Insurance in Germany: Market and IT Overview
Germany's insurance industry faces several challenges, which will slow down its growth and keep IT spending level.
Growth of the German insurance market will behampered by new regulations and competitive factors, according to a newreport by Celent, . The report examines key business trends in the German insurance market and their impact IT on spending.
The German insurance market has experienced very little growth in recent years, expanding at a compound annual rate of 4% from 2001 and 2004. There is some cautious optimism that things are turning around in the German economy; however, the growth in the insurance market is likely to be more muted, given significant changes such as Solvency II, new tax laws for life insurance, a health insurance overhaul, and increased foreign competition. Celent estimates that the total German insurance market will break the 200 billion mark by 2010.
German insurance companies are also facing competition from a new source: banks. The abolition of tax privileges for life insurance products at the beginning of 2006 will have a huge impact on endowment policies. The new tax laws mean that these products are competing, often unsuccessfully, against savings products from banks. Insurance companies will have to develop new products to avoid losing market share.
The challenges facing the insurance industry will keep IT spending fairly flat. Celent estimates that IT spending for 2005 was €4.5 billion and will increase to €6.2 billion in 2010. "Insurers face a real challenge of meeting changing business demands due to fixed IT costs, and large and inflexible IT infrastructure," says Catherine Schmitt, senior analyst and author of the report. "Insurers must find ways of using technology to become more flexible to meet increased competition."
The 27-page report contains nine figures and nine tables.
A table of contents is available online.