What insured persons should pay attention to

Frankfurt Most people underestimate the risk of becoming disabled. On average, however, one in four will fail at least once for a longer period in the course of their professional life. If there is no earnings, most consumers will lack their main source of income.

Occupational disability insurance, or BU for short, cushions the financial consequences and is therefore considered one of the most important forms of insurance for private individuals – especially during the coronavirus pandemic. Experts expect more benefits, including mental illness and consequential damage from Covid 19 disease.

Potsdam-based specialist broker Frank Dietrich says: “The psychological stress in the corona crisis is increasing. I expect a larger wave of depression, which will be favored by social isolation. As a result, some patients will no longer be able to practice their profession, or only partially. ”

In general, the BU insurance pays a pension if, for health reasons, the insured person can no longer work permanently or only to a certain extent in their own profession. Some policies also apply if there is a long-term ban on work due to the risk of infection.

However, many occupational disability policies also reveal weaknesses in the crisis, especially when it comes to this so-called infection clause. If you are thinking about a new contract, you should consider a few points.

Mental illnesses are increasing. But even before the corona crisis, they were the most common cause of disability. They account for almost a third of insurance claims, as data from the Association of the German Insurance Industry (GDV) shows.

Around a fifth of the cases are related to back or joint problems and osteoarthritis. Accidents are only nine percent responsible for occupational disability.

Often, however, it is difficult to prove mental illnesses to the insurer, complains Dietrich. According to the GDV, only every fifth application for a BU pension is rejected. However, the most common reason for rejection is that the insured person does not reach the agreed level of disability, usually 50 percent.

In the case of unclear cases, it could be advantageous for the insured person not only to submit the existing medical documents, but also to have a medical report drawn up. According to the GDV, 63 percent of all reports lead to a positive benefit decision for the insured. When it comes to the psyche, Dietrich also advises its customers to seek inpatient treatment. Then the case is usually clear.

Disabled due to consequential damage

There could also be more insurance claims in the BU in the future because permanent damage may also remain after a coronavirus infection. According to experts, this could permanently damage the lungs and the heart. It is also being discussed that the virus could trigger meningitis, which could then lead to consequential damage.

According to Dietrich, good policies also pay a BU pension if the insured can still work with these consequential damages. It only has to be less than 50 percent of what he could work on days when he was still healthy.

The Federation of Insured Persons (BdV) also points out that insured persons who work in parallel to receiving a BU pension may also receive short-time work benefits in the current situation. This has no impact on the existing disability pension.

Dietrich considers it important that BU contracts also include a so-called incapacity clause (AU). Because while the occupational disability policy protects the insured if they can no longer practice their profession in the long term, the daily sickness insurance takes over if the customer is temporarily unable to work.

The problem that the daily subsistence insurer could now say that the customer is unable to work and that the occupational disability insurance states that he is unable to work – and thus neither of them wants to pay – can be eliminated by an AU clause, Dietrich explains. Then the customer receives a pension from his BU insurance for a certain period of time, even if no incapacity for work has been determined, but only incapacity to work.

Few policies with infection clause

In connection with the corona crisis, the keyword infection clause repeatedly comes up. If it is included in the contract, the insurer pays a BU pension if there is an official or judicial order stating that the work must not be carried out for at least six months due to the risk of infection.

At the BdV, it is said that there are currently no empirical values ​​known that “permanent employment bans are being imposed because of Covid 19 infections.” Dietrich counters, however: “A few weeks ago we could not imagine the current situation. Who knows what will come despite the planned gradual easing. “

However, he had the experience that only about five percent of the BU contracts contain well-formulated infection clauses. Many policies do not contain such a clause. Some insurers limit benefits to certain professional groups.

Even those who have already been infected with the corona virus can still conclude a BU contract. “A well-cured Covid 19 disease does not in principle stand in the way of taking out occupational disability insurance,” says the industry association GDV.

Consequential damage could become a problem. The ability to insure is sinking because consumers have to state the illness when answering the health questions, according to Dietrich: “If you want to conclude a contract now, the health insurer should give you the listed treatment data and the medical record of the family doctor.” Only if the health questions at the If the application is answered correctly and completely, the consumer has a chance in the event of an insurance that the insurer also pays.

More: How insurance customers can save in the corona crisis

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How Jörg Asmussen navigates GDV through the crisis

In the past few days, the pressure from Asmussen’s former colleagues from politics has become too great. The insurers – known for their still well-stocked coffers – should not steal their responsibility for the economy with reference to different contractual arrangements, the statements of governments were not only in Germany.

Since then, the insurance industry has faced a huge image problem. Many critics confirmed their view that the industry would always withdraw with reference to the fine print if there were expensive costs. The insurers shifted responsibility to the industry association GDV, which should look for a uniform solution.

For Jörg Asmussen, it was the first major test in the new environment. There was considerable pressure on the 53-year-old, since even healthy companies have faced financial difficulties in recent days.

Above all because many business partners, some of whom had long trading relationships, no longer dared to do so, and the internationally secured trade in goods at home and abroad threatened to stall.

A quick and surprising solution, in which Jörg Asmussen also played a key role, came on Thursday. The Federal Government and the German credit insurers agreed on the establishment of a protective shield in the amount of 30 billion euros to secure the movement of goods. This gives suppliers the certainty that they will also receive money, even if their customers cannot pay in times of tight budgets.

High loss is programmed

For Jörg Asmussen and the insurers, however, the deal was not in vain. Not only do they commit to largely maintaining their previous credit limits of around € 400 billion, they also transfer 65 percent of their premium income to the federal government this year. Last year, the total amount was a remarkable 817 million euros.

A loss is almost inevitable for the successful industry this year. Nevertheless, praise comes from the industry for what the association has negotiated in the shortest possible time. “Extraordinary times require extraordinary measures”, Ron van het Hof evaluates the deal between Asmussens Verband and the German government.

The Dutchman is the CEO of Euler Hermes in the German-speaking countries and refers to the eminent importance of such security chains for the German middle class. With a market share of almost 50 percent allianceSubsidiary, known for its Hermes loan guarantees, by far the largest credit insurer in Germany.

For Asmussen, whose path at the GDV from the Presidium member to the General Manager is already planned for October 1, quite different priorities are emerging than he formulated when he became known when he joined the association in January.

Handelsblatt Morning Briefing - Corona Spezial

The graduate economist emphasized that insurers could make a major contribution to private retirement provision and in dealing with risks such as climate change and cyber security. All these issues will still be overshadowed by the corona crisis when Asmussen takes over the management of the association in autumn.

There is no doubt in the association that he will continue to be available for quick and sometimes extraordinary solutions. “With his extensive experience, Mr. Asmussen will give the German insurance industry a powerful voice as future general manager,” says Wolfgang Weiler, the long-time boss of Huk-Coburg and current president of GDV.

The industry association has known that Asmussen, who is known as a string puller, does not need a long familiarization period since this week at the latest.

More: The federal government and credit insurers secure German trade

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Insurers are calling for state help

Paris, Frankfurt, Munich Oliver Bäte usually speaks quickly, but with caution. So it is no coincidence that a few days ago he ventured an unusual venture on the subject of Corona. A pandemic is “comparable to catastrophes such as earthquakes or the explosion of a nuclear power plant,” argued the CEO of Europe’s largest insurance company.

For such situations, there is cooperation between the public sector and the private sector in many countries. Bäte does not see himself alone with his wish. Also Thomas Buberl, the chief executive of the French rival Axa, brought into play a partnership between the public sector and the insurance industry in the face of the corona crisis.

The insurers are making an unusual move. Usually, a lot has to happen for the industry to call for the state. But the immense amounts of damage since the outbreak of the corona crisis threatens to push even the multi-billion dollar insurers to their financial limits. A pandemic and a war are risks that cannot be insured because their damage exceeds the financial strength of companies, the industry says in unison.

The situation is similar with other unpredictable major losses caused by natural disasters or terror. “Particularly with regard to the volumes of the aid measures decided by the state, it is clear that private insurance cover is not possible for pandemics of this extreme size,” says Christopher Lohmann, CEO of Gothaer Allgemeine, clearly.

CEO Bäte is therefore drumming openly in the shadow of the corona crisis for a pan-European solution – with the involvement of the state. “We should find a common solution in Europe because we are a community of danger,” argues the top manager.

In an extreme situation like a pandemic, however, private capital would never be sufficient, so a partnership between the public sector and the private sector would always be necessary. “At European level, you could set up a fund that the insurance industry pays into and that you can tap into in crisis situations,” said a spokesman.

Role insurance model

With the specialist insurer Extremus, there is already a model for this at the German level. The institute was founded in September 2002, about a year after the September 11, 2001 terrorist attacks in New York. According to its own statutes, Extremus provides support when damage to property and business interruptions are caused by acts of terrorism in Germany.

With an annual capacity of 2.5 billion euros, the specialist insurer has sufficient funds available to protect against terrorism. With the help of the federal government, this sum can be increased to ten billion euros. In extreme cases, a single company would receive up to 25 million euros, depending on the contract, its own fire and business interruption insurance. Many in the industry now favor such a model in the area of ​​epidemics and pandemics.

On Thursday, both sides demonstrated how quickly politicians and businesses can agree on common solutions under pressure from Corona. The German government and German credit insurers agreed to set up a € 30 billion protective shield to ensure that the flow of goods does not stall in the corona crisis.

The federal government therefore gives the insurers a return guarantee for up to 30 billion euros in defaults, as announced by the Association of the German Insurance Industry.

In return, the industry agrees to at least maintain or expand its cover letters. In addition, the insurers are giving 65 percent of the premium income in credit insurance to the state this year – and thus accepting losses. They also assume 500 million euros in reinsurance.

“For many companies, this crisis is threatening because they no longer receive orders,” said Federal Minister of Economics Peter Altmaier, explaining the move. “And if there are still orders, it is uncertain whether the customer will be able to pay in the end.” The agreement is intended to ensure that commercial credit insurance and most of the existing cover letters can continue to be maintained.

Credit insurance is an important prerequisite for the smooth flow of goods at home and abroad, especially in retail. This protects suppliers against the risk that their customers will not be able to pay the bill. Otherwise you would have to deliver against prepayment. Otherwise, with tight budgets, the risk of default in the crisis is likely to increase many times over.

However, a uniform procedure for pan-European pandemic coverage has not yet emerged. In France, the industry is building a national epidemic insurance policy that involves the state rather than a European fund solution. Axa boss Thomas Buberl had supported the considerations regarding the new policy in an interview with “Les Echos” a few days ago.

At Axa you can see certain advantages of coverage in partnership with the state. Because this would automatically put them at risk, the incentive for politicians to consider the consequences for the economy with all the measures ordered, such as a lockdown, would increase. Then he would have to pay the costs directly.

The German industry association GDV, on the other hand, considers the current time for the development of new approaches for insurance models after the crisis to be too early. “We have to drive on sight now,” said a spokesman. It is not yet known what effects the crisis and its consequences will have.

Insurers under pressure

In the corona crisis, insurers are under increasing political pressure to show more courtesy to their customers. US President Donald Trump urged industrial insurers in the United States to pay in principle for business interruption and shutdown losses due to the Covid 19 pandemic.

In many policies, pandemics are not explicitly excluded, insurers would have to pay, Trump recently said at his daily press conference on the pandemic in the White House. The pressure on the industry is also growing in Europe. For example, the temporary refusal of many insurers to take over damage from the closure of businesses in food businesses, restaurants and hotels in the corona crisis caused outrage.

In Bavaria, politicians and insurers agreed to take over up to 15 percent of the daily rates agreed for company closings for a total of 73,000 companies, mostly from the hotel and restaurant sector. “In the best case, the business closure insurance works like daily sickness benefits,” explains Gothaer-Allgemeine-Chef Lohmann about the current contractual arrangements.

Handelsblatt Morning Briefing - Corona Spezial

Such protection is expressly not intended for the now urgently needed closures to avoid social contacts. They were a prophylactic measure to avoid an epidemic.

So far, however, there is hardly any real protection against epidemics. Munich Re has been one of the few providers since 2017. Since then, the experts have tried to convince customers of products from the “Epidemic Risk Solutions” area through their unit in Singapore.

Interest in it was manageable until mid-March, it says from the house. Since then, the numerous inquiries have not been met. But for customers who still hope to be protected against the current consequences of the Covid 19 pandemic, this comes too late: Protection against the risks of Corona is now ruled out, according to Munich.

More: Despite Corona, Allianz is sticking to its planned dividend.

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The motor insurance sales driver is facing a change

Allianz board member Axel Theis

Despite huge challenges, car insurance is likely to remain extremely important for insurers for quite some time.

(Photo: Allianz SE)

Munich in the alliance Center for Technology (AZT), the insurance experts want to know exactly what happens to the driver and vehicle in the event of an accident. That is why they have been investigating cars and damage histories, simulating crash tests and dismantling vehicles since it was founded almost 50 years ago in Ismaning, just outside Munich.

Axel Theis deliberately chose this location for his last interview as Allianz board member. After more than 33 years, the 62-year-old leaves the insurer at the end of March to start again professionally in Berlin with the family-owned retirement home operator Pro Curand.

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