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April 29 (The following statement was released by the rating agency)
Fitch Ratings says in a new report that the share of insurance sales in Germany via the direct channel will continue to grow, driven by the fast-growing direct motor business, by non-direct insurers expanding into direct distribution through non-motor lines and by above market-average growth of direct life business.
"A key element of the success of the direct distribution channel is the high cost efficiency, for both non-life and life direct distribution," says Stephan Kalb, Senior Director in Fitch's Insurance team. "Not only are acquisition cost ratios lower than for traditional channels, but so are administration cost ratios." Automated processes and standardised products help to achieve lower cost ratios, provided a minimum level of premium volume is achieved.
Despite the growth in direct business, Fitch believes traditional sales channels (tied agents, brokers and banks) will remain the most significant distribution platforms in Germany. Fitch expects developments in these traditional channels mainly to be driven by regulatory influence rather than by underlying business prospects. Fitch believes it is unlikely that any single distribution channel will become dominant, given the fairly strong and stable presence of the various channels in the market.
The report, entitled 'German Insurance: Direct Distribution Set to Grow", is available at www.fitchratings.com.