At that time, a general rethink began among the major international reinsurers: In response to unsatisfactory cycle developments in the reinsurance market and intensifying competition among their clients, they moved away from their traditional role as pure capacity providers. From then on, they increasingly positioned themselves as providers of specialised services and information services.

New Expectations

Until then, such a service offering had played hardly any role for Deutsche Rück’s clients. After all, from the very beginning the company had been geared towards providing the public insurers with smooth risk transfer at the lowest possible cost – meaning also with minimal staffing and cost expenditure. And until then, Deutsche Rück’s shareholders had primarily expected just that as well: the cost-effective provision of reinsurance capacity. That was to change in the 1990s.

The Berlaymont Building in Brussels, European Commission (2005)

The Consequences of Deregulation

The trigger was a momentous event: In 1994, the German market was deregulated through a European Directive. This made the common EU single market a reality for the insurance industry as well. The previously strict state supervision of premium calculation and policy wording in Germany was abolished. Insurers were therefore now largely free to design their own premiums and policy terms.

Competition for customers reached an intensity never seen before.

The monopoly previously held by the public fire insurers in some federal states also had to be abolished under EU law. The public monopoly insurers suddenly found themselves in an entirely new role: From then on, they had to hold their own in the market as competitive insurers.

Image of the building of the Federal Insurance Supervisory Office (in use until 2000)

As a result of deregulation, the authority of the Federal Financial Supervisory Authority with regard to insurance terms and conditions and the pricing of insurance risks was considerable curtailed.
(photo: Berlin office, until 2000)

Many public insurers now needed more from their reinsurer than mere risk transfer: They now required support in navigating the deregulated market, and in assessing existential risks.

Rising to the Challenge

As Deutsche Rück had not previously offered such services to its clients, private reinsurers increasingly succeeded in taking over business from the public insurers. Deutsche Rück responded to this challenge and repositioned itself: Together with the Association of German Public Insurers, which organised the cooperative reinsurance business in non-life and life insurance, it developed new services for its shareholders from the mid-1990s onwards, and expanded its expertise.

The EU Member States in 1995

Focus on Core Competencies

It was clear that the company could not compete with the comprehensive services offered by the large internationally operating reinsurance groups.

As a mid-sized reinsurer, Deutsche Rück specialised in areas that were particularly important for its clients’ business: fire insurance and natural hazard insurance. Claims analysis and risk research, particularly in the field of firefighting, became an important component of its service offering.

Increasingly Challenging Market Conditions

Support was in demand for premium calculation and the development of policy terms. Particularly in the commercial and industrial business, but also in the municipal sector, the former monopoly insurers now faced considerable challenges. Their major industrial risks, which during the monopoly era could be insured relatively easily under standardised terms, now had to be renegotiated in open competition with the large national and international industrial insurers and highly specialised brokers.

Deutsche Rück and the Association of German Public Insurers provided additional expertise, particularly for the smaller public insurers, enabling them to remain successful under these increasingly challenging market conditions.