01 Gothaer Konzern_E_09_Umschl - Gothaer Allgemeine ...

Management Report
Health segment
General risk situation
Underwriting risks
As in the prior year, the market and prospects of development for private health
insurance will be defined to a large extent by the consequences of the healthcare reform
(Act to Enhance Competition in Statutory Health Insurance, GKV-WSG). For example, it
was made easier in 2009 for new customers in comprehensive health insurance to
change insurers and have part of the ageing reserve formed for them transferred to the
new insurer. This results, on the one hand, in greater portfolio volatility – also in terms
of risks – and, on the other, in higher premiums for financing the facility to change
insurers. Scrutiny of the act by the Constitutional Court produced a generally negative
outcome from the viewpoint of private health insurers, so the industry needs to adapt to
the change in the legal environment.
The social safeguard mechanisms of the basic tariff, the generous rules for persons
formerly not insured and emergency treatment even for non-payers has to be borne by
everyone with a comprehensive private health insurance policy.
So in view of the 3-year moratorium still in place on the earnings ceiling for compulsory
state health insurance, growth prospects in our core field of business – comprehensive
insurance – are generally subdued. Even so, last year did see organic growth achieved
in this segment because of favourable competitive positioning.
In supplementary insurance, on the other hand, growth prospects continue to be very
bright. Consumer purchasing power here is curbed only by incipient economic slowdown.
Nevertheless, the constant contraction of the range of statutory health insurance
benefits is creating appreciable demand for supplementary insurance. For the companies
concerned, this means having to make appropriate adjustments in terms of sales
channels, cooperations and administrative processes.
However, as a result of the ongoing difficulties in the capital markets – which are
currently marked by very low interest rates for safe investments –the earnings situation
is deteriorating. And because a large portion of the recessive profits from investment
goes to the insureds, significantly higher premiums need to be paid.
Underwriting risks include risks that arise from the composition of portfolios and from
premiums that are not commensurate with risks. The risks mentioned have a major
bearing on the ability to allocate adequate reserves for premium refunds and thus have
the funds available to lessen the impact of the development of premiums for our
customers. A particularly important role is played here by the recurrent financing of
annually granted premium limits.
We continue to counter these risks with rates based on actuarial principles, professional
underwriting and professional benefit and health management as well as by the use
of controlling tools and early-warning systems. The adequacy of loss reserves remains
subject to regular actuarial verification.
72 Gothaer Group Annual Report 2009