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SUMMARIES

VIEWS: 149 PAGES: 29

  • pg 1
									  The Geneva Papers on Risk and Insurance, 15 (No. 57, October 1990), 428-456




                            SUMMARIES
                of articles published in volume 78, 1989, of the
          ,,Zeitschrift für die gesamte Versicherungswissenschaft"
                 (German Journal of Insurance - ZVersWiss)

 A limited number of offprints of special articles in German is available from the
Deutscher Verein für Versicherungswissenschaft e.V., Johannisberger Straße 31,
D-1000 Berlin 33




ZVersWiss 1989 p. 1 - 24:
European Community Law and Social Security - Supranational Social
Security Legislation and the Consequences of EC Law on National Social
Security
(Das Recht der Europäischen Gemeinschaften und die Sozialversicherung -
Supranationales Sozialversicherungsrecht und Auswirkungen des E G-
Rechts auf die nationale Sozialversicherung)
by Professor Dr. Bernd Baron von M ay d e li, Bonn
  The report deals with the European dimension of social law which has
lately become the focus of discussion to an increasing extent. To receive a
clear picture of the implications of European law for social security in Ger-
many, it is necessary to bear in mind the peculiarities of how supranational
law functions. Even though social policy is not among the fields of politics
assigned to the European institutions, there is a number of provisions relat-
ing to social law in the Treaties of Rome including, in particular, the prohibi-
tion of discrimination and the principle of free mobility of labour within
the Community. Among the European regulations the 'Regulations on Social
Security for Migrant Workers' are of major importance.
  As far as the extension of the economic into a social community is con-
cerned the question of a harmonization of the social systems of the member
countries is now under discussion again. A comprehensive harmonization in
the sense of the creation of a uniform European social security system is,
however, neither feasible nor desirable in the near future. This does not
mean that there will not be, in the future, an approximation of views as well
as considerable consequences for the national social security systems. These
428
consequences follow from EC directives and concern parts of social law, but
also from the coordination provisions of EC social law which are being
developed primarily by the European Court of Justice in the sense of a har-
monization. The same effect can be observed as a result of the interpretation
of some basic principles of Community law by the Court of Justice.
  The decision to establish a minimum of social rights in supranational law,
which should be taken soon, should pay attention that these fundamental
rights should not appear to be mere declamations but should, on the other
hand, be drawn up in a way that they cannot turn out to become social ,,ex-
plosives" within the national systems. Here, special attention should be
given to the adjudication of the European Court of Justice.




ZVersWiss 1989 p. 25 - 50:
European Single Market and Social Security - Some Tasks and Questions
from an Economic Point of View
(Europäischer Binnenmarkt und soziale Sicherung - einige Aufgaben und
Fragen aus ökonomischer Sicht)
by Professor Dr. Winfried S e h m a h 1, Bremen
  The political will to create the European Single Market from 1993
onwards has recently drawn attention to the "social dimension" of Euro-
pean Integration and has intensified the discussion about the effects of
national social security schemes on the international competitiveness and
worker mobility.
  Are adjustments in social security then necessary in order to bring the
Single Market into being and what will be the effects of the Single Market
on the national social security schemes? This paper will start by describing
the differences in the level and structure of social security budgets in the
member states of the EEC and the ways they are financed.
  The financing, for example, out of earnings-related social security by
taxes differentiates a great deal throughout Europe. The question whether a
harmonization of indirect taxes - as proposed - also has consequences for
social security schemes will arise. In Denmark, for example, considerable
problems would ensue due to the high proportion of indirect taxes which
finance the social security budget.
   Concerning the complex question of the interaction between social secu-
rity and international competitiveness, neither can the thesis be confirmed
that countries with a low level of social security are at a competitive disad-
                                                                          429
vantage, nor can the opinion be shared that those countries with a high level
of social security which is tied to employment financed through earnings-
related contributions are at a disadvantage to those countries with social
security budgets financed by taxes. Wage costs, total costs, and other factors
such as productivity development and reliability in fulfilling contracts in
time all have their part to play. Social security has direct and indirect effects
on productivity (maintaining social stability, e.g. in a low strike rate and a
more reliable fulfillment of contracts). As far as mobility is concerned,
people not employed (e. g. pensioners) should be taken into consideration as
well as the employed. Here may be the chances for the Mediterranean coun-
tries through the North-South migration of elderly people (e.g. through
state income flows).
  There is, however, a large deficit of information relating to worker mobil-
ity and the effects of supplementary social security schemes offered by the
employer. Coordination problems will thus arise between the state and com-
pany pension schemes. Vesting of company pension rights as well as their
transferability and insurance against insolvency of firms will play an impor-
tant role. Supplementary pension schemes also win importance, especially if
replacement rates of national pension schemes are reduced.
  Finally, it is pointed out that a harmonization of national social security
schemes would neither be necessary for the realisation of the Single Market,
nor would it, economically seen, prove itself to be positive. It could, amongst
others, lead to additional income redistribution. The expected positive
effects for the integration, with regard to economic growth and employment
level, will be distributed unequally according to country, region, and firm.
There will also be "loosers". This could also be a reason for an increased
international income redistribution. In view of the enormous deficit in
information, many tasks will arise for the international comparative
research, especially in economics.




ZVersWiss 1989 p. 51 - 65:
Insurance in the EC Single Market - Concepts of the Single Market Struc-
ture
(Die Versicherungswirtschaft im EG-Binnenmarkt - Konzeptionen zur
Struktur des Binnenmarktes)
by Professor Dr. jur. Dr-Ing. E. h. Reimer S c h m j d t, Aachen
  This summary concerns a lecture given in Nuremberg (one of four lectures
printed in "Versicherungswirtschaft" 1989 pp. 28, "Versicherungsrund-
430
schau" 1989, pp. 129). While the lectures given in Zurich and Vienna also
and in particular dealt with the interests of non-member states, those in
Nuremberg and Frankfort were mainly concerned with the transition of the
German internal market to the EC single market. Here, the listener's interest
was, first of all, with the changes in the national law. - All four lectures were
given during a comparatively short space of time: after the fundamental
judgements of the European Court of Justice of 4 December, 1986, and
before the first steps into the realization of the freedom of services (life
insurance excluded). The concept has been authoritatively influenced by the
European Single Act and is in close context with the comments in the Ger-
man Insurance Supervision Law by the author (Prölß VAG, 10 edition, 1988,
by Reimer Schmidt & Peter Frey). The author still sees the fundamental
structure of the EC Treaty in a programme treaty which aims for the realiza-
tion of the treaty's goals (particularly of the basic liberties), at first slowly
but by now in more rapid steps. Here, the principle of competition presents
a significant leading idea. None the less, there are considerable obstacles
obstructing its realization, e.g. regarding the tensions between industrial
policies and competition policies in the member states or, to give another
example, the antinomies between social law and competition.
   Although the differentiation between individual business (big risks) and
mass business initially allows a useful transitional compromise for insur-
ance supervision, the introduction of freedom of services for mass business
will bring considerable problems, e.g. through the exclusive supervisional
rights by the home country authorities. Here, the legislator must always
keep the four corner stones of a symbolic square in mind; 1. the supervision
of national insurers with an establishment in the home country; 2. the super-
vision of foreign insurers with an establishment in the supervising country;
3. the supervision of service by foreign insurers with no establishment in the
country of activity and 4. the supervision of national insurers without estab-
lishment in a foreign country. If regulations for enterprises with an office in
non-member states are added it becomes very complicate indeed. There,
deductive solutions become difficult and more pragmatic ones spring to
mind.
  In order to create equal conditions of competition we shall need a far-
reaching harmonization in law. While in the first decades of the realization
of the EC formal harmonization prevailed, the introduction of the European
Single Act brought more complications and, consequently, more factual
harmonization by means of pressure via competition was recommended.
Here, the equivalence of national protective regulations are preferential as
a starting point. The matter is going on.
  The lecture by Reimer Schmidt continues with the so important question
of deregulation, a target idea that - like the modern anti-cartel law - has its
                                                                             431
origin in the USA. Deregulation presents an economic-political idea pro-
moting the liberalization of entrepreneural initiative through elimination or
restriction of protective or other regulations which essentially restrict trade
in the Community. The lecture here deals with deregulation by means of
cancellation of restrictions on the one hand and, on the other, by replacing
severe restrictions with somewhat milder ones. Essential are the consider-
ations on the replacement of "regulations through authorities" by "regula-
tion through institutions for self-administration" as well as the author's
ideas on so-called soft laws. The lecture closes with thoughts on continuing
liberalization.




ZVersWiss 1989 p. 67 - 106:
Expectations of European Insurance Companies in the Single Insurance
Market
(Erwartungen europäischer Versicherer an den EG-Binnenmarkt)
by Professor Dr. Dieter F a r n y, Cologne
  The following hypotheses regarding the expectations of European insur-
ance companies in the single insurance market which is to be realized by the
end of 1992 have been derived from press publications andan empirical
enquiry conducted by the Institute of Insurance Sciences at the University
of Cologne and the "Association Internationale pour l'Etude de l'Economie
de l'Assurance" (The Geneva Association).
      The conception of the single insurance market comprises both, the free-
      dom of establishment and the freedom to perform services on all mar-
      kets of the European Community. Over a rather long transitional period
      the single market will not turn out to be a really unified market but the
      sum of 12 national markets with (still) non-harmonized competitive
      conditions. The 12 national market systems with their different types of
      regulation intending, on the one hand, to support competition and, on
      the other hand, to guarantee consumer protection, will start competing
      with one another.
      Only a part of the insurance companies operating in the countries of the
      EC (an estimated 28%) will become "European insurers". Most of them
      will continue doing business on their national markets only.
      The objectives of business activities in other EC-countries are (in this
      order of succession) growth and turnover, profit, "to follow the domestic
      client abroad", to obtain the prestige of an "EC-insurer", and the diver-
      sification of risks.

432
The degree of attraction each market has is dependant on both the
already existing business volumes and their profitability and on the
future growth potentials. The Spanish insurance market is appraised to
be the most attractive one, Italy, France, Germany, and Great Britain
following next.
In the less developed countries of the EC and on markets with a still
underdeveloped life insurance business the real growth potentials are
expected to reach the highest volume. Thus, insurance business in
Spain, Portugal, and Italy is expected to show the strongest growth with
the rates of business with individual clients being estimated at a higher
value than those of business with company clients.
Most activities within the new installe,d single market will proceed from
insurance companies in the highly developed insurance markets (Switz-
erland, Great Britain, Germany, France, Italy) being especially directed
to the markets in France, Spain, Germany, and Great Britain.
Even after a rather long transitional period there will exist different
regulation systems within the 12 national markets. Markets in Switzer-
land and Germany are expected to be highly regulated, whereas in Bel-
gium, Great Britain, and the Netherlands they will be subject to a par-
ticularly slight regulation. Business with individual clients will con-
tinue under a stronger supervision than business with company clients.
The various strategies of insurance companies to expand on new EC-
markets will mostly concentrate on the installation of subsidiaries and
establishments; the expansion by means of the freedom of services is
given a moderate chance in the case of business with company clients
but only very little chance in the case of business with individual clients.
The strategy of integration into the new markets will be preferred to
that of strict demarcation.
The entrance of insurance companies of non-member countries into the
EC-markets is expected to reach only a small extent; special conditions
for Swiss and Austrian insurers are likely to be granted.
The single insurance market of the EC will lead to a rising number of
actions and reactions and will intensify competition with insurance
products and premiums. However, this dynamic movements will have
many more effects on business with company clients than on that with
individuals. The single insurance market will, furthermore, lead to a
concentration of companies. Professionality of insurance companies
operations will be increasing. There will be a polarization of business
with company clients (liberalization within the EC) and individual
clients (more national and local operation, subject to supervision). With
regard to the type of insurance companies there will be, on the one hand,

                                                                        433
      the large insurer generally operating in the whole EC-market and, on
      the other hand, the small and specialized insurer working in his national
      market only.
11. Altogether there are good reasons for certain scepticism whether there
    will really exist a "single, unified" market for insurance business. A sys-
    tem of 12 national markets open for activities of foreign insurers seems
    to be more realistic. EC insurance activities are likely to find only accep-
    tance by individual clients.




ZVersWiss 1989 p. 107 - 127:
Experience with Insurance Supervision
(Erfahrung mit Versicherungsaufsicht)
by Professor Dr. August A n g e r e r, President of the Insurance Supervis-
ory Authority, Berlin
  Insurance supervision is experienced in different ways. There is the
experience made by those supervised, by the insured, by the public, and the
supervisors. The supervisor who has been entrusted with a legal mandate is
confronted with the following question: Has it been possible to reach the
aims of insurance supervision? Consideration will be given to long-standing
experience with
- safeguarding the legal and financial interest of the insured (j) and (ii)
- supervising the financial capacity and function of the insurance com-
  panies (iii) and (iv)
- the limits of supervision (y)
      The insurance supervisory authority safeguards the interests of the
      insured primarily by authorizing the general insurance contract condi-
      tions. These have to be in accordance with the legal provisions and must
      not place the insured at a disadvantage. The insurance supervisory
      authority also sees to it that any other legislation which is essential to
      the interests of the insured is observed by the insurance companies, e.g.
      that they do not engage in any misleading advertising.
      The insurance supervisory authority safeguards the financial interests
      of the insured by authorizing adequate rates for third party motor insur-
      ance, life and sickness insurance, providing for an adequate and up-to-
      date participation in profits and taking care that the insurance con-
      tracts are duly fulfilled in case of loss.

434
    In order to maintain the financial capacity of the insurance companies
    at any time it is essential that they dispose of the necessary solvency,
    establish sufficient technical reserves, and meet the requirements
   regarding qualified investments. The insurance supervisory authority
   turns its particular attention to these areas and prevents undesirable
   developments. Greater transparency of insurance companies' accounts
   has made it possible for the public to better understand the financial
   situation of individual insurance companies than previously.
    For an insurance company to function properly it is necessary that the
   operational requirements are duly met. If certain functions are taken
   out of the company and are operated separately they will still continue
   to be controlled by the insurance supervisory authority. Life insurance
    companies should not have any shares in other companies to avoid the
   risk of their being held morally responsible. Any relevant reorganiza-
   tions of insurance groups must not be impeded.
y) Insurance supervision has its limits where this would mean state control
    of the economy. The insurance supervisory authority must firmly resist
    any efforts in this direction.




ZVersWiss 1989 p. 129 - 155:
National Investment Guarantee Schemes and the Multilateral Investment
Guarantee Agency (MIGA) - Instruments for the Promotion of Foreign
Direct Investments by Providing Insurance Against Political Risks
(Nationale Kapitalanlagegarantïen und die Multilaterale Investitions-
Garantie-Agentur (MIGA) - Instrumente zur Förderung von Direktinve-
stitionen durch Versicherung gegen politische Risiken)
by Assessor Thomas S t e r n, Konstanz
   Notwithstanding the considerable efforts of the multilateral financial
institutions and major central banks of developing countries, the interna-
tional debt crisis has proved to be rather intractable. While a global effec-
tive solution of the crisis has yet to be developed, it is increasingly recog-
nized that foreign direct investment has an important role to play in any
effective strategy to address the present predicament of developing coun-
tries in view of its considerable potential for promoting sustained growth
and reducing vulnerability to future deterioration in economic conditions.
  In addition to the already existing investment guarantee schemes of the
capital-exporting countries a new intergovernmental agency, the Multilat-
                                                                          435
eral Investment Guarantee Agency (MIGA) was established in April 1988.
MIGA which - although legally and financially autonomous will cooperate
with the World Bank Group is designed to encourage the flow of invest-
ments to and among its developing member countries by according foreign
investors guarantee protection against non-commercial risks, by providing
technical and advisory services to requesting member governments, and by
facilitating policy cooperation among its member governments to improve
and stabilize investment climates.
  The article points out the main features and conditions of the national
investment insurance programs with particular emphasis to the German
scheme, administered by Treuarbeit AG. Since in its operations MIGA is
meant not to compete but rather to complement and cooperate with national
schemes, the aspired "additionality" to existing national schemes will be
examined. In addition to the three "standard risks" that are guaranteed by
all national schemes (transfer restriction, expropriation and war) MIGA will
also cover the risk of repudiation and breach of government contracts in the
cases where the investor has no access to a competent forum, faces
unreasonable delays in such a forum or is unable to enforce a judicial deci-
sion issued in his favor. Besides equity interest MIGA will encompass
portfolio investments and non-equity types of industrial cooperation like
management and service contracts, licensing and franchise agreements,
turnkey contracts, and arrangements for the transfer of technology and
know-how. The program may eventually be extended to medium and long
term loans related to a specific investment, provided they are no export
credits extended by an official agency. Other substantial improvements are
resulting from the eligibility criteria of investors: To qualify for a guarantee
a natural or judicial person must, as a rule, be a national of, or being incor-
porated and having its principal place of business in, a member country
other than the host country. Therefore, MIGA will enable investors from
countries with no national scheme to receive insurance protection and will
be able to issue coverage for multinational joint ventures. MIGAs insurance
contracts will also provide for international settlement of disputes occurring
with the host country without an existing bilateral investment protection
treaty or an investment contract between investor and host country.
  Beyond its guarantee operations MIGA will contribute to the improve-
ment of international legal rules for the fair and equitable treatment of
investments by concluding its insurance contracts, investment protection
treaties with host countries and cooperation agreements with national
insurance agencies. MIGA may thus be able to improve substantially the
existing investment guarantee facilities as well as the international invest-
ment climate and, therefore, help to support the efforts for increasing the
flows of foreign direct investment to developing countries.
436
  At the end a detailed tabular summary shows the main features and con-
ditions of the schemes of the major industrial countries and of MIGA.




ZVersWiss 1989 p. 157 - 175:
Regulation and Deregulation in the German Insurance Industry
(Regulierung und Deregulierung in der deutschen Versicherungswirtschaft)
by Professor Dr. Roland E i s e n, Frankfort
  The debate on deregulation of regulated markets has gained momentum in
recent years. Behind the policy of deregulation lies the opinion of most
economists that competition - since the days of Adam Smith's "invisible
hand" - is a "quasi-perfect regulator" of economic activities. But it was
Adam Smith himself who pointed to exceptions of this rule: public goods,
externalities, economies of scale, and natural monopolies.
  The question, however, is not the "great" decision between "free market"
and "state control", but rather the more prosaic question of the trade off
between welfare losses and cost advantages. Or stated otherwise: Are the
costs of regulation of different types and intensities (e.g. allocative inef-
ficiencies, x-ineffeciencies, transaction costs) larger than the advantages of
regulation (dissolution of uncertainty, distribution of potential rents inclu-
sive of equity aspects)?
  In the first part the paper deals with the question of "peculiarities of the
product and production process of insurance". The main arguments put for-
ward are the problems of capacity, calculation in advance, safety, transpa-
rency. It is argued that for some arguments the empirical relevance and the
necessary policy actions are difficult to ascertain. Nevertheless, the infor-
mational externalities (i.e. adverse selection, moral hazard) and the
"monopolistic market structure" attached to these point in the direction of
some regulation. However, the questions in regard of the intensity of regula-
tion and of the regulatory institution are open.
  In the second part of the paper, therefore, some aspects are discussed
regarding the goals of regulation and how to "optimally" regulate the insur-
ance markets. Here the discussion focusses on the "guaranty fund" widely
debated in the German literature. On the one hand, it is argued, such a
"fund" precludes an "insurance crisis" (similar to a bank run). On the other
hand, the existence of a perfect "guaranty fund" seems to destroy the insur-
ance market: Insurers have an incentive to reduce their capital and reserve
levels to zero. This argument, however, first depends upon the specific way
of premium calculation for the "guaranty fund". Secondly, if the capital
                                                                          437
owners (and the insured) loose money when an insurer goes bankrupt, the
result would be an optimal capital and reserve level larger than zero.
  At the end the question is put forward how to change the institutional sys-
tem. Economics analyse and compare long-run equilibrium positions. Politi-
cians take into regard only (or mostly) short-run consequences. But, the
larger the inefficiencies involved with the going regulation are, the greater
is the probability that there are marked short-run consequences of deregu-
lation. Thus, the economic analysis gives arguments that the financial
advantages of (potential) winners outweigh the losses of the (potential) loos-
ers. But without a rule for compensation the (potential) loosers will resist an
institutional change. The result then depends largely on group size and
organization possibilities and lobbying.



ZversWiss 1989 p. 177 - 189:
Microelectronics and Insurance
(Mikroelektronik und Versicherung)
by Dipl.-Ing. Friedrich-Karl B e h r e n s, Munich
  The aim of this lecture has been to illustrate the close correlation between
microelectronics and insurance based on examples from the electronic
equipment sector. Other types of technical insurance have also been
experiencing the same or similar interaction. For instance, the erection and
guarantee insurance both provide cover for electronic systems. The applica-
tions' field for microelectronic components, however, is not solely restricted
to electronic systems. The domestic sector including household appliances,
as well as the machine tool and production sector, have also been greatly
affected by this trend towards more microelectronics, involving, for exam-
ple, both the fire and machinery insurance. Motor insurance companies have
also been confronted with a totally new situation due to the increased appli-
cation of microelectronic components. Even companies specializing in
transport insurance cover have had to adapt to entirely new or at least
altered risk circumstances, although the type of goods being forwarded may
seem immaterial. It has never been easy to assess the interaction between
legal and technological matters with any degree of accuracy. In future, lia-
bility insurers will be increasingly faced with the task of finding a feasible
insurance solution to counterbalance the growing application of microelec-
tronics in all sectors.
  Our world is experiencing rapid chance due to microelectronics - insur-
ance will have to adapt accordingly.


438
ZVersWiss 1989 p. 191 - 206:
The Economic Significance of Insurance with Special Consideration of the
Allocation of Risk
(Die volkswirtschaftliche Bedeutung des Versicherungswesens mit beson-
derem Bezug zur Risikoallokation)
by Dr. Dirk Meyer, Kiel
   Technological change has many associated risks. Because of this an essen-
tial condition of its realisation is the appropriation of guarantee funds. This
article shows the influence of insurance in realising innovation from differ-
ent points of view. The main issue constitutes the inclusion of the economic
good "risk bearing" in the production process.
  The analysis reveals many indications of an altered allocation of risks.
Guarantees which imply the willingness to bear risks can be interpreted as
a factor of production. The supply of this input factor through insurance
contracts leads to an increasing probability of damage, to an enhancement
of the ability to bear risks by the covered subjects. On the other hand, insur-
ances may decrease costs because an external guarantee fund renders the
principle of increasing risks inapplicable (Kalecki 1937). This gives rise to
deconcentration and a high intensity of competition.
  The limits of insurance result from the difference between risk and uncer-
tainty (Knight 1921) and the distinction between static versus dynamic risks
(Haynes 1895). Entrepreneurial specially innovative uncertainties cannot be
covered by insurances very easily. A loophole may exist, however, through
risk-sharing systems which split the entire risk into parts and assign these
risks to insurances and entrepreneurs according to their respective com-
parative advantages.
   Other effects result from an induced decreasing liquidity preference and
the re-shifting of property. An increasing certainty allows long-term invest-
ments. On the other hand, the supply of venture capital by institutional
investors is limited by governmental regulations.
  Consequently, the analysis shows an expansion of assumption of liability.
This stimulates the dynamic process of creative destruction and encourages
innovative projects.




                                                                           439
ZVersWiss 1989 p. 207 - 226:
The Corporate Image in the Insurance Business
(Das Image in der Versicherungswirtschaft unter besonderer Berück-
sichtigung der Firmenimagegestaltung)
byMag. Karl C. Ennsfellner, Vienna
  In this article the author tries to give a theoretical explanation of the
importance of insurance marketing instruments for an insurance company
attempting to create a positive corporate image.
   At first the central components of an image concept are described. Then
the importance of brand image, company image, and the branch image in
general of the insurance business is discussed. The author shows that the
brand image is not important because insurance products in most cases are
not branded articles. A company image might be a chance for the individual
insurance company to contrast with its competitors. Although the company
image could be of great importance considering competition with other
insurers who offer comparable products, it is not very distinct in the Aus-
trian insurance industry. In the mind of the consumers the image of the
branch as a whole - the branch image - is dominant. But the general image
of the Austrian insurance industry is negative as a survey conducted in
spring 1988 clearly shows.
  The author then discusses the role of the insurance marketing instruments
in the effort of an insurance company to create a distinct positive corporate
image. The conclusion of this discussion is that the direct contact of the
company's sales staff with the customers is most important for an insurance
company trying to create a positive corporate image.



ZVersWiss 1989 p. 263 - 297:
Legal Questions Concerning Arbitral Settlement of Domestic and Border-
Crossing Insurance Disputes
(Rechtsfragen der schiedsrichterlíchen Regulierung inländischer und grenz-
überschreitender Versicherungsstreitigkeiten)
by Professor Dr. Egon L oren z, Mannheim
  This article is the written version of a talk given on March 8, 1989. The
author's intention is to introduce into insurance arbitration by discussing
selected law problems. The talk is divided into three parts.
   Part 1 contains a brief survey of the arbitration law in the Federal Repub-
lic of Germany and some remarks on the relevance of arbitration as a means
of resolving insurance disputes.

440
  In part 2 the article deals with legal requirements for the validity of
domestic arbitration agreements, of arbitration procedure, and of arbitra-
tion awards. Mentioned are also special requirements provided in the Ger-
man Insurance Supervision Law.
   Topics of part 3 are different questions in law arising from arbitration in
border-crossing (international) insurance disputes, especially questions in
the field of conflict of laws. Seen from the viewpoint of a court and then of
an arbitration tribunal, the author discusses the finding of the law applica-
ble to arbitration agreements, arbitration procedure and insurance con-
tracts from which disputes have arisen. Part 3 concludes with a discussion
of some legal problems concerning the recognition and the enforcement of
foreign arbitration awards in the Federal Republic of Germany.




ZVersWiss 1989 p. 299 - 315:
Insurance and Reinsurance Arbitrations in England
(Versicherungsschiedsgerichte aus der Sicht des Londoner Marktes)
byDr. H. Edward Gumbel, O.B.E., London

I The practical importance of arbitration
  To settle a difference of opinion by submitting it to an impartial third per-
son who has suitable experience and can be relied upon to resolve it in confi-
dence, with expedition and few formalities in an atmosphere that allows the
parties thereafter to resume normal relations in the market place - this basic
idea which underlies all arbitration goes back to times immemorial and has
never lost its appeal.
  As a contractual proviso arbitration figures in virtually every reinsurance
contract. It holds out the prospect that any future disagreement between the
parties may be resolved in an atmosphere of goodwill rather than in con-
frontation before the courts. Moreover it gives the parties a say in the
appointment of the arbitrator or arbitrators rather than haul them before
unknown judges, possibly in a foreign country. Awards can often be more
easily enforced.
  Arbitration suits English social behaviour and London is attractive as seat
of international arbitration because of its position as a world insurance and
reinsurance centre and because of England's reputation for fairness and jus-
tice.
  The London Court of Arbitration goes back to the late nineteenth century
and is supported by the City. Arbitrators are respected and have their own
                                                                           441
Institute which is endowed with the Royal Charter. Amongst other activities
the Institute provides since 1981 a simple and cheap personal insurance
arbitration service to policyholders of some 54 insurance companies. Their
policies include an arbitration clause which, however, refers only to quan-
tum of a claim, not to questions of liability which the assured remains free
to pursue in the courts.
  Some 260 other insurers support an Insurance Ombudsman whose deci-
sions bind only them, not the assured - an illustration that there is competi-
tion within the market also in the field of alternative dispute resolution.

II Arbitration and the Courts before 1979

  The finely balanced and recently greatly modified role accorded to the
ordinary courts in the arbitration process is a crucial feature of the English
system.
  At the end of some 300 years of legal development English courts had by
1979 arrived at three basic propositions:
  First, it was thought axiomatic that the jurisdiction of the ordinary courts
could not ousted. That basic principle was last re-affirmed by a strong
Court of Appeal in 1922 - Czarnikow t'. Roth. If an action was brought con-
trary to an arbitration agreement the courts would stay, not dismiss it.
  Second, in matters of procedure arbitrators were allowed considerable
latitude and the courts did not try to interfere. An attempt in 1978 to per-
suade the judges to terminate an arbitration that had been left dormant so
long that it was hardly fair to revive - that attempt to bring the courts into
arbitration process succeeded in the Court of Appeal but was thrown out by
the majority of the House of Lords. That was the Bremer Vulkan case.
   Third, in matters of law the courts had developed a system of judicial con-
trol by allowing the parties, either in the course of a reference or in connec-
tion with the award, to submit a legal question to the judges for decision.
Czarnikow y. Roth was the authority to confirm that this right to the "case
stated" procedure could not be waived.

III The 1979 Changes

  In the course of time the "case stated" procedure and a strict control of the
arbitral process by the courts came to be looked upon as a means whereby
unwilling debtors might delay payment. It was also thought that they acted
as a deterrent to multinational and foreign corporations instead of an
encouragement to take their disputes to arbitration in London.

442
  A new Arbitration Act was, therefore, put on the statute book in 1979 and
revolutionised English arbitrations. The "case stated" procedure was swept
aside as also the previous right of the courts to cancel an award on the
ground of evident error.
  Instead, parties now have a right of appeal against an award but within
very strict limits which are laid down partly in the 1979 Arbitration Act
itself and partly in the so-called Nema guidelines published by the House of
Lords shortly afterwards in the case about a vessel of that name.
   Arbitrations now take place in a different climate. The parties will no
longer be protected against errors in law unless they are of major impor-
tance. After a chequered career it is now also possible for parties to insert in
their agreements an equity clause which gives to their arbitrators a fairly
free hand to dispense justice without being bound to a strict application of
the letter of the law.
   Since 1970 judges of the Commercial Court may accept an appointment as
arbitrator and there is a general move towards a quicker and cheaper arbi-
tral process.

IV The Framework

   Where the Arbitration Tribunal sits, by which legal system its delibera-
tions should be guided and which law should govern an arbitration agree-
ment and contract remain important preliminary questions. Unless they are
clearly dealt with in the agreement between the parties they may lead to
lengthy and unproductive wrangles.




ZVersWiss 1989 p. 317 - 333:
The Demand for Insurance as a Topic of Economic Research
(Die Versicherungsnachfrage als Gegenstand der ökonomischen Forschung)
by Professor Dr. J.-Matthias Graf y. d. S c h u 1 en b u r g, Hanover
  Currently significant changes take place in insurance markets: after a
long period of rapidly increasing revenues of insurers there are some indi-
cators for stagnation. The harmonization of the European financial markets
and the deregulation of insurance markets will increase competition among
insurers and induce concentration processes in the insurance markets. In
addition, banks found, or merge with, insurance companies to offer a
broader range of financial services. This scenario has increased the interest
                                                                            443
of insurers for the demand side: what can be done to increase insurance
demand? What kind of insurance supply do consumers really want? How
will consumers react on increased competition in insurance markets and a
cut-back of insurance market regulation? This article shows the contribu-
tion of economic insurance market theory to the analysis of the demand for
insurance.
  The first chapter summarizes the major current changes of insurance
demand. The second chapter contains four parts:
- the optimal insurance demand
- the theory of separated markets for risk
- cost components influencing market structure and
- the economic consequences of asymmetric information
   In the last chapter it is shown how new information technology will
change insurance supply and the communication between insurers and
insureds.




ZVersWiss 1989 P. 335 - 355:
Price Competition in the Car Insurance Market. A Contribution to the
Empirical Theory of the Insurance Company
(Preiswettbewerb auf dem Markt der Autoversicherung - ein Beitrag zur
empirischen Theorie der Versicherungsunternehmung)
by Diplom-Kaufmann Gunter Kürble and cand. rer. pol. Jens Wie-
1 a n d, both Mannheim and Wiesbaden
  The analysis of the car insurance market has shown that there is a
relationship between price differentials and growth rates. Insurance com-
panies with competitively priced products have in the past been able to
increase their market share at the expense of the less attractive companies.
  This indicates that we are dealing with a sophisticated consumer who is
able to recognize and to take advantage of the price differences.




444
ZVersWiss 1989 p. 479 - 577:
Financial Supervision of Insurance Companies with a Special View to the
Financial Resources Required for Insurance Operations
(Die Finanzaufsicht über Versicherungsunternehmen unter besonderer
Berücksichtigung der für den Versicherungsbetrieb erforderlichen Finanz-
mittel)
by Professor Dr. jur. Dr-Ing. E.h. Reimer S ch mi dt, Aachen
 This is the general report on theme II produced for the AIDA 8th World
Congress on Insurance Law (Copenhagen, June 18 - 22, 1990). It is based on
29 national reports which will be published in English with the congress
papers. We wish to acknowledge and thank Mr. Mikael Rosenmejer, Attor-
ney-at-law, Chairman of the Organizing Committee, Copenhagen, for the
opportunity to publish the German Version of this General Report in our
paper.
  As there will be a full English version of this report only a very short
English introduction will be necessary.
  The general report on theme I "Damage from International Disasters in
the Light of Tort and Insurance Law (general reporter Prof. Dr. jur. Peter
Wetterstein) can be found in the congress papers.

Contents
Preliminary Remarks

   Insurance supervisory law as an area of the law
   Method used in this general report
   Select bibliography
   Purpose of insurance supervision
   Regulations in other areas of the law with financial implications
8. Areas covered by different legal systems and legal traditions

Report
1. Basic Questions

   1.1. "Material supervision by the state",
        "mere financial supervision", mixed systems
   1.2. Ministerial competence
   1.3. Monopoly insurance institutions
   1.4. Forms of undertaking
   1.5. Projected reforms
   1.6. Insurance company insolvency
   1.7. Criticism of insurance supervision
   1.8. Supplementary questions

                                                                       445
  Insurance Company Solvency

  2 a.           Regulations in EC Member States
      2 al.      Translation of EC law
      2a.2.      Establishing (and accounting for) hidden reserves
      2 a.3.     Effects of reinsurance
      2a.4.      Treatment of technical reserves
      2a.5.      Organisation funds
      2 a.6.     Supervising solvency
      2a.7.      Questions not covered by the above
      2h.        Regulations in non-Member States
      2 bi. & 2. Bases for calculating equity capital
      2b.3.      Establishing (and accounting for) hidden reserves
      2 b.4.     Effects of reinsurance
      2h. 5.     Treatment of technical reserves
      2b.6.      Organisation funds
      2b.7.      Supervising solvency
      2b.8.      Questions not covered by the above

      Technical Reserves (excluding life assurance)

      3.1. & 2.   Definition of outstanding claims reserves
      3.3.        Disclosure
      3.4.        Large risks reserves
      3.5.        Equalisation reserve
      3.6.        Winding up outstanding claims reserves
      3.7.        Calculating unearned premium reserves
      3.8.        Participation in profits by policyholders

      Technical Reserves (life assurance)

      4.1.        Calculation bases
      4.2.        Determining technical reserves
      4.3.        Zilimerisation and similar methods
      4.4.        Surrender values
      4.5.        Participation in profits by assureds

      Investments

      5.1.        Government involvement
      5.2.        Rules governing the acquisition of property
      5.4.        Rules governing the acquisition of shares and investment fund certifi-
                  cates
      5.5.        Rules governing the acquisition of government securities  1


      5.3.        Rules governing the acquisition of holdings in other companies


  1
       For reasons to do with the method, 5.3. has been placed after 5.5.

446
  5.6.       Rules governing the amounts which may be invested in particular
             categories
  5.7.       Assets covering underwriting provisions, in particular matching assets
  5.8.       Rules drafted primarily for application to credit institutions
  5.9.       Foreign investments

  Valuation of Assets

  6.1.       Valuation rules (comparison of systems)
  6.2.       Valuation rules for annual accounts
  6.3.       Valuation of amounts payable and receivable in foreign currencies

  Importance of Efficiency (financial strength and other qualities) for Competition

Preliminary Remarks
1. Insurance supervisory legislation as an area of the law

  This general report, which had to be completed by the ist of July, 1989, and there-
  fore does not include recent events, covers one aspect of insurance supervisory leg-
  islation and a very important, if not the most important, one. The legal substance
  of insurance supervision is in a fairly considerable state of flux all over the world.
  For various reasons, national legislators are becoming involved in regulating this
  area of the law more frequently than in the first half of this century, because pri-
  vate insurance as a means of providing for life founded largely on personal initia-
  tive has become substantially more widespread and consolidated its position with
  very extensive variations (not to mention the introduction of new classes). In addi-
  tion, many of what are referred to as the developing countries and "threshold"
  countries have drawn up new supervisory legislation or amended existing legisla-
  tion. The fact that insurance supervisory legislation in the EC has as a matter of
  course been included in the reorganisation, in particular in the harmonisation pro-
  cess, with a view to creating a single internal market, has brought about re-consid-
  eration of the substance there and as a result had repercussions in terms of ques-
  tions raised and settled on other countries. The changes in the economic systems of
  Eastern Europe also affect insurance supervisory legislation (cf. the introductory
  remarks to the national reports of H and PL). Cartel law (anti-trust law) became
  widespread after the Second World War and affected all aspects of commercial
  law. The question of the interaction of insurance supervision and cartel supervi-
  sion has been particularly forcibly discussed in D. Draft legislation in lis intended
  to give the supervisory institute (ISVAP) responsibility for authorising exclusions
  from the cartel law (national report 1.5). The economic concept of deregulation,
  which is supposed to release the forces of enterprise, reduce welfare costs and
  improve well-being by doing away with or reducing the regulations governing
  economic control, has also stimulated discussion on insurance supervisory legisla-
  tion (cf. for example the introductory remarks to the DK national report). Infla-
  tion, where it appears in an intense form, requires legal steps to be taken by the
  supervisory authorities (e.g. introductory remarks to BR national report).


                                                                                    447
  Methods used in this general report

  There are few textbooks or legal commentaries containing an up-to-the-minute
  view of this area of the law, especially since the legal draughtsmen sometimes have
  little connection with the economic aspects of the subject and the number of
  studies which concern or include this field is increasing. Moreover, the author has
  been unable in the time available thoroughly to examine the literature of all the
  countries which were to be included in the report. It was therefore decided to adopt
  the national report approach usually used in AIDA working sessions. So that the
  material could be gathered in a sufficiently refined form and to ensure that it
  covered questions which were likely to be of relevance to all countries, a detailed
  questionnaire was drawn up and circulated to all the national groups. The ques-
  tions posed are listed under the relevant section headings in the general report. I
  am indebted to the authors of the national reports who are listed later on in this
  section, since they submitted material more comprehensive than any available
  until now by ist July 1989. Reference is made to those national reports throughout
  this report. The general report can contain only a condensed version accompanied
  by my own thoughts. Wherever appropriate, tables have been supplied to illustrate
  certain aspects of the report and a number of questions have in some cases been
  combined in the process.
  For the sake of order, it should be borne in mind that not all the questions in the
  questionnaire proved sufficiently clear in terms of the wide differences in legisla-
  tive provisions. There is also room for improvement in various other aspects of the
  method used. Some aspects of the summary do not, therefore, follow the original
  method.

  Select Biography (here not included)

  Purpose of Insurance Supervision

  A government's aims include ensuring private insurers' efficiency: the latter
  should be in a position always to provide the benefits promised under insurance
  policies to policyholders and, in the broader sense of the term, to beneficiaries, i.e.
  in particular to those with an entitlement to benefit in life and accident ïnsurance
  and to injured third parties in liability and motor third party insurance. Parlia-
  ments and supervisory authorities are faced with an innate contradiction which
  stems from the nature of the matter when laying down rules for the financial
  supervision of insurance companies by the state: ensuring their financial efficiency
  means both protecting insured and the named third parties and also the undertak-
  ings themselves. If insurance industry employees are also protected as a result of
  that process, such incidental effect is rarely criticised on grounds of economic or
  social policy, although there may not be any particular reason for giving pref eren-
  tial treatment to members of the industry by indirectly safeguarding their liveli-
  hood. The practice of protecting those who provide the capital, the shareholders,
  against the loss of their investment and (possibly also) adverse effects on the pro-
  fitability of that investment is in sonle cases regarded critically. That incidental
  effect is, however, mitigated by the fact that, in addition to insurance limited com-


448
panies, there are large numbers of mutual insurance societies and/or associations
in the national markets and in some cases also, but in some cases only, public agen-
cies and by the fact that supervisors not infrequently have to insist on fresh injec-
tions of capital from the shareholders and that capital losses have to be accepted in
the event of a company's finances being reorganised. The requirement to protect
insured and beneficiaries outweighs the problem of corporate protection, espe-
cially since national parliaments are aware of the contradiction and take precau-
tions, e.g. by participations in profits for insured.
The nature of state supervision of insurance companies in each country is moreover
defined by the way in which the object of supervision, in other words the operation
of insurance, is defined. Thus are the objects of that supervision specified, which is
not easy, considering the complexity of economic developments, particularly in the
field of welfare facilities and with regard to cover. lt goes without saying that the
questions arising in connection with financial supervision have to be put quite dif-
ferently when the abovementioned areas are taken into account.

Provisions of other areas of the law with financial implications

The provisions of supervisory legislation are not the only ones which affect the
financial policy of insurance companies. Mention should be made here of the
requirements of insurance contract law, which affect insurance benefits, and of
compensation law, which to a large extent determines the benefits payable under
all types of liability insurance; of necessity, however, they have been disregarded
here. The rules governing compulsory winding-up and bankruptcy have also been
ignored unless they are included in supervisory legislation, compensation and
labour law, fiscal and monetary legislation (the latter two areas only if they had to
be taken into account in the answers to the questions posed). The fact that a settle-
ment, even one with financial repercussions, can be made both through offers
directly addressed to insurers and legislative injunctions and through the rights of
supervisors to take action, i.e. not just through public-law regulations alone, but
also through arrangements under private law, is of particular interest, but will not
be dealt with here. The statutory provisions of an insurance contract which are
binding either on both parties to that contract (ius cogens), or on the insurer alone,
may both affect the settlement. They also constitute a fundamentally milder intru-
sion compared with public law.

Areas covered by different legal systems and traditions

The methods which have been used to shape insurance supervisory legislation in
the various countries also reflect their membership of, or close association with,
the main legal systems, in other words the Roman, the Anglo-Saxon, the Central
European (possibly soon an EC legal system) and that of the countries of Eastern
Europe. Such a division is generally acknowledged to be based on "fairly rough
and ready" and general common features. The author is of the opinion that "volun-
tary", and therefore possibly stimulating, approaches also play a part in some
countries. However, insurance supervisory "traditions" --typical types of organisa-
tion and conduct - are also important today; they are particularly evident in coun-
tries in which insurance business was written earlier and on a fairly broad scale.

                                                                                  449
  Countries in which a domestic insurance industry did not develop until lateron
  have become assimilated in one system or another or devised mixed systems. The
  findings of work by UNCTAD and the OECD, beginning with the so-called Paratte
  Report, have had an effect on that process. Generally speaking, the prevailing sys-
  tem of administrative law, together with the legal remedies available to the
  intended recipient of an administrative action against the latter, have had a signif-
  icant influence on the structure of national supervisory legislation. The "legal
  machinery" of supervision, in particular the instruments of government interven-
  tion, stands out in national administrative law, in some cases at any rate. The gen-
  eral principles relating to the examination by the courts of actions by the supervi-
  sory authorities are also part of this field.




ZVersWiss 1989 p. 579 - 674:
The Future of Provision for Old Age in the Overall Economy
(Die Zukunft der Alterssicherung in der Gesamtwirtschaft)
  The following pages contain the summaries of six papers held at a confer-
ence of the 'Deutscher Verein für Versicherungswissenschaft' on 6th
November, 1989, by the following authors (in chronological order):
Dr. Arthur K r u mp e r, Munich; Professor Dr. Franz R u 1 a n d, Frank-
fort; Dr. Axel H o 1 z w a r t h, Cologne; Dr. Klaus H e u b e e k, Cologne;
Dr. Werner T e g t m e i e r, Deputy Minister of Labour and Social Affairs,
Bonn; Professor Dr. Robert S c h we b 1 er, Karlsruhe.

      Introduction

      The birthrate in the Federal Republic of Germany has dropped sharply
      since the mid-'60s. At the same time live expectancy is increasing. Both
      these factors contribute to the fact that the population is growing older
      relatively quickly. This has a serious impact chiefly on the old age insur-
      ance systems financed by a contribution procedure. An intensive
      academic discussion in the Federal Republic of Germany is, therefore,
      dealing with alternative financing procedures, i. a. with the suitability of
      life insurance for provision for old age and surviving dependants. This is
      the context of the following papers.
      Dr. Arthur Krumper, member of the Ifo Institute, Munich, spoke on the
      subject of "Overall economic aspects of different financing procedures in
      old age insurance under the influence of demographic change." In his
      assessment the most serious problems in the financing of old age insur-
      ance will not emerge until the two decades after 2010. In order to prevent
      losses of prosperity as far as possible, he believes that i. a. the efficiency
450
of public administration and the capital input would have to be
increased and the productivity of the decreasing number of gainfully
employed persons would have to be raised. Krumper sees greater impor-
tance for the funding principle in the field of old age insurance, which
offers better opportunities for further growth, for the labour market and
for lasting prosperity than the principle of adjustable contributions.
Greater self-sufficiency in his view would help to see to it that those sec-
tions of old age insurance are increased which are insured through inter-
est income and not through total wages and salaries.
The subject of "Benefits from social security pension insurance achieva-
ble in the long term from the point of view of individual enterprises" was
covered by Professor Dr. Franz Ruland, Deputy Managing Director of the
Association of German Pension Insurance Institutions, Frankfort. He
welcomed the consensus achieved in drafting the 1992 Pension Reform
Act. Although under this Reform Act the increase in the contribution rate
compared with the previous regulation was reduced, it could not be pre-
vented altogether. He pointed out that the current contribution system
made pension insurance possible to be financed in the long term. Ruland
attaches particular importance to the increasing gainful employment
among women, thus reducing widows' and surviving dependants' pen-
sions in the long term. He does not see any alternative to the existing con-
tribution procedure, as a funding principle would necessitate DM 5 bil-
lion in pro rata unearned premium reserve.
"Benefits from life insurance achievable in the long term from the point
of view of individual enterprises" was the subject of the paper presented
by Dr. Axel Holzwarth, member of the boards of the Nordstern Insurance
Companies, Cologne. He emphasized four features of life insurance as a
component of our old age insurance system: It offers comprehensive
insurance cover, its benefit statements are reliable in the long term, life
insurance is an index-linked system and is widely accepted. Holzwarth
pointed out the high degree of flexibility of live insurance in the struc-
ture of contributions and above all the possibility of choosing between
capital and a pension. He added that surveys had shown that in nine out
of ten cases the old age and surviving dependants' pension was the decid-
ing factor in taking out a life insurance policy. Payments from life insur-
ance policies including redemption surrenders will have reached almost
one fifth of pension benefits from white collar and blue collar employee
insurance by 1990, and by the mid-'90s over a quarter. Holzwarth used
some model calculations to show the ratio between contribution and
benefit in long term life insurance policies.
Dr. Klaus Heubeck, Dipl-Mathematiker and Dipl.-Volkswirt, Cologne,
was concerned with the subject of a "Mixture ratio between pay-as-you-
                                                                         451
  go and capital accumulation systems - presented by some model calcula-
  tions" In the long run the Federal Republic of Germany expects a decline
  in population. This and associated problems in financing social security
  have once again raised old questions:
  - Is it possible to change from pay-as-you-go to capital accumulation,
     thus reducing the burden facing a declining and ageing population?
  - Is there a 'suitable' alternative mix of capital accumulation and pay-
     as-you-go and what would be the consequences of its use in terms of
      the underlying benefit systems and the overall economy?
  More than 25 years ago, the 'Deutsche Gesellschaft für Versicherungs-
  mathematik (German Association of Actuaries) took a position on similar
  (and relating) questions in connection with the then discussion on social
  security. There is a complete knowledge of the actuarial techniques to
  answer such questions systematically and to make quantitative model
  analyses. On the basis of fundamental contributions by Kaiser, Wünsche
  and Thullen, Heubeck's paper gives a vivid summary of the structure of
  benefit financing and its developments over the course of time.
  Looking to the multitude of alternative combinations of prefinancing and
  pay-as-you-go the two extremes are particularly accentuated. Heubeck
  in his paper shows model calculations with regard to the social security
  system for these two extremes. He also comments on a few models with
  partial capital accumulation for social security that have been discussed
  in recent years with the 1992 reform of the social security system in mind.
  There is already some capital accumulation within the area of private
  company pension schemes and life insurance, still allowing for an exten-
  sion of the level of capital accumulation. Thus it seems appropriate to
  investigate in particular those combinations of capital accumulation and
  pay-as-you-go assigning the different ways of benefit systems to their
  specific forms of financing (i.e. pay-as-you-go to "first pillar" benefits,
  prefinancing to "second and third pillars"). Corresponding calculations
  are taken from an opinion by the 'Gesellschaft für Versicherungs-
  wirtschaft und Gestaltung'. In this context, within the frame of a mixed
  financing approach for an overall benefit system, company benefit
  schemes with planned early accumulation of capital prove particularly
  appropriate - besides life insurance - to take some lasting pressure of the
  social security system.
f) "Social security pension insurance in the overall economy" was the field
   covered by Dr. Werner Tegtmeier, Deputy Minister in the Federal Minis-
   try of Labour and Social Affairs in Bonn. He welcomed the consensus
   among the parties on the 1992 Pension Reform Act and praised the inten-
   sity with which many social groups in the Federal Republic of Germany

452
  had contributed to the success of this reform work. Tegtmeier outlined
  long-term provision strategies in a society which is growing older, strate-
  gies which - under demographic aspects - include not only the promotion
  of the new generation and accumulation of human capital - in his eyes a
  flexible organization of working hours is also particularly necessary.
  Tegtmeier described social security pension insurance as a system of pro-
  vision for old age which the majority of the public deeply wants, and
  which still retains the "three-pillar theory".
g) Professor Dr. Robert Schwebler, Chairman of the Board of the
  Karisruher Lebensversicherung AG, Karlsruhe, dealt with the subject of
  "Life insurance in the overall economy". He pointed out that life insur-
  ance contributes to social security with the insurance cover it offers. This
  cover has a positive influence on people's economic behaviour. Life
  insurance in his view is the medium of monetary wealth formation for
  private households and, therefore, a capital reservoir. It provides the eco-
  nomy with long-term capital. The long term nature and consistency with
  which the accumulation of contingency assets is carried out in life insur-
  ance in his view helps to smooth out economic fluctuations and to pro-
  mote monetary stability. He went on to say that the total capital of DM
  380 billion at the end of 1988 represents the financial assets of private
  households with the life insurance companies. This in his view is the
  clearest demonstration of the nature of life insurance as an old age insur-
  ance system with capital coverage. Schwebler put forward the view that
  the proportion of old age insurance with capital coverage in old age
  insurance as a whole would increase. He then went on to deal very thor-
  oughly with the resulting overall economic questions. He also outlined
  interesting aspects on the development, reduction and profitability of a
  capital stock. He pointed out that there would not be a decline in the total
  capital of life insurance companies until 2030. In conclusion, Schwebler
  established that the economic advisory system for politicians sees a use-
  ful strategy for the security of the future of old age insurance under
  changed conditions in the increase of the share of old age insurance sys-
  tems with capital coverage, particularly life insurance. The experts here
  are pleading in favour of the general public taking care of their old age
  pensions adequately and in good time with the third pillar.




                                                                          453
ZVersWiss 1989 p. 675 - 690:
Calculation of Rebate Structures
(Zur Kalkulation von Rabattstrukturen)
by Dr. Heinz-Jürgen K 1 e m m t, Hamburg
  Given a calculated tariff premium, there often arises the necessity for
allowing some rebate for special risks in the portfolio. By offering such
rebates or similar loadings or both of them the premium income of the insur-
ance company will vary in a corresponding manner. In order not to change
the original calculated total premium income, an ex-post costing of the
tariff premium should be carried out. The paper shows the way for this kind
of adjusting and gives explanations by typical examples. The special case in
which the original premium is not identical for all risks of the portfolio but
is split up by some additional tariff structure is worked out in detail. More-
over, it is shown how to proceed when several rebate structures, e.g. the no-
claims bonus and the rebate for disabled persons in vehicle insurance, are
allowed simultaneously. The amount by which the original premium has to
be increased usually is measured in terms of the rebate requirement (Rabatt-
bedarf). This is a central feature of the study. Looking at the simplest case
of an original premium which is not split up the rebate requirement is defi-
ned as 100 - x, whereas x is the percentage of the tariff premium which is
paid in the average within the portfolio in consideration. Concerning the
rebate requirement, mathematical formulas are derived for the more sophis-
ticated cases of split-up original premiums as well as for the case of several
rebate structures simultaneously. Applications are given of the bonus!
malus-system in vehicle insurance and the rebate for cost in .third liability
insurance.




ZVersWiss 1989 p. 691 - 712:
Realisation of Security by Strategic Planning and Control - Fundamentals
and Proposals for the Insurance Company
(Zukunftssicherung durch strategische Planung und Kontrolle - Grundla-
gen und Umsetzungshinweise für die Versicherungsunternehmung)
by Professor Dr. Claus S t e i n le and Dipl.-Ök. Bernd E g g e r s, Hanover
 Due to the fact that there has been a distinctive transformation within the
market segment of insurance and finances leading to a "financial services
(r)evolution", it appears that strategic planning and controlling have
become essential for insurance companies. Numerous concepts and instru-
ments of strategic planning have been developed for the underlying interests

454
of the industrial enterprises. This is the reason why the development of spe-
cific insurance planning and control instruments is a necessity.
  Therefore, Steinle and Eggers have established a foundation for furnish-
ing insurances, by defining strategic business areas and describing portfolio
analyses with scenario technique and early warning systems.
  In reference to a case study, the authors illustrate how a direct-insurance
company could benefit by identifying risks and opportunities with the indi-
cated instruments from the strategic planning operations. For instance, the
authors come to the conclusion that a "dynamic portfolio analysis" has
exceptional significance in correlation with the scenario technique and the
reception utilization of weak signals from micro to macro environment of an
insurance company. Besides, the so-called "trend formula" (an instrument
to identify strategic issues) which renders important services seems to be
necessary for insurance companies. Furthermore, an outline structuring the
strategical mf )rmation system enables the insurance company to become
orientated over the possibility to facilitate chance and risk management
governing specific strategic business units (for example customers).
  Transforming the proposals to appropriate situations could contribute to
fulfill the goals of "planned ('prospected') security" of the insurance com-
pany - although the instruments of strategic planning offer no guarantee to
anticipate the steps to manage the future.




ZVersWiss 1989 p. 713 - 723:
Actual Vocational Training of the Insurance Agent - a Promising Vocational
Concept for the Future?
(Berufsausbildung zum Versicherungskaufmann - ein zukunftsorientiertes
Ausbildungskonzept?)
by Dr. Brigitte B.a u e r, Cologne
  Predominantly, insurance policies are built up on the basis of actuarial
theory and legal provisions and not according to the specific demands of the
insureds. This rather inflexible procedure is not appropriate to cope with
the challenges of further development. According to future demands the
vocational training of insurance agents should be more orientated to the
effective interests of the insureds and not, in the first place, to the available
insurance products.
  Whether such future qualification pattern of an insurance agent could be
obtained through effective vocational rules is the main topic of this paper.

                                                                             455
  The analysis shows only a partial suitability in the field of training in
insurance companies. The subjects of vocational training schools, too, are
not able to create an understanding for the individual risk management on
the part of the students.
  Possibilities to dissolve this discrepancy between future demands and
actual vocational training fields can be found, on the one hand, in supple-
mentary training arrangements or, on the other hand, in a calculated assign-
ment of the different commercial clerks to insurance companies.




456

								
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