By Marcel Beyer, Hermann Buslei, Peter Haan, and Alexander Ludwig
We present a quantitative estimate of the demand for insurance in Germany with a particular focus on life insurance in the medium and long run.
For this purpose, we use (i) a population projection for Germany, (ii) a macroeconomic simulation model and (iii) an empirical estimation of premiums for various insurance products, based on data from the German sample survey of income and expenditure (EVS). Our results show in the baseline scenario (i) a sharp decline in the labor force participation rate from 60% to 53% and an increase in the old-age dependency ratio from 35% to over 50% by 2040; (ii) a decline in returns to capital and income growth rates and, indexed to today’s real terms, an increase in GDP per capita until approx. 2025, declining thereafter; (iii) a decline in indexed disposable income of about 12% until 2040; (iv) pronounced age and cohort effects in the demand for insurance products; (v) a decline in life insurance premiums by 8% in today’s real terms until 2030; (vi) in the case of an increase in the retirement age, a decline in this demand by only 5% due to increased incomes; (vii) an increase in premiums for private health, long-term care, disability and accident insurance by 60%; (viii) all insurance products analyzed together, an increase in demand by 10% by 2040, which corresponds to an increase from the current approx. 4.2% to 4.7% of GDP.
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