The Essence of Intermediaries in 2021
In the ever-evolving landscape of the German insurance industry, traditional intermediaries are grappling with a squeeze on their commission-based revenues. The primary culprits behind this squeeze are enhanced competition from comparison portals and insurtech firms, coupled with economic headwinds from the COVID-19 pandemic.
The German Association of Insurance Intermediaries (BVK) has expressed concern about potential commission bans and a switch to fee-based advice in several parties' election programs. The BVK Vice-President, Andreas Vollmer, has stated that putting pressure on costs on the intermediary is short-sighted.
The rise of comparison portals during 2020-2021 has empowered consumers to easily compare insurance products, thereby intensifying price competition. The emergence and rapid growth of insurtech companies introduced innovative digital distribution channels and direct-to-consumer models, offering more efficient, often lower-cost alternatives. This disrupted market environment has put traditional insurance intermediaries under pressure to maintain margins and client loyalty.
The economic situation in 2020-2021, marked by the global COVID-19 pandemic, heightened uncertainty and cautious consumer spending. While detailed Germany-specific data on insurance intermediaries’ commission trends and market share changes during this period is not extensively covered in the given 2024-2025 reports, the broader capital markets and economic background suggest that intermediaries faced challenges from disruptive digital entrants amid a moderate economic slowdown in Europe.
According to BVK figures, almost half of the intermediaries would earn more as an employee in an insurer's in-house department. The survey conducted by the BVK in December 2020 to March 2021 involved around 3,400 intermediaries. The analysis reveals that intermediaries are generally not high earners, and shrinking intermediary numbers, lack of new talent, and an aging intermediary workforce are the visible consequences of the current situation.
In response to the challenging market conditions, intermediaries are increasingly offering online closures. However, the BVK is wary of insurtechs and comparison portals, which Vollmer believes promise quick and cheap insurance policies while shedding advisory and support obligations. The BVK states that these new players do not ease the situation in a barely growing market.
Vollmer also points out that a look at European neighbours exposes populist demands for commission bans as unsupported by facts. Election times, according to Vollmer, are not conducive to rational arguments.
The analysis by the BVK provides a biennial overview of the income and employment situation and the economic development in intermediary businesses. Despite the challenges, the insurance distribution sector has been impacted by Corona, and the industry is adapting to the evolving digital landscape to remain competitive.
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- As the insurance industry in Germany transforms, traditional intermediaries are exploring alternative funding streams, such as fees from business technology services, in order to maintain profitability and adapt to the increasing digitization of the sector.
- Given the heightened competition from technology-driven insurtech firms and comparison portals, the German Association of Insurance Intermediaries (BVK) has advocated for policies that support the financial stability of intermediaries, championing their role as essential advisors in a complex and ever-evolving finance landscape.
