Premium Rates in the German Motor Insurance Business

In his report to the XVIth International Congress of Actuaries in Brussels [5] in 1960 the author has given a survey of the German Motor Insurance Business and in this it was mentioned that a change might be expected from the flat-tariff prescribed by law into individual tariffs for every insurance company. The Federal Ministry of Economics decided this question at the end of 1959 by signing the price regulation PR 15/59 [I] The federal price-fixing treaty had thus come to an end after several decades.Three steps are planned for the transitional period: For the years i960 and 1961 the flat-tariff remained in existence; free competition was introduced by providing for a return of premiums from technical surplus. At the beginning of 1962 the second phase of liberalisation began: Between 1962–1965 each insurance company has to compute its own tariff which has to be approved by the Federal Ministry of Economics. No deviations are permitted from the approved tariffs. Nobody can tell yet what the third phase in 1966 will bring.At the time the price-fixing agreements were cancelled it was unanimously agreed that proper competition should be maintained and that ruinous price competition which would harm the interests of victims of traffic accidents must be avoided [4]. Trusts or tariff rings were not taken into consideration. However, some market regulations were set up by co-operation between the different parties.The benefits (insurance conditions) are the same for all insurance enterprises. Also there are only few alternatives in the tariff conditions.