cross-references multiple performance indicators. When choosing a PKV plan—or any health insurance—look beyond simplistic rankings. Understand the strategy behind the numbers to select an insurer that offers not just a good price today, but robust coverage, excellent service, and long-term stability for your future.