The German Insurance Industry: Market Overview and Trends

Abstract

The private insurance business in Germany has its origins in three different lines: mutuals, public, and commercial insurance companies (for details on the German insurance market’s history, see Wandel, 1998, pp. 59–65, and Koch, 1988). The first mutuals were organized during the sixteenth century, and they typically provided fire insurance to members of specific groups such as guild members (called Brandgilden). In 1821 the Gothaer Feuerversicherungsbank and in 1827 the Gothaer Lebensversicherungsbank were founded by Ernst Wilhelm Arnoldi, with both companies organized as mutuals. Following these examples, many mutuals were created in all insurance lines during the second half of the nineteenth century. The first public insurer in Germany, the Hamburger General-Feuercasse, was formed as a merger of many Brandgilden in 1676. Following this example, other public insurers providing fire insurance to homeowners, who were often required by the authorities to insure their property, were formed in nearly all other German states during the eighteenth and nineteenth centuries. After this period, public insurers also started to offer coverage in other lines of the private insurance market. The first commercial (i.e., profit-seeking) insurers were sea transport insurers, created in 1765 and headquartered in Hamburg and Berlin. It was only in the mid-eighteenth century that the first commercial life insurer was created in Germany (Brockhaus, 1974). One of the major factors in the development of the life insurance industry was discoveries in mathematics, particularly in probability theory.