Why Do Germans Love Insurance So Much?

Last week, we had the pleasure of speaking with Jenna from Life in Dusseldorf to answer some common expat insurance questions. She started off by asking our expert Kyle perhaps the most basic question of them all: “Why do Germans love insurance so much?”

You can check out his answer here:

What did we talk about?

Many expats are at first overwhelmed by the sheer number of policies, and by the widespread acceptance of them in German society. For example, while 85% of Germans have personal liability insurance, standalone personal liability policies aren’t usually available in the US—they’re usually looped in with renter’s insurance (which only 34% of US renters have) or under “umbrella” homeowner’s insurance policies (which only around 10% of US homeowners have). And while nearly 50% of German households have legal coverage, most of our expat customers have never even heard of it. 

So where does this widespread love for insurance come from? First of all, it’s hard to deny that it’s, at its core, just a good idea. This collective approach to risk mitigation provides peace of mind. And, the more people buy into the system, the cheaper the policies are. (That’s why you can get personal liability insurance for under €50/year, for example.) 

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A history of coverage

But this concept is nothing new. In fact, many of the types of insurance we sell today have been common in Germany for centuries. Here are a few things you may not have known about the longstanding German tradition: 

1. Germany has the oldest public health insurance system in the world: The origins of the Krankenkassen (public health funds) can be traced back to the founding of the German republic. In fact, the German goverment passed the first health insurance bill into law in 1883, under Otto von Bismarck. Under that law, the goverment forced members of certain professional groups to join a Krankenkasse. At the time, this requirement applied to only about 10% of German workers. 
2. Beer brewers were the first to pool their risk: The first known fire insurance in Germany was the brainchild of brewers in Hamburg. Because breweries had particularly high risk of fire, they began drawing up “fire contracts” as early as the 1590s. In 1676, the city of Hamburg was the first place to protect property owners against fires.
3. The Great Fire of London sparked the commercialization of the German property insurance market: One September evening in 1666, a fire that started in a bakery rapidly engulfed large swathes of London. In the years that followed, Londoners struggled to rebuild. They quickly realized that the previous risk management strategies didn’t work when managing with these massive damages. In 1680, London’s first property insurance company was established, and others quickly followed. This concept spread throughout Europe and was widespread in Germany (though largely administered by English firms) by the early 1800s. 
4. German life insurance has its roots in Polish church records: For centuries, churches were the main keepers of life and death records in Europe. The meticulous records of a pastor in Wroclaw, Poland, helped English astronomer Edward Halley create the first life insurance table. After further work by statisticians, they created the first known life insurance company in London in 1762. Aristocratic circles in Germany began adopting the concept around 25 years later. 

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