Germany: Selling life insurance run-off portfolios may be restricted in the future
Germany's Christian Democrats (CDU) are considering reforming life insurance regulations to make it more difficult for insurance companies to sell run-off portfolios, weekly news magazine Spiegel reported, quoted by Reuters.
As achieving the returns stipuled by the savings plans with guaranteed interest rates as high as 4% is becoming increasingly difficult for life insurers, many companies are attempting to to sell these portfolios, to offload life insurance operations.
"We are now exploring a scheme where the insured must agree for their insurance contracts to be sold," CDU finance expert Anja KARLICZEK told Spiegel, adding that in offloading policies, insurers were breaching trust towards their clients. On the other hand, "many investors currently in the run-off market are overestimating its potential," is the opinion expressed by Frank Grund, head of insurance supervision, BaFin.
According to the Spiegel story, the said initiative is still at very early stage, but several CDU representatives have already confirmed one way or the other the party's intention, especially considering the increasing number of such deals.
On the other hand, the German Insurance Association (GDV) said the proposed regulations would interfere with entrepreneurial freedom of decision and would make restructuring virtually impossible. "Further legal regulation is not necessary. For the consolidation or transfer of life insurance is already subject to strict regulations and controls by BaFin," the GDV said in a statement.
Author: Daniela GHETU
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