Acknowledging the Challenges: A Call for Systemic Reform

Christoph Bohn, a board member of the ALH Group, highlighted the significant changes impacting retirement provision and health insurance. He pointed out the stark contrast between significant government investments in defense and infrastructure and the lack of extensive reform in social security systems. bohn emphasized the critical importance of pension policy, stating that the federal government currently subsidizes the statutory pension system with €112 billion, a quarter of the entire budget. he argued that enduring, structural solutions are necessary to address demographic shifts, rather than short-term redistribution measures. The ALH group views its role in life and health insurance as crucial to stabilizing these systems.

financial Performance: A Slight Uptick Amidst Market Shifts

The ALH Group reported a slight increase in total sales for the 2024 financial year, reaching €5.36 billion, a 0.7% rise from the previous year’s €5.32 billion. Old Leipzig life insurance contributed significantly to the group’s sales with €2.71 billion, while halle health insurance accounted for over a quarter of the total, with €1.66 billion. The remaining group companies, including old leipziger Versicherung, Bauspar, and Trust, collectively generated €989 million.

Life Insurance: The Enduring Appeal of Fund-Linked Pensions

Old Leipziger’s Strong Position in the Market

Old Leipziger has solidified its position as one of the top five life insurance providers in Germany. The trend towards fund-linked retirement provisions remains strong. With a premium income of €2.7 billion and a focus on ongoing contributions, the company has outpaced market growth. While the industry experienced near stagnation in 2024, Old Leipziger increased its ongoing gross contributions by 2.5%. Over the past five years, the company has grown by 21%, significantly exceeding the market average. Ongoing contributions represent a substantial 85% of the total business.As anticipated, the one-time contribution business declined in 2024 due to less attractive short-term interest rate products resulting from changes in the capital market.

Growth in New Business and Product Preferences

The upward trend in new business for ongoing contributions continues, with Old leipziger reporting a 3.5% increase. Though, overall new business was slightly below the previous year’s value due to the weaker one-time contribution business. Fund-linked products dominated new business against ongoing contributions, accounting for 46.6%,an 11.8% increase compared to the previous year. Together with solutions for lacquer protection, they comprised 63% of the current new business. Private old-age provision also saw growth, representing 51.9% of new business, a three-percentage-point increase from the previous year.

Surplus and Customer Benefits

The company’s raw surplus remained high at approximately €400 million, the second-best result in the past five years.Over 90% of this surplus was returned to customers, directly benefiting them.

Advocating for Pension Reform: key Proposals

Jürgen Bierbaum, a board member of old Leipzig life insurance, outlined specific proposals for pension reform, emphasizing the need for stronger tax funding for low earners in company pension schemes (BAV), the introduction of opt-out models beyond tariff-bound companies, and more flexible investment rules during the pension phase. Bierbaum argued that even a 1% increase in interest rates could result in a 14% increase in monthly pension payments for a 67-year-old pensioner. However, achieving this requires a reevaluation of the tax paradigm of the non-fluctuating pension.

One percent more interest could mean 14 percent more monthly pension for a 67-year-old pensioner.

Jürgen Bierbaum,old Leipzig life insurance

These proposals come at a time when many developed nations are grappling with similar pension challenges. For example, in the United States, the Social Security Governance projects that the Old-Age and Survivors Insurance (OASI) trust Fund, which pays retirement benefits, will be able to pay scheduled benefits on a timely basis until 2033. After that, the fund’s reserves will be depleted, and continuing tax income will be sufficient to pay 79% of scheduled benefits. This underscores the urgency of addressing pension system sustainability globally.

Securing Retirement: A Multi-Pillar Approach

Germany faces the ongoing challenge of ensuring a stable and secure retirement for its citizens. Experts emphasize the importance of a multi-pillar approach, combining statutory pensions with occupational (BAV) and private pension plans. This diversification aims to mitigate risks and provide a more robust safety net for retirees.

The concept of lifelong income is central to this strategy. As Bierbaum notes, Nobody knows how long he lives – that’s why the lifelong pension through insurance is so elementary. This highlights the critical role of insurance-based pensions in providing financial security throughout retirement, nonetheless of longevity.

private Health Insurance Gains Momentum Amidst Rising Costs

The private health insurance (PKV) sector in Germany is experiencing notable growth, even as the broader healthcare landscape faces increasing financial pressures. Hallesche, a Stuttgart-based health insurance group, reported a record year in 2024, achieving €7.3 million in new business, a key indicator of market performance. Their premium income also saw a substantial increase of 7.6%, reaching €1.66 billion.

This growth is particularly evident in full health insurance and occupational health insurance (BKV), with the number of fully insured individuals increasing by 2,000 to 225,000. This positive trend challenges the pessimistic outlook some market observers have for PKV. Hallesche now serves approximately 900,000 customers across all health insurance sectors, demonstrating its strong market position.

the company’s gross surplus also rose significantly, exceeding €200 million, a 13% increase from the previous year. this surplus is reinvested to benefit policyholders, ensuring financial stability and competitive premiums.

Challenges in statutory Health insurance and the Rise of Supplementary Care

While private health insurance is thriving, the statutory health insurance (GKV) system faces significant challenges. Christoph Bohn points out that The additional contributions rose sharply at the beginning of 2025, at the same time the assessment and compulsory insurance limits were increased. This makes it tough to switch to private health insurance. This highlights the growing financial burden on individuals within the statutory system.

Despite the increasing need for long-term care, the uptake of supplementary care insurance has been slower than expected. In 2024, 83,149 individuals purchased additional care insurance from Hallesche, a modest increase of 0.3% compared to the previous year. This suggests a need for greater awareness and incentives to encourage individuals to plan for future care needs.

The Future of Long-Term Care: A Generational Contract

Wiltrud Pekarek describes the state of social long-term care insurance (SPV) as being in patient status, highlighting the system’s structural challenges. The statutory long-term care insurance, initially designed as a partial coverage model focused on outpatient care, is now overburdened by expanded benefits and the introduction of care levels. The contribution rate has more than doubled since 2006, and further increases are anticipated.

Pekarek notes that the average cost of care is around €4,700 per month,with the average share of inpatient care being approximately €2,500 per month. These figures underscore the significant financial burden associated with long-term care.

To address these challenges,Hallesche and the PKV association propose a new “generational” care contract. This model emphasizes greater private provision, increased capital coverage, and tax funding, both privately and within companies. Pekarek emphasizes that comprehensive care supplementary insurance is already available for less than €70 per month for a 35-year-old customer, making personal responsibility both reasonable and socially necessary.

Operational Long-Term Care Insurance: A Growing Trend

Hallesche is positioning itself as a pioneer in operational long-term care insurance, offering a model that supports employees in caring for their relatives. This includes organizing care,providing advice,and offering relief in everyday working life. While demand is currently lower than for traditional BKV budget tariffs, the potential is significant.

A key obstacle to wider adoption is the lack of tax equality with other health benefits. Frank Kettnaker emphasizes the strategic importance of BPV, stating that Home care needs support. Here, employers could do a lot of good. This highlights the potential for employers to play a crucial role in supporting employees and their families in managing long-term care needs.

Hallesche’s Strategic Vision: Balancing Compulsory and Voluntary Insurance

Hallesche insurance company is advocating for a pragmatic approach to insurance funding, blending mandatory and voluntary capital-backed provisions. This strategy aims to stabilize contribution rates within the supplementary pension scheme (SPV) and alleviate financial strain on germany’s business sector. This comes as the debate around the future of social security intensifies across Europe, with countries grappling with aging populations and rising healthcare costs. For example, in France, recent pension reforms have sparked widespread protests, highlighting the sensitivity of these issues.

Financially, Hallesche demonstrated robust performance, with a significant increase in gross surplus to €202 million, up from €179 million the previous year. The solvency ratio remained strong at 599 percent, although slightly lower than the previous year’s 623 percent. This financial strength positions Hallesche well to navigate the evolving insurance market.

Not ideology, but a pragmatic combination of legal compulsory insurance and voluntary, capital-covered provision should be at the centre. This is the only way to stabilize the contribution rate in the SPV in the long term and to relieve the business location of Germany.

Wiltrud Pekarek, Hallesche Director

Alte Leipziger’s Property Insurance: Growth Outweighed by Rising Costs

Alte leipziger Versicherung AG experienced a year of substantial growth in its property insurance division, despite market headwinds. Premium income surpassed €500 million for the first time, marking a more than 13 percent increase. New business also reached a record high of €109 million in new contributions. This growth was broad-based, with residential building insurance seeing a 31.4 percent increase to €150.7 million and commercial insurance growing by 11.7 percent to €201.2 million.

Though, this positive momentum was tempered by a rising damage/cost ratio, which climbed from 99.7 percent to 106 percent. Consequently, the annual result was negative at -€17.8 million, a stark contrast to the previous year’s +€1.1 million. This highlights the growing challenge of damage inflation within the property insurance sector.According to a recent report by the Association of british Insurers (ABI), the cost of home insurance claims has risen by 23% in the last year, driven by factors such as extreme weather events and supply chain disruptions.

Two developments noticeably burdened the annual result…

Kai Waldmann, Board of Damage Insurance, Alte Leipziger

Navigating Damage Inflation: A Key Challenge for Insurers

the experiences of Hallesche and Alte Leipziger underscore the complex dynamics facing the insurance industry. While both companies have demonstrated an ability to grow their businesses, they are also grappling with external pressures such as damage inflation and evolving regulatory landscapes.The ability to adapt to these challenges will be crucial for long-term success. Insurers are increasingly turning to technology, such as AI-powered risk assessment tools, to better predict and manage claims costs. Moreover, there is a growing emphasis on preventative measures, such as offering incentives for homeowners to invest in flood defenses or fire-resistant materials.

Insurance Challenges: Damage Inflation and Elementary Events

The ALH Group is facing significant headwinds due to persistently high damage inflation, particularly in the vehicle insurance sector, and a surge in smaller elementary damage events affecting residential buildings.This confluence of factors is creating a challenging surroundings for insurers, demanding strategic adjustments to maintain profitability and stability.

Vehicle Insurance Hit Hard by Damage Inflation

The vehicle insurance sector has experienced a substantial increase in damage costs.While general inflation has averaged 2.4 percent over the past decade, damage inflation in the vehicle sector has soared to approximately 5.4 percent annually during the same period. This disparity has led to negative insurance results, a situation described as unprecedented in recent years. In response, ALH has already increased vehicle insurance rates by 20 to 30 percent and plans further increases in April 2025.

This trend aligns with broader concerns about rising insurance rates. as reported by WGRZ, property insurance issues have increased by an average of 34 percent across the country in recent years, driven by catastrophes [[1]].

Residential Buildings vulnerable to Elementary Damage

Residential buildings are also experiencing elevated claims, primarily due to numerous smaller elementary damage events. Critically, none of these events exceeded the threshold for reinsurance relief, meaning ALH had to absorb the full financial impact. This situation serves as a stark warning, especially considering ongoing political discussions about introducing compulsory insurance for elementary hazards.

Navigating Compulsory Insurance and Climate Change

The potential introduction of compulsory insurance for elementary hazards presents both opportunities and challenges. While acknowledging the importance of political engagement on this issue, ALH emphasizes that such insurance should not absolve local authorities of their responsibilities. Continuing to designate new construction areas in flood zones undermines the purpose of collective insurance solutions. Effective climate adaptation and spatial planning are essential prerequisites for any accomplished compulsory insurance scheme.

Adjusting insurance policies for inflation is crucial in today’s economic climate. The value of assets like homes and properties can change significantly over time, and homeowners need to ensure their coverage reflects these changes [[3]].

Residential Building Insurance: A Balancing Act

Residential building insurance is becoming increasingly complex. brokers are pushing for better conditions and higher performance, while ALH faces mounting pressure from rising damage rates, particularly those related to tap water damage, now the leading cause of claims in this sector.

Addressing Risks in Older Buildings

Older buildings present a unique challenge, as owners may be tempted to defer necessary renovations and rely on insurance coverage instead. This trend has sparked discussions within the industry about implementing higher deductibles or even exclusions for unstable risks. ALH is actively exploring such measures, focusing on differentiated tariffs and individual risk assessments for new business.

Strategic Growth and Brokerage Partnerships

Despite these challenges, property insurance remains a strategic growth area for the ALH Group. Strong sales figures and high demand in the commercial sector underscore the continued potential of this market. ALH’s structure as a brokerage insurer facilitates differentiated consulting services,further enhancing its competitive advantage.

The Future of Sales: Hybrid, digital, and Personal

According to Sales Director Frank Kettnaker, ALH’s sales strategy is centered on future-proofing the business through digital efficiency and service orientation. Kettnaker believes that insurers who prioritize digital processes, standardized interfaces, and strong partner relationships, especially within the broker channel, will be best positioned for success.

Strengthening Ties with Self-reliant Mediators

ALH has deep roots in the independent mediator market, with over 90 percent of new business in life, health, and property insurance originating through brokers. This strategic focus has been sharpened in recent years, including the transition of exclusive brokers to multiple agencies in collaboration with the broker association VfN. The goal is to empower intermediaries with greater advisory freedom and a future-proof business model, recognizing that traditional exclusive intermediaries may face competitive disadvantages in today’s evolving market.

From Exclusivity to Multiple Agencies

This shift is already yielding positive results. The attrition associated with exclusivity has been halted, and production figures are trending upward. Agencies are benefiting from a broader product range and a renewed entrepreneurial outlook. The ALH Group believes it is indeed well-positioned to thrive in an increasingly consolidated broker market.

Adapting to Market Shifts: Broker Consolidation and Digital Transformation

The insurance landscape is undergoing significant changes, particularly with the rapid consolidation occurring within the broker market. Recent data indicates that in 2024 alone, an average of 1.5 brokerage firms were either acquired or merged. This trend is creating larger sales organizations with increasingly elegant demands from their product providers, especially concerning standardized connections and streamlined IT processes.

In response to these evolving needs, the ALH Group is making substantial investments in digital services and automated processes. Frank Kettnaker,Sales Manager of the ALH,emphasizes the importance of adapting to these changes:

The ALH group sees itself as a partner at eye level-both for large broker pools and for small, owner-managed mediators.

Frank Kettnaker, Sales Manager of the ALH

These investments include the implementation of BiPro interfaces, participation in the Open Insurance Initiative Frida, and collaborations with external platforms for services like video advice. Moreover, ALH is leveraging its own service portals, such as “Hall for You” for corporate clients and the “Find for You” app for end customers, incorporating AI-driven features and voice control to enhance user experience.

AI Integration: Streamlining processes and Enhancing Efficiency

Internally, the ALH Group is actively pursuing digital transformation, underscored by the appointment of Dr. Jochen Kriegmeier to the board specifically for IT and digitization. A key focus is the integration of artificial intelligence into various service processes. The company already has productive AI applications in place for input management, including automated pre-sorting and classification of customer inquiries, and also in medical risk assessment.Additionally, internal pilot projects are underway, exploring the use of generative AI, similar to ChatGPT, within secure, closed systems.

Balancing digital Innovation with Personal Touch

Despite the strong emphasis on digitization,Kettnaker emphasizes that the future of distribution lies in a balanced approach. He argues that personal advice, tailored solutions, and technological excellence must complement each other. This “both-as also” strategy ensures that ALH can cater to a diverse range of clients and needs.

Challenging Yet Confident Outlook for 2025

Looking ahead, ALH CEO Christoph Bohn remains optimistic about the company’s prospects for 2025, despite acknowledging the challenging environment. While life insurance performance in 2024 was slightly below the previous year due to a decline in one-time contribution business, health and property insurance segments experienced significant growth. the group achieved growth, aligning with its strategic focus on steady, sustainable progress and strong customer relationships.

Bohn attributes this success not only to entrepreneurial discipline but also to the company’s commitment to addressing critical social issues related to old-age provision, care, and health. ALH aims to be a catalyst for change in these areas,proposing concrete reform measures that can be implemented quickly and effectively. These proposals include tax incentives for private and company-sponsored care and old-age provision,dynamic income limits for funding models,and reforms to pension taxation during the payout phase.

The ALH Group anticipates potential reform signals from the new government coalition regarding old-age and healthcare, advocating for a shift away from ideologically driven systems and a greater emphasis on personal responsibility and capital coverage. bohn believes that individuals must take proactive steps to secure their future and utilize the available products and solutions more effectively.

if you want to be provisional and care for the age, you have to act – and already have all the necessary options. The products and solutions are available. Now it is about using them more intelligently, promoting more specifically and anchoring more widely.

Christoph Bohn, CEO of ALH

With a robust brokerage sales force, strong financial standing, consistent new business growth, and a clear strategic direction, the ALH Group is well-positioned to navigate the evolving insurance market and achieve continued success.

Navigating the Competitive Landscape: ALH’s Strategic Outlook

The ALH Group has expressed strong confidence in its ability to thrive in the current market environment. Company leadership, including Bohn, believes the organization is well-positioned to capitalize on emerging opportunities and overcome existing challenges. This optimism stems from a combination of strategic investments, operational efficiencies, and a deep understanding of consumer preferences within the hospitality and entertainment sectors.

The group’s confidence comes at a time when the hospitality industry is experiencing significant shifts. Factors such as changing consumer spending habits,increased competition from online platforms,and evolving regulatory landscapes are all contributing to a more dynamic and complex market. ALH’s ability to adapt and innovate will be crucial to maintaining its competitive edge.

Key Strategies for Sustained Success

While specific details of ALH’s strategies were not disclosed, it is likely that the group is focusing on several key areas to drive future growth. These may include:

• Enhanced Customer Experience: Investing in technology and training to provide personalized and seamless experiences for customers. This could involve loyalty programs, mobile apps, and improved service standards.
• Strategic Partnerships: Collaborating with other businesses to expand its reach and offer complementary services. for example, partnerships with local breweries or entertainment venues could enhance the overall customer experience.
• Operational Efficiency: streamlining processes and leveraging technology to reduce costs and improve profitability. this could involve automation,data analytics,and supply chain optimization.
• Market Diversification: Exploring new markets and customer segments to reduce reliance on existing revenue streams. This could involve expanding into new geographic areas or targeting different demographic groups.

According to recent industry reports, companies that prioritize customer experience and operational efficiency are more likely to achieve sustained growth in the hospitality sector. For example, a 2024 study by Deloitte found that companies with superior customer experience generate 5.7 times more revenue than their competitors.

Challenges and Opportunities Ahead

Despite its confidence, ALH Group undoubtedly faces challenges. Rising operating costs, including labor and energy, could put pressure on profit margins. Furthermore, increased competition from both traditional and online players requires constant innovation and adaptation.

However, these challenges also present opportunities. By embracing new technologies, developing innovative products and services, and fostering a strong customer-centric culture, ALH Group can solidify its position as a leader in the hospitality and entertainment industry. The group’s proactive approach and commitment to excellence will be key to navigating the evolving market landscape and achieving long-term success.