What types of insurance guarantee schemes are there?

As a customer of a life insurance company, you are protected through the statutory guarantee scheme Protektor Lebensversicherungs-AG. The Medicator AG guarantee scheme provides corresponding protection for your substitutive private health insurance (substitutive Krankenversicherung), which partially or entirely replaces statutory health insurance. Both insurance guarantee schemes are subject to supervision by BaFin.

Insurers domiciled in Germany that are authorised to conduct life insurance business or substitutive health insurance business are required to join the respective guarantee scheme. The same applies to German branches of insurers domiciled outside the European Economic Area (EEA), which comprises the European Union as well as Iceland, Liechtenstein and Norway.

Insurers are legally required to specify in their pre-contractual disclosures whether they are members of an insurance guarantee scheme and, if so, which one.

The Protektor and Medicator schemes are funded by contributions from their member institutions.

What products are protected?

If a life or health insurer is at risk of insolvency, all the company’s insurance contracts may be transferred to the Protektor or Medicator guarantee scheme for continuation in the interests of policyholders. This mechanism protects the contracts of German life and substitutive health insurers in their entirety.

In particular, the Protektor scheme covers death and survival benefits in endowment insurance (kapitalbildende Lebensversicherung), income protection insurance (Berufsunfähigkeitsversicherung), term life insurance (Risikolebensversicherung), private pension insurance contracts (private Rentenversicherungsverträge) and unit-linked life insurance. The scheme also covers capital redemption contracts offered by life insurers, which are interest-bearing savings products paid for according to a fixed plan (in a single payment or through regular ongoing payments) and paid out at a time or times determined in advance. The contracts of Pensionskassen that have voluntarily joined the Protektor scheme are also covered.

The Medicator scheme covers substitutive health insurance contracts, which are private health insurance contracts that fully or partially replace statutory health insurance. This applies to comprehensive health insurance (Krankheitskostenvollversicherung), daily benefits insurance (Krankentagegeldversicherung) and private compulsory long-term care insurance (private Pflegepflichtversicherung), for example, but not to daily hospital allowance insurance (Krankenhaustagegeldversicherung), supplemental health insurance to top up statutory cover (Zusatztarife zur gesetzlichen Krankenversicherung) or private foreign travel health insurance (private Auslandsreisekrankenversicherung).

Property and casualty insurance is also not covered.

Are contracts with foreign insurers also protected?

The protection covering your insurance contracts depends on where your insurance company is domiciled. As a customer of a German life or health insurer, your contract is covered by the German insurance guarantee schemes. The same is true if you have a contract with the German branch office of an insurer domiciled outside the EEA. Germany’s Protektor and Medicator schemes cover these contracts as well.

The German insurance guarantee schemes are not responsible, however, for any contracts you have with insurers from other countries within the EEA. The respective country of origin is responsible for these insurance contracts. Unlike in the banking sector, though, there is no uniform level or form of protection across the various EEA states. The scope of protection depends on the statutory provisions of the country in which the insurer is domiciled.

If you would like to know more about the protection offered in a specific case, you can contact BaFin or the supervisory authority of your insurer’s country.

How are my insurance benefits protected?

If a life or health insurer experiences economic difficulties so serious that it may become insolvent, BaFin usually orders the company to transfer its insurance portfolio to the respective guarantee scheme. As a customer, you will be notified immediately, but not much will change for you at first.

All affected insurance contracts are taken over by the respective guarantee scheme, which also restructures the insurance portfolio. For this reason, no one-time indemnification is paid out.

After the restructuring, the respective guarantee scheme may transfer the relevant insurance portfolio to another German insurer, which will become your new contractual partner and carry on the contractual relationship. However, transfers of this kind are subject to authorisation from BaFin. This serves to ensure that the interests of policyholders remain protected.

Because your insurance relationship remains intact, you are still obliged to pay the contractually agreed premiums after the insurance contract is transferred. In return, you continue to receive the benefits to which you are entitled. Your entitlement to all contractually guaranteed benefits and to any profit participation issued in the past remains unaffected.

There are some restrictions, though:

• The insurance guarantee scheme provides capital to restructure the acquired contract portfolio. Policyholders will receive no profit participation until this capital is returned to the guarantee scheme. Only then will profit participation be granted again according to the general provisions.
• If the funds available to the guarantee scheme are not sufficient to guarantee the continuation of the contracts, the liabilities of the life insurers under their contracts will be reduced by a maximum of 5% of the contractually guaranteed benefits.
• If the guarantee scheme does not have sufficient funds, BaFin can issue orders to prevent an undue increase in the number of premature contract terminations, since a large number of surrenders makes it difficult to restructure the acquired insurance portfolio. To this end, BaFin can issue a temporary prohibition of terminations, for example.

Protection for insurance products*

* The protected and unprotected insurance products listed here should be viewed as examples – your actual coverage is subject to the specific provisions of your contract and the resulting entitlement to benefits. This is not an exhaustive list. Information about the protection for occupational retirement provision can be found here.