Former Chief Underwriting Officer, P&C, Generali Germany
Monika joined the insurance industry in 1994 and has been involved in underwriting motor insurance for over 25 years. She has experience working for many leading European insurance companies, leading AXA Direct in Germany in the late 90’s before running motor insurance at Westfalische Provinzial, one of the largest regional insurance companies in Germany. Monika was then Head of Underwriting P&C globally at Allianz SE before running Cosmos Direkt, a leading German auto insurer, where she was managing over 3bn EUR of gross written premiums. Monika has experienced C-Level positions across Europe and is on the Board of associations and other businesses such as MS Amlin, ERGO Group AG, and Europ Assistance. Read more
Monika, can you provide a short introduction to your background in the insurance business?
I have been in the insurance industry since 1994. I have worked for several insurance companies, such as AXA, Allianz, Generali and ERGO, for big international corporates. But I’ve also worked for a regional company, called Provinzial, which is a public insurer in Germany. I am a trained non-life actuary and, therefore, I was always focused on non-life business. I covered several different functions and roles and I always reported to C-level or was myself at C-level. The first time I was promoted to a board, as an executive member, was 2005. Today, I am non-executive independent director for two boards.
My first love in the insurance industry was the motor business because it was the first one where we really faced challenges and where we had new methodologies applied and my knowledge, as an actuary, was highly appreciated. I could apply most reasoned methods and statistical methodologies.
Can we take a step back, into the 90s, and maybe you could share a bit of context to exactly how motor insurance was underwritten, back then?
I think that’s quite interesting, especially in Germany. Until 1994, motor insurance was strictly regulated. Every tariff had to be approved by the regulator and there was a basic structure for the pricing provided by the association for all motor insurers. You weren’t allowed to differ from that, except for your own expenses as an insurance company, if you could prove that your expected claim per risk was lower than the market. You really had to prove it over a long time period. The market was pretty uniform and the main distinguishing element was the cost structure of the different companies.
It was mainly about acquiring the customer and the cost of the claims and processing the claims, rather than the actual price?
Yes. There was a pretty huge difference between the cheapest and the most expensive because their cost level was very different. There was – and still is – a mutual end of the German market, called HUK-COBURG and it has a cost level, an expense level, of 7.5%. The most expensive ones have a cost level of almost 30%. This cost level was already in place in the 90s and explains the difference between the prices in that area. It was a very competitive market, given the circumstances, and competition exploded after 1994.
What happened after 1994, in terms of the data and the models that you were using?
The model didn’t really change much. There were just a few additional criteria, such as age of the driver. But the competition and the reduction of prices were enforced and the market lost a huge amount of money. It was the first time that the underwriting side had produced combined ratios about 120% for some insurers. It was a big loss-making period, until the end of the 90s.
Why was that?
It was because the competition was so harsh and tough and the insurers were not prepared for that. They just gave a flat discount. They gave the competency to trust the price to the sales organization which just reduced the price by 10%, 20%. On the other hand, there was a reduction in frequency but not as fast as the price was reducing.