Sales Efficiency in Life Insurance: The Drivers for Growth in the German Market

Jonas Lorson and Joël Wagner
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Jonas Lorson: Institute of Insurance Economics, University of St. Gallen, Tannenstrasse 19, St. Gallen 9000, Switzerland
Joël Wagner: Institute of Insurance Economics, University of St. Gallen, Tannenstrasse 19, St. Gallen 9000, Switzerland

The Geneva Papers on Risk and Insurance - Issues and Practice, 2014, vol. 39, issue 3, 493-524

Abstract: German life insurers are facing consolidation tendencies as the major players increase their market share. As a result, insurance companies are being forced to grow to ensure future prosperity. In the past, the industry has shown that growth can be achieved while maintaining profitability. The central question of our research is to detect factors for the generation of new business. In order to determine what drives sales—and thus growth—in the German life insurance industry, we apply different multi-linear regression models. We use panel data from 1998 to 2011 with characteristics of German life insurers and mostly full market coverage. In our modelling, we distinguish between sales success on the business unit level of life insurance and on the level of specific life products. The sales success drivers for pension insurance as well as term life insurance are analysed. By doing so, we determine different significant drivers for sales success, which include the total return granted to policyholders, commissions paid to sales partners, the solvency of the insurer, company (financial) rating and firm size.

Date: 2014
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